Cost centre breakdown examples

Cost centre breakdown examples with diagrams

The following diagrams illustrate the effect of cost centre breakdown on postings generated for customer and supplier transactions. Examples 1 and 2 use an invoice to illustrate the expected postings and examples 3 and 4 use a purchase payment that includes discount.

The examples are based on transactions entered for a supplier account in the Purchase Ledger. The same processing applies in the Sales Ledger with different accounting results to the Nominal Ledger.

• Example 1 (invoice) illustrates posting to the Nominal Ledger when the cost centre and department elements of the default nominal codes are left blank.

  Invoice, cost centre breakdown on

  

  Invoice, cost centre breakdown off

  

• Example 2 (invoice) illustrates posting to the Nominal Ledger when the full nominal account codes are specified (account code, cost centre and department) in the defaults.

  Invoice, cost centre breakdown on

  

  Invoice, cost centre breakdown off

  

• Example 3 (purchase payment with discount) illustrates posting to the Nominal Ledger using codes with the full nominal code specified and some without.

  Payment including discount, cost centre breakdown on

  

  Payment including discount, cost centre breakdown off

  

• Example 4 (purchase payment with discount) illustrates posting to the Nominal Ledger when the full nominal account codes are specified (account code, cost centre and department) in the defaults.

  Payment including discount, cost centre breakdown on

  

  Payment including discount, cost centre breakdown off

  

Note: Examples 3 and 4 assume that you are using the Cash Book to control your bank transactions.

Detailed cost centre breakdown examples with values

The following examples use values to explain the effect of cost centre breakdown in more detail. All these examples use a standard VAT rate of 17.5%.

• Example 1 (purchase invoice) demonstrates posting to the Nominal Ledger when the full nominal account codes are specified (account code, cost centre and department) in the defaults.

  Purchase invoice with cost centres

  Purchase invoice with cost centres
  Your nominal accounts are set up as follows, the first three listed are set up in default nominal accounts and the fourth is set up on the supplier account record. The invoice analysis uses 44100 FAC STD (Profit and Loss).
  	Default creditors control	24100	ADM	ADM	(Balance Sheet)
  	Default VAT input	15100	ADM	ADM	(Balance Sheet)
  	Default purchases	44100			(Profit and Loss)
  	Default nominal account	44100	FAC	STD	(Profit and Loss)
  You enter a purchase invoice with the following values:
  	Net	1000.00
  	VAT	175.00
  	Gross	1175.00
  The nominal postings will be as follows.
  1.1 Cost centre breakdown is not selected
  	Creditors control	Cr 1175.00	24100	ADM	ADM
  	Default VAT input	Dr 175.00	15100	ADM	ADM
  	Default purchases	Dr 1000.00	44100	FAC	STD
  With this example, if you choose to report by cost centre, the results will appear not to balance in your nominal reports.
  1.2 Cost centre breakdown is selected
  	Creditors control	Cr 1175.00	24100	FAC	STD
  	Default VAT input	Dr 175.00	15100	FAC	STD
  	Default purchases	Dr 1000.00	44100	FAC	STD
  With this example if you choose to report by cost centre FAC, your nominal reports will balance.

• Example 2 (purchase invoice) demonstrates posting to the Nominal Ledger when the cost centre and department elements of the default nominal codes are left blank.

  Purchase invoice without cost centres

  Purchase invoice without cost centres
  Your nominal accounts are set up as follows, the first three listed are set up in default nominal accounts and the fourth is set up on the supplier account record. The invoice analysis uses 44100 FAC STD (Profit and Loss).
  	Default Creditors Control	24100			(Balance Sheet)
  	Default VAT Input	15100			(Balance Sheet)
  	Default Purchases	44100			(Profit and Loss)
  	Default Nominal Account	44100	FAC	STD	(Profit and Loss)
  You enter a purchase invoice with the following values:
  	Net	1000.00
  	VAT	175.00
  	Gross	1175.00
  The nominal postings will be as follows.
  2.1 Cost centre breakdown is not selected
  	Creditors Control	Cr 1175.00	24100
  	Default VAT Input	Dr 175.00	15100
  	Default Purchases	Dr 1000.00	44100	FAC	STD
  With this example, if you choose to report by cost centre FAC, the results will appear not to balance in your nominal reports.
  2.2 Cost centre breakdown is selected
  	Creditors Control	Cr 1175.00	24100	FAC	STD
  	Default Input VAT	Dr 175.00	15100	FAC	STD
  	Default Purchases	Dr 1000.00	44100	FAC	STD
  With this example, if you choose to report by cost centre FAC, your nominal reports will balance.

• Example 3 (sales invoice) demonstrates posting to the Nominal Ledger when the full nominal account codes are specified (account code, cost centre and department) in the defaults.

  Sales invoice with cost centres

  Sales invoice with cost centres
  Your nominal accounts are set up as follows, the first three accounts listed below are set up in default nominal accounts, and the fourth is set up on the customer account record. The invoice analysis uses 31100 SAL DLR (Profit and Loss).
  	Debtors control		14100	ADM	ADM	(Balance Sheet)
  	Default VAT output		26100	ADM	ADM	(Balance Sheet)
  	Default sales		31100			(Profit and Loss)
  	Default nominal account		31100	SAL	DLR	(Profit and Loss)
  You enter a sales invoice with the following values:
  	Net		1000.00
  	VAT		175.00
  	Gross		1175.00
  The nominal postings will be as follows.
  3.1 Cost centre breakdown is not selected
  	Debtors control	Dr		14100	ADM	ADM
  	Default VAT output	Cr		26100	ADM	ADM
  	Default sales	Cr	1000.00	31100	SAL	DLR
  With this example, if you choose to report by cost centre SAL or ADM, the results will appear not to balance in your nominal reports.
  3.2 Cost centre breakdown is selected
  	Debtors control	Dr		14100	SAL	DLR
  	Default VAT output	Cr	175.00	26100	SAL	DLR
  	Default sales	Cr		31100	SAL	DLR
  With this example, if you choose to report by cost centre SAL, your nominal reports will balance.

• Example 4 (sales invoice) demonstrates posting to the Nominal Ledger when the cost centre and department elements of the default nominal codes are left blank.

  Sales invoice without cost centres

  Sales invoice without cost centres
  Your nominal accounts are set up as follows, the first three accounts listed below are set up in default nominal accounts, and the fourth is set up on the customer account record. The invoice analysis uses 31100 SAL DLR (Profit and Loss).
  	Debtors control		14100			(Balance Sheet)
  	Default VAT output		26100			(Balance Sheet)
  	Default sales		31100			(Profit and Loss)
  	Default nominal account		31100	SAL	DLR	(Profit and Loss)
  You enter a sales invoice with the following values:
  	Net		1000.00
  	VAT		175.00
  	Gross		1175.00
  The nominal postings will be as follows.
  4.1 Cost centre breakdown is not selected
  	Debtors control	Dr	1175.00	14100
  	Default VAT output	Cr	175.00	26100
  	Default sales	Cr	1000.00	31100	SAL	DLR
  With this example, if you choose to report by cost centre SAL, the results will appear not to balance in your nominal reports.
  4.2 Cost centre breakdown is selected
  	Debtors control	Dr	1175.00	14100	SAL	DLR
  	Default VAT output	Cr	175.00	26100	SAL	DLR
  	Default sales	Cr	1000.00	31100	SAL	DLR
  With this example, if you choose to report by cost centre SAL, your nominal reports will balance.

• Example 5 (purchase payment) demonstrates a cash transaction using the Cash Book. Postings to the Nominal Ledger are shown when the full nominal account codes are specified (account code, cost centre and department) in the defaults.

  Purchase payment with cost centre

  Purchase payment with cost centre
  Your nominal accounts are set up as follows, the first two are taken from default nominal accounts.
  		Code	C/c	Dept
  	Default bank account	16800	ADM	ADM	(Balance Sheet)
  	Default creditors control	24100	ADM	ADM	(Balance Sheet)
  	Discount taken account	34200			(Balance Sheet)
  	Bank account (from bank record in Cash Book)	16801	ADM	ADM	(Balance Sheet)
  	Default account (from supplier record in Purchase Ledger)	44100	FAC	STD	(Profit and Loss)
  You enter a purchase payment for £1175.00 with a discount of £60.00. The nominal postings will be as follows.
  5.1 Cost centre breakdown is not selected
  	Default bank account	Cr 1175.00	16801	ADM	ADM
  	Default creditors control	Dr 1235.00	24100	ADM	ADM
  	Discount taken account	Cr 60.00	34200	FAC	STD
  5.2 Cost centre breakdown is selected
  	Bank account	Cr 1175.00	16801	FAC	STD
  	Default creditors control	Dr 1235.00	24100	FAC	STD
  	Discount taken account	Cr 60.00	34200	FAC	STD

• Example 6 (purchase payment) demonstrates a cash transaction using the Cash Book. Postings to the Nominal Ledger are shown when the cost centre and department elements of the default nominal codes are left blank.

  Purchase payment without cost centres

  Purchase payment without cost centres
  Your nominal accounts are set up as follows, the first two are taken from default nominal accounts.
  		Code	C/c	Dept
  	Default bank account	16800			(Balance Sheet)
  	Default creditors control	24100			(Balance Sheet)
  	Bank account (from bank record in Cash Book)	16801			(Balance Sheet)
  	Default account (from supplier record in Purchase Ledger)	44100	FAC	STD	(Profit and Loss)
  You enter a purchase payment for £1175.00. The nominal postings will be as follows.
  6.1 Cost centre breakdown is not selected
  	Bank account	Cr 1175.00	16801
  	Default creditors control	Dr 1175.00	24100
  6.2 Cost centre breakdown is selected
  	Bank account	Cr 1175.00	16801	FAC	STD
  	Default creditors control	Dr 1175.00	24100	FAC	STD