I am new to bookkeeping and have just started a personal cash flow statement. I was just wondering if I have two payments relating to the same transaction, do I place the credit payment under Income and the debit under the corresponding expense category or do I deduct the two amounts from each other and just add this as an expense? For example, I had a credit for £460 which was taken from a savings account for charity. I then repaid £480 back into the same savings account. Do I just need to add the expense at £20 or add the £460 to income and £480 under expense? If two payments balance, do they cancel each other out or do I also still need to add these to my cash flow statement? I also received a credit for my grocery shopping, do I deduct this amount from the grocery expense or is this classed under income?
I am very sorry if these are basic questions but I am very new to accounting.
except in some quite specific instances offsetting is to be avoided as you lose the detail of transactions (some accounting standards are quite vocal about that).
Where is the £480 coming from? Has it already been recognised as income or an existing (B/Fwd) cash balance within your cash flows? If so, why are you recognising it again at all?
I could be wrong but it sounds more as though you are attempting to keep a proper set of books rather than a simple personal cashflow statement (i.e. you recognise multiple bank accounts). And your confusion is around inter account transfers (quite different to income).
Also, on that matter, for the last paragraph, credits should not be classified as income... Imagine that you were doing this with real accounts. You would end up double recognising (and by extension paying tax based upon) receiving the same money again. A credit should effectively be considered a reversal or part reversal of the original transaction (but as noted above, do not offset, record the transactions seperately).
You say that you are very new to this. How new? Which body are you studying with / what are you aiming towards? Don't worry, we're not going to bite based on your answer. We're just looking to help you get the right start for whatever direction you may be travelling.
kindest regards,
Shaun.
__________________
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 am just starting AAT and am completing my first personal cash flow statement. I have two categories for income which is Income or Income/other. I have several categories for my expenses such as groceries. If I receive a credit from a grocery item, do I just deduct this from my grocery expenses? Is it ok to recognise the £480 as income even if it came from my savings account? Do I have to add all amounts to my cashflow report even if they balance out?
Hi ??
Welcome to the forum. Can you pop your first name on so that it appears on your posts (shows under the line), via edit profile, signatures. Saves us calling you ?? or 'oi you'.
What level of AAT is this training from? Not something I've seen on their courses. Who are you doing your training with?
Re the savings, no as Shaun said, you do not show this as income as it would've been counted as income already when you first earnt and received it, so by counting it now as income you would be counting it for a second time. Those funds are just being moved from one pot to another. Think of it as moving from your pocket to your purse. You had £480 before, but it wasn't in your purse. You move it to your purse. You still have the same amount of funds.
It might help if you show us the spreadsheet you are trying to complete. You can attach it as a picture. If it includes personal details, apart from your first name of course, then just scrub that part out using paintnet or some such.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
