Note: Purchase Accounts represent purchases for resale only and should only be used to record purchase transactions which are direct Costs of Sales.

It is important to note that these purchase accounts relate to purchases for resale ONLY i.e. a direct cost (direct component) or input cost of the end sale, e.g. the purchase of Computer monitors by a Computer sales shop would be regarded as a purchase for resale. 

These accounts must only be used for such items to ensure the correct classification of purchases for period-end accounting to determine the cost of sales and Gross Profit figures.  Any other purchases, e.g. kettle for the staff canteen, should be posted to the relevant expense account, e.g. Staff Canteen Expense, this is an overhead cost.

To facilitate customisation, these pre-set purchase-for-resale accounts are available to rename in order to specify the business's direct costs linked to its sales activities or to group specific purchases for resale together.

There are some purchases for resale accounts already set up which cannot be added to or taken away from, however, you may show or hide any of the accounts from view to prevent their use (Adding Nominal Accounts)

These include the following accounts:

• Carriage Inwards
• Carriage Outwards
• Outlay
• Manufacturing Wages / Salaries
• Subcontractors
• Manufacturing Power and Fuel
• Manufacturing - Miscellaneous
• Closing Stock / WIP (P&L)

Setup >  Sales / Purchases Names

Fixed Name                                                                                             

Click Fixed Name of the Purchase Accounts that you wish to rename e.g. Purchases at Standard Rate. The fixed purchases accounts available to rename are:

• Purchase Accounts at standard rate (i.e. VAT at 23%)
• Purchase Accounts at a low rate (i.e. VAT at 13.50%)
• Purchase Accounts at a lower rate (i.e. VAT at 9%)
• Purchase Accounts at zero rate (i.e. VAT at zero)
• Purchase Accounts VAT exempt (i.e. VAT non-applicable)

Note: Once renamed the VAT rate that is linked to the original account will automatically remain linked to that account.

Enter Preferred Name

Within this box type the preferred name of the purchases for resale account that will suit your particular purchases e.g. Purchase of Computer Monitors for Resale

Choose the Purchase Accounts at Standard Rate account and rename it to Purchase of Computer Monitors.  Each time a purchase invoice is received for the purchase of computer monitors from a Supplier it should be entered against this purchase account, and a VAT rate of 23% will be attached. The account will now show under the user-determined preferred name on the accounts and all reports.

Update

Click Update to save the new preferred name

Once a purchases account has been renamed it will automatically appear within the nominal accounts available for selection within the purchases and cheque payments transaction screens.

When using these accounts within the transaction screens the VAT is automatically processed at the corresponding VAT rate attached to the account, i.e. Purchases at a low rate will automatically attach a VAT rate of 13.5% to the transaction. The VAT rate attached cannot be amended.