Microsoft Office Accounting Professional 2008

Creating invoices

An invoice is a financial document that records a sale. Invoices are posted to the appropriate nominal accounts as soon as they are saved.

Sample Invoice

The invoice form is divided into several parts:

• The toolbar contains the most common tasks you can perform with an invoice. These can also be found in the respective menus (File, Edit, View Actions and Help).
• The top of the invoice contains the date, the customer information as well as the terms for the invoice.
• The products and services section contains the details of the invoice – what you are offering the customer and at which price. An invoice must contain at least one line. Each line can contain a specific product or service with a quantity, an amount that will be posted directly to a nominal account, a comment or a VAT line.
• The bottom of the invoice allows you to add an internal memo or document links, a reference to the customer, VAT and price level information as well as totals.

There are several noticeable things about an invoice:

• Like other customer documents, the customer information is automatically copied to the invoice when the customer is selected, but the information may be changed on the invoice itself. This When you save the invoice, you will be asked if you also want to update the customer form.
• When the invoice is saved, it will appear in the customer financial history and the invoice list.
• An invoice must contain a customer and one or more lines with products or services.
• You change the line type by clicking on the icon in the beginning of the line. This will show a dropdown that allows you to select Product or Service, Comment, VAT or Account.
  
  


• The unit price on each line can be changed if desired. This will not change the underlying product or service.
• Discounts are given per line and can be given either as a percentage (default) or as an amount in sterling (by typing £ before the amount).
• An invoice may be created from a blank template or from a quote or sales order.
• The payment terms define the due date and any early payment discounts on the customer payment as well as the VAT amounts on the invoice.
• Once an invoice is saved, all financial relevant fields become read-only and cannot be modified. However you can click the Edit button, which will void the old invoice in the background and create an identical new invoice for editing. This preserves the audit trail of the financial transactions.
• When an invoice is saved it is posted and the quantity of each stock product on the invoice is deducted from the stock on hand (see Invoice Postings below).
• An invoice cannot be deleted, but may be voided (by selecting Void on the Actions menu of the invoice) if the transaction for some reason is invalidated.
• Invoices show up in the Forecast Cash Flow tool as part of the cash inflows.

Invoice Postings

As noted above the invoice will post to the underlying nominal accounts. The invoice will:

• Debit the customer on the sales ledger account with the full invoice amount including VAT
• Credit the income account for the line total (net of VAT)
• Credit the VAT on sales account for the VAT amount.

the invoice contains stock products (Accounting Professional and Professional Plus) the invoice will also:

• Credit the stock asset account with the quantity and cost of the products (based on the FIFO principle, explained in the How stock valuation works in Office Accounting training article)
• Debit the cost of sales account with the cost of the products

All of these posting are done automatically for you – you only have to set up the products once and Office Accounting will do the rest.

The Audit trail (available in the Actions menu of the invoice) report contains the postings for the invoice. The example below shows an invoice for £100 + 17.50% VAT for a stock product:

Sample audit trail report for an invoice

• The sales ledger is debited £100.00 for the sale and £17.50 for the VAT
• The income account (sales) is credited £100.00
• The VAT on sales is credited £17.50
• The stock asset account is credited £78.13 for the cost of the stock (and the stock on hand reduced by one)
• The cost of sales is debited £78.13 for the cost of the stock