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Using TurboCASH

 







TAX
INVOICE BASED VAT TRANSACTIONS
  
VAT is prescribed by legislation as amended from time to time. If you are registered as a VAT Vendor, you must charge VAT to your or Debtors for all sales on credit and to your Customers for all sales on a cash basis. For some goods and services, which you sell, specific VAT rates and conditions may apply for certain items, etc. Vat is normally calculated as a percentage of your sales, according to the prescribed rate, which applies to the specific goods or services. The VAT you charge on your sales is known as Output Tax or Output VAT. All transactions must be properly documented on a source document, which is the Tax Invoice. The Tax Invoice must meet certain or specific requirements as prescribed by the VAT authorities.

When you purchase goods or services, which is applied in your business, you may claim Input Tax or Input VAT on these purchases, provided that the creditor or supplier is a registered VAT Vendor. You must also have a valid Tax Invoice from your creditor or supplier to substantiate the Input Tax. The Input VAT on these purchases may also be in different categories and percentages for the various goods or services purchased. The Input VAT on these purchases may also be in different categories and percentages for the various goods or services purchased.

At the end of each VAT period, you must submit a VAT return on which you need to enter the Output Tax figures and the Input Tax figures. You then need to pay the difference between the Output and the Input Tax to your local Tax Authority.

 

To optimise the features in TurboCASH, you need to create the correct Tax Accounts or Tax codes in the Edit - Accounts - Tax Accounts and select the correct Output Tax codes and Input Tax codes when entering transactions in batches. If you trade in Stock Items, you need to select the correct Tax codes when you create Stock Items in the Edit - Stock Items menu option.

To illustrate the basic principles of VAT:
Output Tax:
Goods are sold to a customer for an amount of 1 500.00 (excluding VAT). TurboCASH will calculate the VAT automatically as a percentage which is applicable to the selected Tax code (e.g. 14% of the amount of 1 500.00) which is an amount of 210.00. The customer pays an amount of 1 500.00. The Output Tax to the amount of 210.00 is the amount owed to the Tax Authorities.

The name address and contact details entered on the Setup Company Info menu option. The name address as entered on the Edit - Accounts - Debtor (General Information) menu option. The Invoice Heading as set in the Setup Documents (Invoice) menu option. TurboCASH generates numbers for each Invoice. Page number. Date of the Invoice - This is also the transaction date when an invoice is updated to the ledger. Reference if entered in the Tax Reference field of the Edit - Accounts Debtor (Accounting Information) menu option. The Reference number as supplied by the customer / debtor if entered on the Invoice Header screen. The name address and contact details entered on the Setup Company Info menu option. The name address as entered on the Edit - Accounts - Debtor (General Information) menu option. The Invoice Heading as set in the Setup Documents (Invoice) menu option. TurboCASH generates numbers for each Invoice. Page number. Date of the Invoice - This is also the transaction date when an invoice is updated to the ledger. Reference if entered in the Tax Reference field of the Edit - Accounts Debtor (Accounting Information) menu option. The Reference number as supplied by the customer / debtor if entered on the Invoice Header screen. The account number of the customer / debtor account. The delivery address as entered on the Edit - Accounts - Debtor (Statements) menu option. Stock Item code and description as selected. The quantities as entered. The selected unit (each, etc.) selling price. Line Discount percentage as specified on the Customer Discount field of the Accounting Information tab of a Debtor account, if the Stock Item was set to allow Invoice discount. Overall discount percentage. This will reduce the net selling price exclusive of VAT. The total selling price for the specified quantity (the quantity x selling price). The VAT amount is automatically calculated on the Output Tax percentage for the selected Stock item on the Exclusive amount. This is the total of the Exclusive and the VAT (Tax) amount. The unit for the selected Stock Item (e.g. each, litres, etc.) Invoice and Item or Line Discount. Total of all transactions on this Invoice (Exclusive, Tax and Inclusive). The Inclusive total is the amount payable. Company Registration number (entered on the Setup Company Info menu option) must be displayed if a business is registered as a Company, Close Corporation, Non-profit Organisation, etc. VAT Registration number (entered on the Setup Company Info menu option) must be displayed if a business is registered as a VAT vendor. Standard Invoice message as entered on the Documents Setup (Invoices) menu option. The name and signature of the customer or debtor and the date on which the invoice is accepted.
Input Tax:
Goods are purchased from a supplier, which is a registered VAT Vendor, and we have received a valid Tax Invoice for an amount of 1 000.00 (excluding VAT). TurboCASH will calculate the VAT automatically as a percentage which is applicable to the selected Tax code (e.g. 14% of the amount of 1 000.00) which is an amount of 210.00. The supplier is paid an amount of 1 500.00. The Input Tax to the amount of 140.00 is the amount, which may be claimed as Input Tax on the VAT return. This VAT collected must be paid over to the Tax Authority.

The name address and contact details entered on the Setup Company Info menu option. The name address as entered on the Edit - Accounts - Creditor (General Information) menu option. The Purchase document Heading as set in the Setup Documents (Purchase) menu option. TurboCASH generates numbers for each document. Page number. Date of the Purchase document - This is also the transaction date when the document is updated to the ledger. Reference if entered in the Tax Reference field of the Edit - Accounts - Creditor (Accounting Information) menu option. The Reference number as supplied by the supplier / creditor if entered on the Purchase Document Header screen. The account number of the supplier / creditor account. The delivery address as entered on the Edit - Accounts - Creditor (Remittance) menu option. Stock Item code and description as selected. The quantities as entered. The selected or entered unit (each, etc.) cost price. Line Discount percentage as specified. Overall discount percentage. This will reduce the net cost price exclusive of VAT. The total cost price for the specified quantity (the quantity x cost price). The VAT amount is automatically calculated on the Input Tax percentage for the selected Stock Item on the Exclusive amount. This is the total of the Exclusive and the VAT (Tax) amount. The unit for the selected Stock Item (e.g. each, litres, etc.) Invoice and Item or Line Discount. Total of all transactions on this document (Exclusive, Tax and Inclusive). The Inclusive total is the amount payable. Company Registration number (entered on the Setup Company Info menu option) must be displayed if a business is registered as a Company, Close Corporation, Non-profit Organisation, etc. VAT Registration number (entered on the Setup Company Info menu option) must be displayed if a business is registered as a VAT vendor. Standard Purchase or Goods Received Voucher message as entered on the Documents Setup (Purchase) menu option. The name and signature of the person and the date on which the Purchase or Goods Received document is accepted.

All of your transactions for which you have selected a VAT code, may be viewed in the Reports - General Ledger - Transactions menu option and the VAT payable to the Tax Authority may be viewed on the Reports Tax menu option.

The detailed General Ledger Transaction Report for the VAT Accounts Sales Invoice and the Purchase Invoice are as follows:

Name of the business. Name of the report. Selected accounting period or periods. System date and time. Page number. Transaction date. Transaction date. The account number and description or name. The Opening balance for the selected period. The Closing balance for the selected period. The balance as accumulated (increased or decreased) by each transaction. The total of all the closing balances of selected accounts in this report. Accounting periods. The batch type or the name of the journal in which the transactions is posted or updated to the ledger. Reference number for the transaction. 8 Asterisks (********) indicates that it is a balancing entry. If Documents were updated to the ledger, the Document number will be displayed. The description of the transactions. If Documents were updated to the ledger, the Document type will be displayed. Debit amounts of transactions. Credit amounts of transactions. Debit amounts of transactions. Credit amounts of transactions. Accounting periods. The batch type or the name of the journal in which the transactions is posted or updated to the ledger. The Opening balance for the selected period. The Closing balance for the selected period. Transaction date. Accounting periods. The batch type or the name of the journal in which the transactions is posted or updated to the ledger. The account number and description or name. Reference number for the transaction. 8 Asterisks (********) indicates that it is a balancing entry. If Documents were updated to the ledger, the Document number will be displayed.

The Tax Report for the VAT Accounts Sales Invoice and the Purchase Invoice are as follows:

Name of the business. System date and time. Page number. Name of the Tax report. Accounting period  or periods for which transactions are included. Tax code or VAT account. Batch / Journal in which VAT transactions were updated or posted to the ledger. Transaction date. Accounting period. The reference number of the transaction in the batch or the document number (Invoice, POS Invoice or Credit Note). The transaction description or detail in the batch. If documents were updated, the document type (Invoice, POS Invoice or Credit Note). Debtor or General Ledger Account number. Exclusive amount of the transaction. Tax amount of the transaction. Total for each batch or journal. Total of all the transactions of all batches or journals for the Output Tax code or VAT account. Tax code or VAT account. Batch / Journal in which VAT transactions were updated or posted to the ledger. Transaction date. Accounting period. The reference number of the transaction in the batch or the document number (Purchase and Stock or Goods Returned documents). The transaction description or detail in the batch. If documents were updated, the document type (Purchase and Stock or Goods Returned documents). Creditor or General Ledger Account number. Exclusive amount of the transaction. Tax amount of the transaction. Total for each batch or journal. Total of all the transactions of all batches or journals for the Input Tax code or VAT account. Grand total of the report. This reflects the net total of the Output and the Input VAT.

This Tax Report will reflect the total of all the Output and Input VAT Tax codes (Exclusive and Tax amounts). You may also select to view the details of the transactions or only the totals for each of your Tax codes. You will use this report to fill in the VAT return and to calculate the VAT payment to your Tax Authority. According to this example, you will need to pay over an amount of 70.

The transactions for the Sales transactions entered in the Sales Journal or the updated or posted Invoice is as follows:



The transactions for the Purchase transactions entered in the Purchase Journal or the updated or posted Purchase Document is as follows:



At the end of the Tax period, you will need to submit a VAT return and pay the difference to the Tax Authorities. The payment should be recorded in the payments journal. The transactions would be as follows:



Once you have paid the amount to the Tax authority, the VAT account should reflect a nil balance for the specific period.

If you are registered for VAT on the Payments Based - VAT Accounting basis you need to generate a Payments Based VAT report.