We expect you’ll like what you find in Enterprise 6. Many sophisticated and experienced IT managers and accountants like the way the system allows such flexible control over all the data it contains: how you can keep all your data in its original form, rather than clear down to balances each month; how you can keep as many periods open together as you like for as long as you like; how you can export and report freely on almost anything; how you can build macros to fulfil functions specific to your business, and include complex macro calculations in Quick Reports, SuperReports, even Word Processed letters ...
But we want you to love Enterprise 6 even if you’re a beginner. So we wrote this part of the manual to help you Get Started in a different way - to learn computerised business management from the ground up. Because, to get the most from any software package you need to understand the simplest elements, as well as the most complex. That’s what this chapter is all about - taking you through some of the most basic concepts of accounting on a computer, some of the common pitfalls, and then into some very specific advice.
Below can be found an outline of the accounting steps required to set up Enterprise 6’ accounts volumes. Of necessity, the points made are of a general nature. They are in line with our current understanding of British legislation and no liability resulting from their implementation can be accepted by Daybook, its employees or representatives. If you have any queries, perhaps about how to customise the supplied settings to your own requirements or need clarification of any points discussed, it is strongly recommended that you seek independent professional advice.
Once the principles have been understood, we suggest that all opening balances should be entered using an accounting period created solely for that purpose. It could be the period representing the month prior to the current month. A balancing Trial Balance should then be printed, the period closed and the Enterprise 6 data file backed up. Then you will be ready to start entering new current data.
Much of what follows is general, and some is very specific to Enterprise 6. There are a few items of special advice, which are marked as such, and you should take particular note of those sections.
If you are a beginner, please, please read this section in full. If you think you’ve seen it all before, please read it through anyway.
Transactions
All commerce is based in one form or another on the concept of buying and selling. The buyer needs a seller as much as the seller needs a buyer.
In its earliest form, the buying and selling process was represented by a direct exchange of goods and services - where one party was prepared to exchange or ‘trade’ one item for another of similar or equivalent value.
The modern transaction is more commonly seen as a trade of goods or services in exchange for money.
If I sell 100 apple pies at £1 each, the value of the ‘Transaction’ (excluding any taxes) is £100.
Because financial transactions are so often very important, we have relied for many hundreds of years on pieces of paper to record the exact details of each element of each transaction. Those pieces of paper are usually known as invoices - passed by the seller to the buyer when a sale is made, or credit notes - given by the seller to the buyer when goods are returned or a service rejected.
A computer can help with the recording of transactions by generating the paperwork more quickly and efficiently and by keeping records of each transaction for future reference.
But there’s something missing. How do we find out the total value of sales of apple pies this month, or this year? How do we calculate how much tax is owed? How do we work out whether the business is making or losing money from day-to-day and month-to-month? It’s easy enough to add up the figures if you only have a few transactions, but it gets more difficult and time-consuming once your business starts to expand.
Ledgers
In running your business, every financial transaction should be recorded in Enterprise 6. The location of this recording will depend on the nature of the transaction but will typically be in the Sales, Purchase or Nominal ledgers.
Sales ledger
The Sales Ledger records sales, otherwise known as income. Transactions regarding sales of goods and services (whether or not Invoices are issued) and the receipt of money (termed ‘Receipts’ in Enterprise 6) will be recorded here. Management of the money you are owed is a vital function provided by the Sales Ledger. Deposits that you receive to guarantee the future delivery of items to your customers should also be recorded here.
Purchase ledger
The Purchase Ledger records purchases. Transactions regarding purchases such as the receiving of purchase invoices for goods or services and the issuing of payments will be recorded here. Therefore, the Purchase Ledger can be seen to be the exact opposite of the Sales Ledger. The Purchase Ledger is most commonly used for the recording of ‘cost of sales’ items - those goods or services your company buys and then sells on. Management of the money you owe is a vital function provided by the Purchase Ledger. Deposits paid out by your company to secure the future delivery of items from suppliers should also be recorded here. The Purchase Ledger is also referred to as the Bought Ledger in some quarters.
Nominal ledger
All other transactions (such as salaries, loan repayments and interest payments) will be recorded in the Nominal ledger (also known as the Nominal Ledger). The Nominal ledger is the home for miscellaneous income, such as interest received, and the remaining overheads. Such transactions will usually not be accompanied by invoices. In addition, it provides a location where figures from the Sales and Purchase Ledgers are married up to summarise business trading figures. The Nominal ledger will then produce all necessary reports including Balance Sheets, Profit and Loss Reports and VAT Returns at the press of a button.