BAA 3 AIS Skills 1 Recap / Issues from Class

Reviewing and checking your work

Sage is only an electronic method of processing transactions you have already dealt with in first and
second year financial accounting modules. However, unlike first and second year, you cannot see
the transactions very clearly; so you should work out what to expect (in terms of P&L/BS), make
the bookings, and then check the result.
1.1

Understand the accounting

Read the question carefully and think about what you are being asked to do: booking an income?
an expense? paying a supplier? accruing costs? etc. Then consider the effect on your P&L
(greater cost/income or less or no impact) and on the balance sheet (increase/decrease asset/liability,
sometimes no impact).
1.2

Process in Sage

Sage usually decides on the debit/credit entries from the English, for example:
Transaction

Automatic

From your input

Bank payment

CR: Bank

DR: supplier, P&L, fixed assets, etc

Accrual

CR: Accruals

DR: P&L (usually)

Cash receipt

DR: Bank

CR: customer (usually)

Depreciation
Sales invoice

DR: Customer

Payroll journal
1.3

DR and CR as per your input

CR: income/sales
DR and CR as per your input

Check your results

Most of the results can be checked in the Company view; some as the total for the NC, some only in
the activity. The most common mistakes are through bank transactions where Debits and Credits
are mixed up, so remember:

Debit: Expenses (or reducing income) or increasing assets (reducing liabilities), and

Credit: Incomes (or reducing costs) or increasing liabilities (reducing assets).

It is also important to check suppliers and/or customers balances/movements. If you see your
expected results, then you are 99.9% likely to be correct; if not, then you need to consider where
you went wrong.

Set-Up & Navigation

2.1

Payment due days and Discount allowed days

These terms are easily confused, especially since the discount days figure is input first:

Due date is called Payment Due

Discount date is called Settlement Due. [A way to remember is that the settlement due
date has a discount associated with it, Sett. Discount, and the normal due date does not.]

2.2

Chart of Accounts

If a NC number is not included in the COA, this will be evident when you check the COA. Note
that this may be deliberate for accounts that should always have a zero balance (contra accounts,
for example) but if not such an omission may cause your SFP not to balance.
2.3

Viewing transactions (1)

When scrolling down the nominals listing, or suppliers/bank/customers, clicking on a line holds
that line. Clicking elsewhere just highlights a second line, so beware if you are looking at that
accounts activity make sure you have selected the one you want.
2.4

Viewing transactions (2)

Within the customer, bank, and supplier activity sections there are two boxes with transactions in
them. The first is the main booking affecting that account, the second is a breakdown of that
booking.
2.5

Viewing transactions (3, and search)

Lists and views can be set alphabetically by account name or numerically by account number. It is
strongly recommended to view by number since you are then less likely to select the wrong account
eg. P&L depreciation rather than BS depreciation
2.6

Search

The search function is useful when there is a lot of data to sort through, but not clearing the search
at the end (discard) will leave the search active even if you close the screen or log-out of Sage.
Always clear the search when it is no longer needed.

Bank

3.1

Types of payment and receipt

Payments and receipts from those set up as suppliers and customers must be recorded via the bank
module buttons Supplier and Customer. Payments and receipts from others (those not set up as
suppliers or customers) can be booked through Payment and Receipt.
3.2

Nominal codes

Remember bank nominal codes need to be set up as such, through the bank module (and not as just
another nominal account within the bank range).
3.3

Cheque printing

Some cheque formats are only available for payments to suppliers (eg those including a remittance
advice). When paying non-suppliers by cheque, only one entry can be made at the time (batch entry
will work with supplier payments - see 4.2 below). The cheque listing screen shows all cheques
that have not yet been printed (and so will not have cheque numbers). Take care to set the correct
cheque start number (usually Sage will prompt the correct one), and the reference will be created
for the transaction when the cheque is printed.

Suppliers

We do not use purchase orders or materials files.

4.1

Credit notes

Credit notes are not shown as negative numbers on input, or supplier listings. They are, however,
coloured red on input. Take care you are inputting on the correct screen.
On the payment screen credit notes are not shown as negative either find the credit note number
from the original paperwork, or look for PC in the Type column.
4.2

Batch payments

Multiple payments can be made at the same time through batch payments. All amounts due from all
suppliers are listed, and you choose which items to pay. Sage will identify how much to pay each
supplier based on his selection.
4.3

Offsetting credit notes against invoices

It is sometimes desirable to offset a credit note against an invoice (eg. if no payment is imminent)
and this can only be done through the payment/bank function. Effectively you are turning the credit
note into cash and immediately using this cash to (part) pay an invoice ie. cash in and out
simultaneously. The net effect on bank or supplier is NIL, but the open item listing (due items) will
now be shorter (credit note gone) and one or more invoice will appear as part paid.

Customers

We do not use purchase orders or materials files. Also we only use the New Invoice option
under Tasks.
5.1

Non-automatic posting

Differing from the purchasing, and from posting invoices through the invoice button, invoices
prepared through the TASK: New Invoice need to be separately posted (updated). Possible reasons
for this could include extra controls: a chance to review invoices before sending them (by sales
manager, or against purchase order, or for accuracy in prices, addressee, VAT, etc).
5.2

NC posting

Creating invoices through TASK: New Invoice could cause problems with the NC to which the
sales will be posted. If there are different NCs for different products or regions, Sage will not
automatically pick this up. Default NCs can be set up for customers, but for line items you need to
double-click on the details to open the detail screen to view/update the NC for the item. (Or use
skeleton invoices.)
5.3

Tax Code posting

Creating invoices through TASK: New Invoice could cause problems with the Tax Code with which
the sales will be posted. If there are different Tax Codes for different products or regions, Sage will
not automatically pick this up. Default Tax Codes can be set up for customers, but for line items
you need to double-click on the details to open the detail screen to view/update the Tax Code for the
item/customer. (Or use skeleton invoices.)
5.4

Offsetting credit notes against invoices

It is sometimes desirable to offset a credit note against an invoice (eg. if no receipt is imminent) and
this can only be done through the payment/bank function. Effectively you are turning the credit
note into cash and immediately using this cash to (part) pay an invoice ie. cash out and in
simultaneously. The net effect on bank or customer is NIL, but the open item listing (due items)
will now be shorter (credit note gone) and one or more invoice will appear as part paid.
5.5

Contra posting

Contra postings (offsetting receivables and payables with the same party) are one of the few areas
where you cannot overwrite the date it will always take the program date.

Journals

6.1

Recurring creation

Sage sometimes thinks no bank account has been entered when setting up recurring entries. If this
happens, just click on the drop-down menu and re-select the bank account. Make sure you select
the appropriate option (receipt, payment, etc). The issues with program date arising with accruals,
prepayments and depreciation do not occur with recurring entries recurring entries are always
processed by Sage on a cumulative basis.
6.2

Accruals and prepayments and depreciation (1): Missing month

Once a month has been booked for an accrual or a prepayment or a depreciation charge, no earlier
bookings are possible so dont forget to book a month. If you do, make a manual entry (journal)
correcting the missing booking, and also at the end of the accrual or prepayment cycle (Sage will
book the right number of postings, so if you miss a month, it will simply be posted as an extra
month at the end). With fixed assets this is particularly inconvenient because the final month
could be several years away. In this case youd be better off to dispose of the asset and then
immediately re-acquire it (with new depreciation bookings).
6.3

Accruals and prepayments and depreciation (2): Early month

Also dont create a prepayment or accrual or fixed asset in a particular month and then post an
earlier month the system will book the monthly charge/credit early. Correcting, again, will be
necessary in the month with the error and at the end of the cycle. With fixed assets this is
particularly inconvenient because the final month could be several years away. In this case youd
be better off to dispose of the asset and then immediately re-acquire it with new depreciation
bookings.
6.4

Descriptions / Details

Make the descriptions count and useful. For example, when booking to a salaries account, details
salaries does not add anything, whereas March payroll would.
6.5

Input amounts

For both accruals and prepayments you should input the total prepaid or total the accrual will need
to reach, together with the number of months. [It may have been easier to have prepayments as a
total, and accruals as a monthly amount, but Sage is not set up that way.]

Fixed assets

7.1

Possible improvements

There is a Disposal Wizard, but not one for additions. One would be helpful, if only to remove the
need to input additions twice (once in FA register, once in GL).
An automatic warning if SFP and IS account numbers have been used by mistake for IS and SFP
would also be helpful.
How to input the depreciation rate is also confusing, and since FA additions are not frequent
transactions, this could be simpler.
Also depreciation would be better if worked out cumulatively (like recurring entries) rather than the
current month-end process.
7.2

Depreciation

See points 6.2 and 6.3 above.

Housekeeping

8.1

Error correction

There are a number of ways to fix errors, but care should be taken to consider the best method.
This is not always the quickest. For example, an error on a sales invoice might be corrected through
a journal (very quick), but if the invoice has already been sent to the customer, extra work would be
needed to advise the customer of the correction. A credit note might be a better method here,
particularly if the invoice has already been paid.
8.2

File maintenance

File maintenance will not work on journals try it. This is mainly since journals are reflected on
the transaction listing as one-sided entries, so a correction of one line could cause an imbalance in
the TB. [An improvement would be if the file maintenance function were to automatically call up
the whole journal for correction, and only allow a correction if the corrected journal still balanced,
and then this could be overcome].
8.3

Back-up files

Your data transactions, default settings, etc are stored in a back-up files. These files cannot be
directly opened (double clicking) you must be in Sage to restore the data from them. You will:
1. Need to download one from Moodle at the start of the exam, and
2. Be asked to up-load your back-up to Moodle at the end of your exam.
8.4

Financials

Financials, under Links in the Customer module, shows a full listing of everything that has been
booked, posted, or otherwise input into Sage. The default setting is in transaction number order
(every transaction is automatically given a unique number by Sage you cannot change or delete
this), and is useful for reviews:

To see where you left off (the last transaction saved will be the one with the highest
transaction umber)

To see what has been saved (if the PC crashes and you need to restart; similar to the above
point)

To see what the other side of the transaction is (or both sides)
This is the same list you see in Corrections