When a sale or sales credit is processed, certain actions create accounting automatically. This article will go through a list of what actions create accounting.
Sales orders
On sales orders, accounting entries are created when the following events occur:
| Action | Type | Description | Debit | Credit |
|---|---|---|---|---|
| Invoicing | SI | On clicking the 'invoice' button, an invoice journal is posted. This journal records revenue, taxes and money owed from the customer. |
Accounts receivable (Debtors control account) |
Revenue (income) Sales tax liability |
| Payment | SR | On taking payment against the order (or issuing a refund), a sales receipt journal is posted. This journal records money received into or taken out of the bank, and the corresponding debt. |
Bank (money in) |
Accounts receivable (Debtors control account) (money in) |
| Shipping | GO | On the order being shipped, a goods out journal is posted. This journal records the inventory leaving the system, and the cost of that inventory. |
Cost of goods | Inventory |
If using deferred cost of goods, there is a slight change. Read more about deferring cost of goods here.
These events can occur in any sequence.
Sales credits
Accounting journals are created when the following events occur:
| Action | Type | Description | Debit | Credit |
|---|---|---|---|---|
| Crediting | SC | On clicking the 'credit' button, a sales credit journal is posted. This journal records revenue, taxes and money owed to the customer. |
Revenue (income) |
Accounts receivable |
| Refunding | SR | On issuing a refund, a sales receipt journal is posted. This journal records money taken out of the bank, and the corresponding debt. |
Accounts receivable |
Bank |
| Receipt of goods | SG | On the items being received on the credit, a sales goods in journal is posted. This journal records the inventory entering the system, and the cost of that inventory. |
Inventory | Cost of goods |
Cost of sales
Brightpearl uses the first-in first-out (FIFO) method of inventory valuation for cost of sales. The actual price paid for inventory is used when goods out notes are shipped.
If cost of sales accounting is not used then cost of sales must be manually entered into accounting periodically, which is usually done by a stock take and asset valuation.
Learn more about cost of sales here.