Another query with Sage

katsutlieff

When I started the financial year, I made a journal entry to debit the accrual account and credit the expense account. When I have come to paying the accrual the expense account is left with the VAT still showing, only the net has been taken off.

What have I done wrong?

coojee

What you've done wrong is that you included VAT in the accrual, it should have been net of VAT. Also why did you DR the accrual? Your opening entry should have been DR Expense and CR Accrual.

stevef

Cojee is correct in that you should have accrued net of VAT.

But you were corrct to cr expenses dr accruals in your opening journal. You debited expenses in the previous year when you set up the accrual and you need the credit in expenses in the current year to offset the actual payment!