GST SmartBook Online Book

GST SmartBook Online Book - Page 3

9. General Ledger Transactions
This page allows you to add, edit or view any general ledger transactions. Most entries in this page will come from automatic payroll transactions for any employees that you have. The only other entries that you would make in this page are for non cash items such as depreciation.

The page is divided into 3 sections as with the previous two pages. The top section contains the Editor bar where you will add or edit ‘journals’. The middle section contains the list of journal transactions payments by transaction or by account subtotal. And the bottom section contains the Viewer bar where you can select the period to view, the accounts you want to view and the method of viewing as subtotals or transactions.

Adding Transactions
Before you enter transactions make sure that the ‘Add / Update’ button shows ‘Add’ and is greyed out. If the button shows ‘Update’ click the ‘New’ button to prepare for a new transaction.



• Select the month for the journal.

• The journal numbers update automatically but you can create your own references.

• Select the appropriate account. Click on the ‘=‘ symbol (or press F2) if you want to edit the current account and the ‘+’ symbol (or F3 key) if you want to add a new account.

• Choose whether the current item is a Debit or a Credit.

Debits and Credits are accounting terminology but they are quite easy to understand. Debits increase Assets and Expenses and Credits increase Debts and Equity.

• Add as many more entries as required. If you need more than six entries simply breakup the transactions over a number of journals.



• Enter details about the current journal.

• The Add button will only be available when the journal balance is nil ie where the Debits equal the Credits in total. Press this button to add the new journal.

The journal will now appear in the list of journals and the fields are cleared for the next entry.



Editing Transactions
You can edit journals by double clickin on any entry within the appropriate journal. Change any entries as required and then press the Update button.

Normal accounting practice suggests that you should reverse journals rather than edit the original journal. For this reason you cannot delete any entered journals.

You can reverse a journal by simply creating a new journal, showing all the debit entries as credits and vice versa and referencing the original journal.



Viewing Transactions
Use the bottom Viewer bar to display general ledger journals or account subtotals.



• Select the first and last months in the viewing period.

• Select the current financial year.



• Choose to display all accounts or select an individual account.

• Choose whether to display transactions or sub totals.

If you choose to display subtotals you can double click on any of them to display the transactions for the selected account. Double click again to edit that account.

The account subtotals shown in the General Ledger transactions page only include general ledger transactions and do not include entries made to that account through the Cash Receipts & Payments page. You can get full account transactions from the reports page.



10. Reports Page
This page allows you to view a number of accounting reports including your Business Activity Statement for any period.

The page has no entry details and as such is only divided into 2 sections. The first section contains the selected report or the source transactions for any entry in the selected report. The bottom section contains the Viewer bar where you can select the period to view, the report you want to view and whether or not you want to display accounts with nil balances.

Viewing Reports
Use the bottom Viewer bar to display accounting reports.



• Select the first and last months in the viewing period.

• Select the current financial year.



• Choose which report to display.

• Choose whether or not to display nil balance accounts.



When you click the view button your report will be displayed for the selected period. You can double click on any item that displays a ° symbol in front of the account name (such as °GST Sales) to display all source transactions for that account in the relevant period including the opening and closing values.

You can then double click on any transaction within that listing and the program will open the relevant page (Cash Receipts & Payments or General Ledger Transactions) and prepare that transaction for editing.

Business Activity Statement
You can use this report to greatly simplify the completion of your business activity statement. You can select any time period and so you can produce quarterly statements as well as data for the annual reconciliation. The report displays GST inclusive totals in the same sequence as required for your business activity statement and so it should only be a matter of reviewing the totals and copying the relevant figures onto your return.

Trial Balance
The trial balance provides details of all of your account movements and balances net of GST for the selected period. Profit and loss items are displayed at the top followed by Balance Sheet items.

All credit balances are shown as negatives. For example, sales and other income accounts are credit accounts and so are shown as a negative value. Expenses are debit accounts and are shown as a positive value.

Profit & Loss Statement
The profit and loss statement shows your taxable income (net of GST) for the selected period. This statement includes Income and Expense accounts and shows your net results as either a profit or a loss. Negative or credit values are profit.

This report is essentially the information that is necessary for your income tax return following June of each financial year.

Balance Sheet
The balance sheet is a snapshot of the value of your business at any time. You can see the total of your assets (such as cash, stock and furniture) and the total of your liabilities (such as bank loans GST payable and PAYG tax payable). The difference between total assets and liabilities represents your equity or ownership.

Instalment Income The final report is for Instalment income. This report takes all applicable income accounts and calculates the total tax payable using the Commissioner’s Instalment tax rate.

Taxes Payable
Most tax payers have elected to pay their GST, PAYG and Instalment tax obligations quarterly (ie three months apart) but you can produce the business activity statement for any period.

Set up the Activity Statement report for the applicable period and then print this report out. The amounts of tax payable are as follows:



The total GST Payable is the total payable shown at G9 / 1A less the total credits shown at G20 / 1B.



You then need to add the total tax deducted from your employees if you have any.



So, in this example the total tax payable would be $320 less $90 = $230 in GST and $282 in PAYG tax giving a total of $512.

Next, set up the Instalment Income report for the same period and then print it out also. The amount of income tax payable is shown at item 5A.



In this example a further $238 is payable as an income tax instalment.

Accounting for Taxes Payable
When you make payments to the Tax Office you will have to take account of these payments in your accounting records. If you want to keep good control of your payments it is always a good idea to separate the payment into its constituent parts. In the example on the previous page we had a total tax bill for the quarter of $750 made up of $230 in GST, $282 in PAYG tax and $238 in Income Tax.

Although the amounts will be paid on one cheque you should record three different transactions in the Cash Receipts & Payments page with the same cheque number.

The GST portion is a payment to the GST/PAYG (WH) Control account in the GST/PAYG Control account group.

The PAYG portion is also a payment to the GST/PAYG (WH) Control account in the GST/PAYG Control account group but entering it as a separate total allows you reconcile totals with the payroll page.

The Income Tax portion is a payment to the PAYG (Instal) Control account in the GST/PAYG Control account group. You should also create a General Ledger Journal transferring the balance of this account to the Income Tax Expense account and then adjust the balance at the end of the year to represent the actual tax paid.

For example say you had paid four instalments during the year for income tax of $1,000, $500, $800 and $900 (a total of $3,200). When entering the payments of tax each quarter you would enter in the Cash Receipts & Payments page a payment of $1,000 to the PAYG (Instal) Control.



If you wanted to record the tax expense quarterly you would then complete a journal transferring this payment to the Income Tax Expense account.



You would repeat this for each of the four payments. When, at the end of the year you complete your tax return and see the total income tax payable was in fact $3,500 you would pay a further cheque to the tax office and record it against the income tax expense account.



This will now bring the total income tax expense up to the required amount.

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Disclaimer
The information presented on this website does not constitute financial advice and is for general purpose use only. You should always consult your financial advisor before making investment decisions.