Phoenix 9 - User Help

As defined by the Australian Taxation Office (ATO): If you account for GST on a non-cash (Accruals) basis, you will account for all GST payable and all GST credits in your activity statement for the earlier of either:

•the first tax period in which an invoice is issued relating to that sale

Or

•the first tax period in which any of the payment is received or made.

The term Actuals is used to describe the true financial records you have entered into the program, as opposed to your Budget figures. Actuals are the transaction and dissection entries you have made.

Asset & Liability Accounts are used to keep track of the value of items you own such as a house, car, farm and machinery, and can also be used to monitor loans that you may have, including payments, interest charges, and so on.

Bank accounts are used for any reconciled account you have with a finance house. These accounts are considered to be cash accounts for reporting. The reconciliation interval is monthly.

See also Reconciled Accounts.

A budget is a monthly plan of your expected income and your expected expenditure for a future period (usually a financial year) based on the amounts in your Cash Book Categories. By regularly comparing your actual financial performance with your budget, you can assess the financial progress of your business.

You may have several budgets in use over a given period. One useful budget is to use last year's financial records as a budget for this year. It is then possible to compare your progress this year with the same period last year.

When trading part way through the year, you may use the up-to-date actual cash flow figures and project the budget forward from these actual figures. This eliminates budget errors over the period you have so far traded.

Accounting records are divided into equal periods of 12 months. The 12 month period is called the Business Period. The period you use may be any 12 month period such as a financial year (July to June), calendar year (January to December) or any 12 month period that suits your natural business year.

As defined by the Australian Taxation Office (ATO): If you issue (or receive) an invoice but do not account for the sale (or purchase) until the cash is received (or paid), you are using a cash basis of accounting. You can use the cash basis if your annual turnover is $2 million or less.  NB 'Account on a cash basis' is a defined term in GST law. http://www.ato.gov.au/content/78555.htm

A cash flow is a chart of expense and income totals for each one of your expense and income Cash Book Categories broken up into months. A cash flow also gives you Total Income, Total Expenses, Surplus/Deficit, and monthly bank balance figures. A budget is usually calculated in a cash flow format.

The Cash Sale account is provided to allow the entry of cash expenditures and sales. This is typically the content of the cash drawer or till. Phoenix produces the appropriate documentation for any Cash Sales (Tax Invoice) or Cash Refunds (Tax Credit Note) that are entered in this account.

There can be more than one cash sale account if desired. You may wish to have one cash sale account for sales where a credit card was used, and another for each till or cash drawer. You may use this account to record a petty cash system.

This account is reconciled each month, and the closing balance is the contents of the till, petty cash box etc at the time of reconciliation.

See also Reconciled Accounts.

All your income and expenses must be categorised into Cash Book Categories or ledger accounts. This is known as the Cash Book. It is from this pool of records that most of the reports are derived.

For example, if you wish to find out how much money you have spent on fuel it would take you quite some time to sort through your cheque butts and add up all the relevant amounts. In a Cash Book, all these amounts are already sorted and totalled for you.

A Category is used to distribute money (from payments and deposits) to the reconciled accounts (bank, visa, customer and supplier accounts). Categories are sometimes referred to as "ledger accounts". They are the basis of most reports, including income & expenditure, cash flow, and cashbook entry reports.

See also Sub-category

Credit card accounts work the same as bank accounts, but with transaction types of either Charge or Payment to suit credit cards. Credit card accounts are reconciled monthly. Credit card accounts are treated by Phoenix as “Cashflow Accounts”.

Current assets are those that the future benefit to the business will be recognised within a short period of time, usually a year or within the normal operating cycle of the business.  Some examples are Short-Term Investments, Inventories of goods for sale, materials used in manufacture.

Current liabilities are debts that will be paid in the short term.  Examples are taxes and wages payable.

An enterprise may also be called a profit centre. An enterprise can be any source of income that also generates expenses. Enterprises may be unrelated business entities such as:

•Farm;

•Dress Shop;

•Cleaning Company;

or they may be related parts of one business entity, for example ....

•Wheat Cropping;

•Cotton;

•Cattle Fattening;

or a mixture of the two ....

•Wheat Cropping;

•Cotton;

•Cattle Fattening;

•Dress Shop;

•Cleaning Company.

All enterprise expenses and incomes are identified within the Cash Book. As you enter transactions, you may allocate income and expenses to the enterprises. A separate profit & loss statement may then be obtained for each enterprise, independent of any other activities.

You can also use an enterprise to record a cost centre if necessary.  For example, you could set up an "Overheads" enterprise.  As you enter transactions, any entries that cannot be allocated to one of your profit centre enterprises may be allocated to the Overhead enterprise.  Note, however, that Groups are normally used to identify cost centres . You may wish to use an enterprise if one Cash Book category can contain the expenses for more than one cost centre.

Fixed assets are long-lived assets that are purchased to be used in the operation of your business and which are not intended for resale.

A Group is a selection of Categories. Any category may be made part of a group by assigning it to the group. A category’s membership of a group may be altered at any time. A category may be a member of more than one group, unless it has been assigned to Fund Transfers.  A category need not be a member of any group.

Groups may be used to include only some Categories in a report and to ignore all others, or to sort or organise the report. Groups are often used to identify different cost centres, to separate variable costs from fixed costs, or to separate cash flow and non-cash flow Categories.

Consider the following example:

1.Variable Costs

2.Fixed Costs

3.Fund Transfers

All monies earned and spent would go to Categories that belong to either to groups 1 or 2. Any Categories used for transferring monies between accounts would belong to Group 3. By excluding the Group 3 Categories from reports, you can exclude money transfers that have nothing to do with the performance of your business.

Loan accounts have different transaction types from the other account types.  They are charge or payment.  The reconciliation interval for Loan accounts can be monthly, quarterly, half yearly or yearly. These accounts are not considered to be “Cashflow Accounts”.

Long Term liabilities are debts that will become due beyond a year or beyond the normal operating cycle of the business.  Some examples are mortgages, long-term loans.

A Cash Book system should check that all entries in the cashbook are correct. To check the Cash Book, it is compared on a regular basis with your bank statement. This comparison is called a reconciliation or bank reconciliation.

Transaction Reference would usually be the cheque number for a cheque type transaction. Any other number or code that you may like to use could be appropriate here and Phoenix allows the user 13 characters in this field. For instance, FEE might be used for Bank levied fees. When entering a series of transactions, Phoenix attempts to enter the reference number or code for you. If the last transaction entered had a number for the reference, Phoenix will add one to that number. If the previous transaction had a code made up of letters, then Phoenix will enter that same code for you. A dropdown list of previous entries is displayed for your convenience. If you select a number from the list, Phoenix will add one to that number and put it in the field for you.

Stock Firm accounts are just like bank accounts, but the reconciliation period can optionally be monthly or quarterly.  Stock firm accounts are treated in Phoenix as “Cashflow accounts”.

Sub-categories are individual sections of a Category. They are "sub-accounts" for the category. They are still independent accounts in their own right, however.

To illustrate, for a Category titled "Vehicle Repairs", each vehicle you own may be recorded as one Sub-category. This would allow easy retrieval of all expenses pertaining to each vehicle.

Transactions are payments and deposits that have been issued and received. They are recorded in the Cash Book part of Phoenix.

Each transaction can be allocated or dissected into a maximum of 200 different Categories and up to 26 Sub-categories per Category. These are known as dissections.