Simulating a Contra Account
Overview
In accounting terms, a contra account is used to offset the value of another transaction for example, when the same company is both a supplier and a customer, for example:
- You have sold goods to the value of £600 to a customer.
- The customer (who is also one of your suppliers) has supplied you with materials to the value of £880.
- The £600 owed by this customer is offset against the £880 owing.
- This leaves £280 still owing to the customer (supplier).
This action can be simulated in Khaos Control Cloud by:
Creating two credits in the SP Ledger for the customer/supplier: - Credit £600 to the sales nominal, and...
- Credit £600 to the purchase nominal (you may wish to create a specific 'Contra' nominal of system type 'purchase').
- Loading the customer/supplier's [Statement] tab and allocate the credit in the Allocate From grid to pay the invoice in the Allocate To grid.
This is a suggestion only.
We recommend you confirm this process with your accountants to make sure they are happy with the effect on your accounts.