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:
- You have sold goods to the value of £600 to a customer.
- The customer (who is also one of your suppliers) has supplied you with materials to the value of £880.
- The £600 owed by this customer is offset against the £880 owing.
- This leaves £280 still owing to the customer.
This action can be simulated in Khaos Control by:
- Creating two credits in the SP Ledger entries for the customer/supplier:
- Credit £600 to the sales nominal, and...
- Credit £600 to the purchase nominal (you may wish to create a specific 'Contra' nominal of system type 'purchase').
- 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.
We recommend you confirm this process with your accountants to make sure they are happy with the effect on your accounts.