Contents
- Getting Started
- Quick Start Guide
- Video Tutorials
- Operating Procedure Templates
- Sales
- Operations
- Sales Plans
- Requirements
- Job Cards
- Complete Works Order
- Pick Sales Orders
- Dispatch and Invoice
- Customer Receipts
- Send Purchase Orders
- Create Purchase Orders
- Receive Goods and Create GRN
- Process a Stock Invoice
- Process a Supplier Invoice
- Supplier Payments
- Create a Supplier Account
- Create a Stock and Order Item
- Manufactured Items
- Suppliers Tab
- Ad-hoc Purchases
- Expenses and Cash Purchases
- Payroll
- Frequently Asked Questions
- What should I do with my bank statements?
- How do I account for factoring?
- What should I do with supplier statements?
- How do I claim Expenses?
- When should I use Expense Claims rather than payments from a Director’s Loan account?
- How do I reclaim the cost of using my car on company business?
- Do I always have to create an Employee account?
- Which PAYE Tax Code should I be using for my employee payroll?
- Which National Insurance Category should I be using for my employee payroll?
- What is RTI?
- How do I check my VAT Return?
- When do I use Cash Sales rather than a normal invoice?
- How do I delete a sales order that is part complete?
- Do I credit or refund?
- How do I transact a VAT only purchase invoice or credit?
- Which Bank Account do I use?
- When do I use Asset Items?
- Which Customer VAT Type and Stock Item VAT Rate should I use?
- Implementation Support and Training
- Business Planning & Cashflow
- Part 1 Basic Principles
- Starting Up
- Starting Up – continued
- Starting Up – continued (2)
- Key Points
- The Matching Principle
- The Matching Principle continued
- The Prudence Concept
- Cash vs Profit
- Cash vs Profit continued
- Cash vs Profit continued (2)
- Cash vs Profit continued (3)
- Cash vs Profit continued (4)
- Cash vs Profit continued (5)
- Part 2 Pricing, Variable & Fixed Costs, and Simple Breakeven
- Part 3 Working Capital
- Part 4 Investment Appraisal and Simple Payback
- Part 1 Basic Principles
- Guide to ERP Software
The simple answer is to use the stock item type ‘Asset Item’ when raising a purchase order or processing a purchase (supplier) invoice for an Asset, but this begs the question: What is an asset?
Purchase of an Asset is often referrred to as ‘Capital Expenditure’ (abbrieviated to ‘CapEx’) and there are a number of ways of defining this including a number of tests devised by HM Revenue and Customs, and a number of International Accounting Standards (notably IAS 16, 22, and 38), which aim to deal with the accounting treatment, but in simple terms Assets are items that:
The cost of such items is taken into the Balance Sheet and then a proportion of that cost written off each month or year against profits as ‘depreciation’.
Often whether an item is an Asset is obvious, for example machines that are used in production or offices, including computers, or vehicles that are used to carry goods, but what of hand tools and other small value items?
It is generally accepted that low value items, and most particularly those which will not last in use beyond a year, are treated as a ‘minor capital’ expense (Consumable Item) rather than an Asset – in accounting jargon they are treated as ‘revenue’ (an expense) rather than ‘capital’ (an asset) expenditure.
Having said that take great care about hire purchase, lease, and rental arrangements: generally if you are using finance to purchase an Asset then the item needs to be treated as such, and the finance treated as a loan to be repaid, but if an item is rented then it should not be treated as an Asset but rather the rental invoices from the supplier will simply be treated as an expense.