How To: Simulate a Contra Account

In accounting terms, a contra account is used to offset the value of another transaction for example, when the same company is both a supplier and a customer:

  1. You have sold goods to the value of £600 to a customer.
  2. The customer (who is also one of your suppliers) has supplied you with materials to the value of £880.
  3. The £600 owed by this customer is offset against the £880 owing.
  4. This leaves £280 still owing to the customer.

This action can be simulated in Khaos Control by:

  1. Creating two credits in the SP Ledger entries for the customer/supplier:
    1. Credit £600 to the sales nominal, and...
    2. Credit £600 to the purchase nominal (you may wish to create a specific 'Contra' nominal of system type 'purchase').
  2. Loading the customer/supplier's [ Statement ] tab and allocate the credit in the Allocate From grid to pay the invoice in the Allocate To grid.

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This is a suggestion only.
We recommend you confirm this process with your accountants to make sure they are happy with the effect on your accounts.

See Also

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