I have had a call from a potential customer, he has asked me to do some journals in his sage package for him as each month / quarter he has massive profits and then other months he has small amounts of profit. He wants these to be evened out throughout the year?
What accounts would i use in the journal entries? And is this something that can be done?
Please can someone explain to me what a journal does, i see it as it is just movement of money between the nominal codes and does not touch / effect the bank on sage?
Oh dear, you are looking for customers yet do not know what a journal is?
In your other thread you say you are aat. With respect I would presume someone with that qualification to understand whether a journal 'touches the bank'......
Me thinks this is a troll, in which case I've been had, but it is a Friday and I've had rather a good week. Still I must refrain from replying to these things.
No one knows everything about bookkeeping, these forums are a testament to that. Having said that, and with all due respect, perhaps you should get a grasp of the basic such as journals before taking on clients. No one will appreciate you 'practicing' on their accounts.
To answer your question, as far as I'm concerned, you can't artificially manipulate the profit so that the graphs look pretty. Profit in many businesses come in peaks and troughs. I think your client should just be happy that he's making a profit.
I don't want to sound like teacher here but I don't think that initial response was deserved and it's not the sort of answer that people would normally expect when posting questions on this site.
I'm sure that's it's not meant the way that it comes accross but just want to emphasise to the readers out there that they should be able to ask whatever questions they need without fear that they will be ridiculed or belittled and only by asking the questions can we hope to improve the quality of the profession as a whole as every question asked is an answer sitting on the site hopefully forever so that others have a rich resource within which to find the answers that they need.
I've actually seen it on AccountingWeb where someone asks a question that perhaps would have been more appropriate on a non accountants forum and they are set on as though by a pack of wild dogs. That makes people with less knowledge affraid to lift their heads above the parapets over there and that's really not something that I want to see happening on this site.
If anyone Troll's or Spams the site then Site admin or myself will remove the posts / threads / users.
Local bookkeeper. Just out of interest, are you a franchisee? (assuming local bookkeeper franchise?), no need to give your name so whatever you say it's totally anonymous and can't get back to you.
Also, in answer to the question re profit smoothing. That is manipulation of financial reporting and is not permitted (see IAS 18 Revenue and IAS37 Provisions, contingent Assets and contingent liabilities (or under UKGAAP FRS12 Provisions, Contingent Assets and Contingent Liabilities and FRS3 Reporting Financial Performance, and to a certain extent FRS5 Reporting the substance of Transactions)).
If the client is actually attempting to simply manipulate their management reports then they are just trying to lie to themselves.
If, as is more likely they are trying to slip things into different reporting periods then that's where it's getting seriously naughty and they need their wrist slapped by you before they have them slapped by HMRC.
If you prepare reports for this client make sure that you get it in writing (normally in your engagement letter) that such reports are for the client, not for use by a third party without your specific written permission as the client may be seeking to raise finance against these reports for which the finance provider could hold you jointly and severly liable as, as a finance professional you should know that the reports that you produced were misleading. (Although the case is related to Audit work, see the case of RBS vs Bannerman, Johnston, Macklay and others (2002)).
right, think that's me done for a bit.
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think a lot of the problems are down to a poster (not specifically the one on this thread but in general) asking a question and it being interpreted differently by the responder. They may be asking a simple question and then whoever is responding thinks it is more complicated.
Take this post for instance. Only the original poster knows what she is really asking and what the real problem is. Just say this company gets an electricity bill every three months. Month 1 might have nothing in for electricity (and a decent profit), Month 2 similar, Month 3 they get the bill and the profit is reduced. Now, putting in an accrual at the end of month 1 and month 2 would even out the profit figures over the three months. Nothing sinister. Maybe the problem really is as simple as that. We don't know. Maybe that's the journals she is talking about in the original post.
The original poster may know what she is talking about but, like me, is not good at putting it across.
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Never buy black socks from a normal shop. They shaft you every time.
Firstly may I apologise for my initial response which was out of charcter for me and a bit embarrassing.
I think Peasie is spot on and also Kris has given a reasoned response, as perhaps I should have done.
This site is invaluable for information, though you do have to be careful not to take everything at face value as otherwise it becomes as useful as the advice from the man down the pub.
I've re-read the post a few times and can see how it could be construed differently. I think I was just having an AccountingWeb moment where I have jumped to conclusions too quickly based on limited information.
All I will say in my defence is that I think the OP should have given a little more info to allow a better response. Though I take Peasies point about people not being able to put things across, we are not charged per word and there is no time limit in constructing a question.
I'm reminded of the old adage when computers were first invented - GI-GO......
Garbage In - Garbage Out, which funnily enough is very pertinent in our profession especially when looking at peoples Sage 50 files. I think it also applies here, though I hold my hand up for giving the Garbage Out response.
I wish the OP all the best in with her new client, though if Shaun hasn't put her off then I don't know what will. (meant as a joke Shaun and I promise to do better next time!!)
Also glad I posted under my pseudonym and not my company name, once you've put it on the web its there forever, as poor Scarlet has found out. Bet Shaun knows who I am though
Thank you for the responses, Peasie you are correct i am terrible at explaining. The client does projects over a number of months and then gets one large payment so they want the profit split over the months they have been working on the project.
I have studied my AAT 4 years ago but have not worked using the knowledge until 6 months ago. I have never used sage so although i know how to do the basics like posting i am now faced with Journals. I have not said i would do the work for this client as i would not want to mess it up. I wanted to know how to go about doing it to make sure i am correct.
KRS thank you for the apologie. You was right in the fact i should know what a journal is however not using the knowledge learnt through AAT for many years it is like starting all over again. Using an accounts package adds to the confusion as it does all the double entry etc.
HI I did AAT Level 3 a few years ago and they do cover journals, although saying that I covered them best in my OCR manual bookkeeping years ago. I suppose it depends also on your teacher and how they are explained as to how well you remember them.
I always find it easier to go back to basics and draw up a 'T' account when doing them on a scrap pf paper and them transfer it on to Sage or QB. I'm just abit old fashioned there.
Are you still a student with AAT and are you studying level 4?
I always find it easier to go back to basics and draw up a 'T' account when doing them on a scrap of paper and then transfer it on to Sage or QB. I'm just abit old fashioned there.
