Process transactions in system

Input data refers to the raw information that is entered into a system or process for it to be processed, analysed, or used to produce a desired output. In the context of accounting software like MYOB or Xero, input data can include various types of financial information, such as:

• Customer Details: Names, addresses, contact information, and payment terms of your customers.
• Supplier Information: Similar details for suppliers, including terms of trade.
• Transactions: Data related to sales invoices, purchase bills, payments, and receipts.
• Inventory Information: Details of items in stock, including item codes, descriptions, quantities, and prices.
• Opening Balances: Initial balances of bank accounts, categories (formerly accounts), outstanding invoices, unpaid bills, and other financial figures at the start of using the system.
• Bank Statements: Transactions from bank accounts that need to be reconciled with the accounting system.
• Payroll Information: Employee data, payroll items, and salary details.

Input data is crucial as it forms the basis for the accounting system to generate accurate financial reports, manage day-to-day transactions, and provide insights into the financial health of a business.

MYOB

To prepare input data for processing in MYOB, follow these steps to ensure that your data is accurate, complete, and properly formatted for smooth integration into the system:

Xero

To prepare input data for processing in Xero, you'll need to ensure that your financial data is accurate, properly formatted, and ready for integration into the system. Here's how you can do it:

Watch

Watch the video below to see the step-by-step process of inputting data in Xero:

Processing cash and credit transactions according to organisational policies and procedures is vital for maintaining accurate and consistent financial records, which are essential for reliable financial reporting.

Adherence to these procedures helps prevent errors and fraud by ensuring that transactions are properly documented, authorised, and recorded.

This not only supports financial control and accountability but also ensures compliance with legal and regulatory requirements, thereby safeguarding the organisation’s financial integrity.

MYOB

Processing cash and credit transactions in MYOB involves recording payments received or made, whether in cash or via credit, and ensuring these transactions are accurately reflected in your accounts. Here’s how to do it:

Processing Cash Transactions

Receiving Cash Payments (e.g., for Sales):

• Step 1: Go to the "Sales" menu and select "Take Payments."
• Step 2: Choose the customer from whom you received the payment.
• Step 3: Enter the payment details, including the amount, date, and payment method (select "Cash").
• Step 4: Allocate the payment to the appropriate invoice(s).
• Step 5: Select the account where the cash will be deposited (e.g., Cash on Hand or a bank account).
• Step 6: Click "Record" to complete the transaction.

Making Cash Payments (e.g., for Purchases):

• Step 1: Go to the "Purchases" menu and select "Pay Bills."
• Step 2: Choose the supplier to whom you are making the payment.
• Step 3: Enter the payment details, including the amount, date, and payment method (select "Cash").
• Step 4: Allocate the payment to the appropriate bill(s).
• Step 5: Select the account from which the cash is being withdrawn.
• Step 6: Click "Record" to finalise the payment.

Processing Credit Transactions

Receiving Credit Payments (e.g., via Credit Card):

• Step 1: Go to the "Sales" menu and select "Take Payments."
• Step 2: Choose the customer and enter the payment details.
• Step 3: Select "Credit Card" as the payment method.
• Step 4: Allocate the payment to the corresponding invoice(s).
• Step 5: Choose the account that will receive the credit card payment.
• Step 6: Click "Record" to process the transaction.

Watch

Watch the video below to learn how to set up online payments in MYOB:

Making Credit Payments (e.g., Paying Bills with a Credit Card):

• Step 1: Go to the "Purchases" menu and select "Pay Bills."
• Step 2: Select the supplier and enter the payment details.
• Step 3: Choose "Credit Card" as the payment method.
• Step 4: Allocate the payment to the relevant bill(s).
• Step 5: Select the credit card account from which the payment is made.
• Step 6: Click "Record" to complete the transaction.

Reconciliation

• Step 1: Regularly reconcile your cash and credit transactions against your bank statements to ensure all entries in MYOB match your actual financial activity.
• Step 2: Go to the "Banking" menu and select "Reconcile Accounts."
• Step 3: Select the account you wish to reconcile, then match the transactions in MYOB with those on your bank statement.
• Step 4: Mark the transactions as reconciled once they match, and finalise the reconciliation.

Watch

Watch the video below to find out how to reconcile bank accounts in MYOB:

Xero

Processing cash and credit transactions in Xero involves recording payments received or made, whether in cash or via credit, and ensuring that these transactions are accurately reflected in your accounts. Here's how to do it:

Processing Cash Transactions

Receiving Cash Payments (e.g., for Sales)

• Step 1: Go to the "Business" menu and select "Invoices."
• Step 2: Find the invoice for which you’ve received a cash payment, and click on it to open.
• Step 3: Click on the "Add Payment" button.
• Step 4: Enter the payment details, including the amount, date, and select "Cash" as the payment method.
• Step 5: Choose the bank account where the cash will be deposited (this could also be a cash-in-hand account if the cash hasn’t been deposited in the bank yet).
• Step 6: Click "Add Payment" to record the transaction.

Making Cash Payments (e.g., for Purchases)

• Step 1: Go to the "Business" menu and select "Bills to Pay."
• Step 2: Find the bill you are paying in cash and open it.
• Step 3: Click on "Make a Payment."
• Step 4: Enter the payment details, including the amount, date, and select "Cash" as the payment method.
• Step 5: Select the account from which the cash is being paid.
• Step 6: Click "Add Payment" to finalize the payment.

Processing Credit Transactions

Receiving Credit Payments (e.g., via Credit Card)

• Step 1: Go to the "Business" menu and select "Invoices."
• Step 2: Open the invoice for which you’ve received a credit card payment.
• Step 3: Click "Add Payment."
• Step 4: Enter the payment details, including the amount, date, and select "Credit Card" as the payment method.
• Step 5: Choose the bank account where the credit card payment is being deposited.
• Step 6: Click "Add Payment" to process the transaction.

Watch

Watch the video below to find out more about adding a payment service in Xero:

Making Credit Payments (e.g., Paying Bills with a Credit Card)

• Step 1: Go to the "Business" menu and select "Bills to Pay."
• Step 2: Open the bill you wish to pay by credit card.
• Step 3: Click "Make a Payment."
• Step 4: Enter the payment details, including the amount, date, and select "Credit Card" as the payment method.
• Step 5: Choose the credit card account from which the payment is made.
• Step 6: Click "Add Payment" to complete the transaction.

Watch

Watch the video below to find out how to pay your suppliers with Xero:

Reconciliation

• Step 1: Regularly reconcile your cash and credit transactions with your bank statements to ensure all entries in Xero match your actual financial activities.
• Step 2: Go to the "Accounting" menu and select "Bank Accounts."
• Step 3: Click "Reconcile" next to the bank account you want to reconcile.
• Step 4: Match the transactions in Xero with those on your bank statement.
• Step 5: Mark transactions as reconciled when they match, and complete the reconciliation process.

Watch

Watch the video below to learn more about how to start out with reconciliation in Xero:

Balance day adjustments are accounting entries made at the end of a financial reporting period (often referred to as "balance day") to ensure that all income and expenses are accurately recorded in the correct accounting period. These adjustments are necessary because some transactions may not have been fully processed by the end of the period or because certain expenses and revenues may need to be allocated over multiple periods.

Key Types of Balance Day Adjustments

Importance of Balance Day Adjustments

• Accurate Financial Reporting: Balance day adjustments ensure that financial statements (such as the income statement and balance sheet) accurately reflect the true financial position and performance of the business for the period.
• Compliance with Accounting Principles: Adjustments are necessary to comply with the accrual basis of accounting, which requires that income and expenses be recognized in the period in which they are earned or incurred, regardless of when cash is received or paid.
• Informed Decision-Making: Accurate financial data, facilitated by balance day adjustments, allows management and stakeholders to make better-informed decisions based on the true financial health of the business.

Watch

Watch the video below to find out more about adjusting entries in accounting:

Making Adjustments in MYOB

For Prepayments

• Step 1: Navigate to "Accounts" in the main menu and select "Record Journal Entry."
• Step 2: Enter the date of the adjustment (typically the end of the financial period).
• Step 3: In the journal entry:
  • Debit the relevant expense category (e.g., Insurance Expense) for the portion of the prepayment that applies to the current period.
  • Credit the Prepaid Expense category for the same amount.
• Step 4: Add a memo or description to clarify the purpose of the adjustment.
• Step 5: Click "Record" to save the journal entry.

For Accruals

• Step 1: Navigate to "Accounts" and select "Record Journal Entry."
• Step 2: Enter the date of the adjustment.
• Step 3: In the journal entry:
  • Debit the appropriate expense category (e.g., Wages Expense) for the amount incurred but not yet paid.
  • Credit the corresponding liability category (e.g., Accrued Wages) for the same amount.
• Step 4: Include a memo or description for clarity.
• Step 5: Click "Record" to finalize the entry.

Making Adjustments in Xero

For Prepayments

• Step 1: Go to "Accounting" in the main menu and select "Manual Journals."
• Step 2: Click on "New Journal."
• Step 3: Enter the date of the adjustment (typically the end of the financial period).
• Step 4: In the journal entry:
  • Debit the expense category (e.g., Insurance Expense) for the portion of the prepayment applicable to the current period.
  • Credit the Prepaid Expenses category for the same amount.
• Step 5: Add a description or narration to explain the purpose of the adjustment.
• Step 6: Click "Post" to record the journal entry.

For Accruals

• Step 1: Go to "Accounting" and select "Manual Journals."
• Step 2: Click on "New Journal."
• Step 3: Enter the date of the adjustment.
• Step 4: In the journal entry:
  • Debit the appropriate expense category (e.g., Wages Expense) for the amount incurred but not yet paid.
  • Credit the corresponding liability category (e.g., Accrued Expenses) for the same amount.
• Step 5: Include a description or narration for clarity.
• Step 6: Click "Post" to finalise the entry.

Reviewing and Finalising

• Review: After posting your journal entries in either MYOB or Xero, review your financial statements (such as the Profit & Loss Statement and Balance Sheet) to ensure that the adjustments have been accurately reflected.
• Reversal Entries: In the next period, you may need to reverse these entries to properly reflect the ongoing financial position. This can be done by creating an opposite journal entry at the beginning of the next period.

By following these steps in MYOB and Xero, you can effectively use general journal entries to make balance day adjustments for prepayments and accruals, ensuring that your financial statements accurately reflect the financial position of your business at the end of the reporting period.

MYOB

When processing transactions in MYOB, it’s essential to regularly review the system output, verify the accuracy of data input, and make adjustments for any detected processing errors. Here’s how you can do this effectively:

Review System Output Process

1. Generate and Review Reports:
   • Profit & Loss Statement:
     • Go to the "Reports" menu and generate the Profit & Loss Statement.
     • Review the report to ensure that all income and expenses are recorded accurately and reflect the correct period.
     • Balance Sheet: Generate a Balance Sheet report to check the accuracy of asset, liability, and equity accounts. Ensure that all balances align with your expectations.
     • General Ledger Detail Report: Review the General Ledger Detail report to see a breakdown of all transactions recorded in each category (formerly accounts). This helps identify any unusual or incorrect entries.
   • Transaction Journal:
     • Review Transactions:
       • Go to "Accounts" > "Transaction Journal."
       • Review the list of transactions for the relevant period. Check for any unusual entries, incorrect amounts, or misclassified transactions.
       • Filter the transactions by type (sales, purchases, payroll, etc.) to focus on specific areas where errors are more likely.

Verify Accuracy of Data Input

1. Bank Reconciliation:
   • Navigate to "Banking" > "Reconcile Accounts."
   • Reconcile the transactions recorded in MYOB with your bank statements. Ensure that each transaction is accurately reflected in both the system and the bank statement.
   • Identify and correct any discrepancies, such as missing transactions, duplicates, or incorrect amounts.
2. Customer and Supplier Reconciliation:
   • Accounts Receivable:Compare your MYOB Accounts Receivable with customer statements to ensure all sales invoices and payments are correctly recorded.
   • Accounts Payable: Reconcile your Accounts Payable with supplier statements to verify that all purchase invoices and payments are accurate.
3. Data Entry Verification:
   • Check Sales and Purchases Entries: Review individual sales and purchase entries to ensure they have been correctly entered with the right dates, amounts, and categories.
   • Payroll Verification: For payroll transactions, ensure that all employee payments are accurate and that payroll deductions, taxes, and other withholdings are correctly calculated.

Make Adjustments for Detected Processing Errors

1. Correcting Transactions:
   • Edit or Reverse Transactions:
     • If you find an error in a transaction (e.g., wrong amount, incorrect category), locate the transaction in the "Transaction Journal" or relevant module (e.g., Sales, Purchases).
     • You can either edit the transaction directly or, if necessary, reverse the transaction and re-enter it correctly.
   • Journal Entries:
     • For errors that require adjustments rather than corrections to individual transactions, use the "Record Journal Entry" function under "Accounts."
     • Make an adjusting journal entry to correct the balances in the affected categories.
2. Re-run Reports: Once corrections have been made, re-run the relevant reports (Profit & Loss, Balance Sheet, etc.) to ensure that the adjustments are correctly reflected and that the financial data is now accurate.
3. Documentation: Keep a record of any adjustments made during the review process for future reference and audit purposes. Note the reasons for the adjustments and the date they were made.

Xero

To review the system output process, verify the accuracy of data input, and make adjustments for any detected processing errors in Xero, especially in the context of processing transactions, follow these steps:

Review System Output Process

1. Generate and Review Reports:
   • Profit & Loss Statement:
     • Navigate to "Accounting" > "Reports" > "Profit and Loss."
     • Review the report to ensure that income and expenses are accurately recorded for the period. Check for any unusual fluctuations or discrepancies.
   • Balance Sheet:
     • Go to "Accounting" > "Reports" > "Balance Sheet."
     • Analyse the balances in asset, liability, and equity accounts to ensure they reflect the correct financial position of your business.
   • Account Transactions Report:
     • Generate the "Account Transactions" report from the "Accounting" > "Reports" menu.
     • Review this report to see a detailed list of all transactions in each account. This helps identify any incorrect entries or misclassifications.

Verify Accuracy of Data Input

1. Bank Reconciliation:
   • Navigate to "Accounting" > "Bank Accounts" and click on "Reconcile" next to the relevant bank account.
   • Compare the transactions in Xero with your bank statements to ensure every transaction has been accurately recorded.
   • Address any discrepancies, such as missing transactions, duplicates, or incorrect amounts, by matching or creating new transactions in Xero.
2. Check Customer and Supplier Transactions:
   • Accounts Receivable: Go to "Business" > "Invoices" and review outstanding invoices. Ensure that all sales invoices are accurately recorded and payments are applied correctly.
   • Accounts Payable: Navigate to "Business" > "Bills to Pay" and verify that all purchase bills are entered correctly. Ensure that payments have been properly recorded against the respective bills.
3. Review Payroll Transactions:
   • Payroll Reports: If you’re using Xero Payroll, go to "Payroll" > "Reports" > "Payroll Summary." Review payroll transactions to ensure that employee payments, taxes, and deductions are correctly calculated and recorded.

Make Adjustments for Detected Processing Errors

1. Correcting Transactions:
   • Edit or Void Transactions:
     • If you find an error in a transaction, such as an incorrect amount or wrong account, locate the transaction in the relevant module (e.g., Sales, Purchases, or Bank Accounts).
     • Click on the transaction to open it, and then either edit the details or, if necessary, void the transaction and re-enter it correctly.
   • Manual Journals:
     • For more complex adjustments that involve multiple accounts, use a manual journal entry. Navigate to "Accounting" > "Advanced" > "Manual Journals."
     • Create a new journal entry to adjust the affected accounts. Be sure to include a clear description of the reason for the adjustment.
2. Re-run Reports:Once corrections are made, regenerate the relevant reports (Profit & Loss, Balance Sheet, etc.) to ensure that all adjustments have been accurately reflected and that the financial data is now correct.
3. Documentation: Document any changes made during the review process, including the reasons for adjustments and the date they were made. This helps maintain a clear audit trail.

The end of financial year (EOFY) rollover is the process of closing out the current financial year and preparing your accounting system for the new financial year. This involves finalizing all financial records for the year, ensuring that all income, expenses, assets, liabilities, and equity are accurately recorded, and then transitioning the accounting system to the new financial year.

Key Aspects of EOFY Rollover

The EOFY rollover is crucial for maintaining accurate financial records, meeting legal and tax obligations, and ensuring that the business is ready to start fresh in the new financial year with accurate opening balances.

Legislative Requirements

In Australia, the end of the financial year (EOFY) comes with several legislative requirements that businesses must comply with. These requirements are designed to ensure accurate reporting, compliance with tax obligations, and proper financial management. Here’s a summary of the key legislative requirements for EOFY in Australia:

Compliance with these legislative requirements ensures that your business meets its obligations to the ATO and other regulatory bodies, helping to avoid penalties and ensure smooth operations into the new financial year.

MYOB

Performing an end-of-financial year (EOFY) rollover in MYOB according to legislative requirements is a crucial task to ensure your financial records are accurately closed out for the year and ready for the new financial year. Here's a step-by-step guide:

Prepare for the EOFY Rollover

1. Reconcile All Accounts:
   • Bank Reconciliation: Ensure all bank accounts are fully reconciled. Go to "Banking" > "Reconcile Accounts" and reconcile each bank account against the bank statements.
   • Accounts Receivable and Payable:Reconcile your accounts receivable and payable. Make sure all outstanding invoices and bills are accounted for and correctly recorded.
2. Finalise Payroll:
   • Process Final Payroll: Process all final pays for the year. Ensure that all employee payments, deductions, and taxes are correctly recorded.
   • Generate Payroll Reports: o Generate the required payroll reports, such as Payment Summaries (or STP Finalisation if using Single Touch Payroll), and ensure they are correct.
   • Lodge STP Report: o If using Single Touch Payroll (STP), finalize and lodge your STP reports with the ATO. Mark the payroll year as "Finalized" in the STP portal.
3. Review Financial Reports:
   • Profit & Loss Statement: Review the Profit & Loss Statement for the financial year to ensure all income and expenses are correctly recorded.
   • Balance Sheet: Review the Balance Sheet to ensure all asset, liability, and equity accounts are correct and reflect the true financial position of the business.
4. Backup Your Data:
   • Create a Backup: Before performing the rollover, create a full backup of your MYOB company file. Go to "File" > "Back Up" and follow the prompts to save a backup copy. Store this backup in a secure location.

Perform the End of Financial Year Rollover

1. Close the Financial Year:
   • Go to the Close a Year Wizard: In MYOB, go to "File" > "Close a Year" > "Close a Financial Year."
   • Review the Checklist: MYOB will present a checklist to ensure all necessary steps have been completed before closing the year. Review this checklist carefully. - Confirm Closing Entries: o MYOB will automatically post year-end closing entries, transferring net profit or loss to retained earnings. Review these entries to ensure they are correct.
2. Finalise the Rollover:
   • Complete the Rollover: Follow the prompts to complete the rollover process. MYOB will close off the old financial year and roll forward any balances to the new year.
   • Set Up the New Financial Year: o After completing the rollover, MYOB will prompt you to set up the new financial year. Review and confirm the start date for the new year.

Post-Rollover Tasks

1. Lodging Tax Returns: Use the finalised reports from the previous year to prepare and lodge your tax return with the appropriate authorities, ensuring compliance with legislative requirements.
2. Record Keeping: Keep all records from the previous financial year, including backup files, reports, and compliance documents, as required by law for audit and reference purposes.

Watch

Watch the videos provided in the playlist below to find out more about EOFY with MYOB:

Xero

Performing an end-of-financial year (EOFY) rollover in Xero according to legislative requirements involves several key steps to ensure that your financial records are accurate and ready for the new financial year. Xero automatically handles much of the rollover process, but there are still important tasks you need to complete. Here's how to do it:

Prepare for the EOFY Rollover

1. Reconcile All Accounts:
   • Bank Reconciliation: Go to "Accounting" > "Bank Accounts" and reconcile each bank account against your bank statements. Ensure that all transactions are accounted for and matched correctly.
   • Accounts Receivable and Payable:
     • Reconcile your accounts receivable by reviewing outstanding invoices in "Business" > "Invoices."
     • Reconcile your accounts payable by reviewing outstanding bills in "Business" > "Bills to Pay."
     • Ensure all customer payments and supplier payments are recorded accurately.
2. Finalise Payroll:
   • Process Final Payroll: Complete all payroll runs for the financial year. Go to "Payroll" > "Pay Employees" and ensure all payments, deductions, and taxes are accurately recorded.
   • STP Finalisation (Australia): If you're in Australia, finalise your Single Touch Payroll (STP) reporting. Go to "Payroll" > "Single Touch Payroll" > "Finalisation" and mark the payroll year as finalized for each employee.
   • Generate Payroll Reports: Generate and review payroll summary reports to ensure that all payroll data is accurate.
3. Review Financial Reports:
   • Profit & Loss Statement: Go to "Accounting" > "Reports" > "Profit and Loss" and review the report to ensure that all income and expenses are correctly recorded for the year.
   • Balance Sheet: Generate the Balance Sheet from "Accounting" > "Reports" > "Balance Sheet" to review the business's financial position, ensuring that assets, liabilities, and equity are accurately reflected.
   • Depreciation Schedule: Review your fixed asset register and depreciation schedule by going to "Accounting" > "Fixed Assets." Ensure all assets are correctly depreciated for the year.
4. Backup and Secure Data:
   • Export Reports and Data:While Xero automatically backs up your data, it’s a good practice to export key reports (Profit & Loss, Balance Sheet, Trial Balance) and save them for your records.
   • Secure Documentation: Ensure all EOFY reports, payroll summaries, and financial statements are securely stored as per legislative requirements.

Perform the End of Financial Year Rollover

1. Finalise the Accounts:
   • Final Adjustments: Make any final adjustments for accruals, prepayments, or provisions by creating manual journal entries if necessary. Go to "Accounting" > "Advanced" > "Manual Journals" to record these entries.
   • Lock the Period: To prevent further changes to the completed financial year, lock the period. Go to "Accounting" > "Advanced" > "Financial Settings" and set the lock date to the end of the financial year.
2. Close the Financial Year:
   • Automatic Rollover: Xero automatically carries forward balances into the new financial year. There’s no need for a manual rollover as in some other accounting systems.
   • Review Opening Balances: Check that the opening balances for the new financial year correctly reflect the closing balances of the previous year by reviewing the Balance Sheet for the new period.

Post-Rollover Tasks

1. Update Payroll Year:
   • Start the New Payroll Year:If you use Xero for payroll, update to the new payroll year by checking "Payroll" > "Payroll Settings" to ensure tax tables and other payroll settings are current for the new year.
   • Review Tax Codes: Ensure that any tax code changes or updates for the new financial year are applied correctly.
2. Set Up Budgets:
   • Create Budgets for the New Year: Go to "Accounting" > "Reports" > "Budget Manager" to set up your budgets for the new financial year. This helps with financial planning and performance tracking.

Compliance and Reporting

1. Prepare and Lodge Tax Returns:
   • Prepare Financial Statements: Use the finalised reports from the previous financial year to prepare your tax return. Xero’s reporting tools make it easy to compile the necessary financial data.
   • Lodge Tax Returns: Ensure that your tax returns are lodged with the appropriate tax authorities in compliance with legislative requirements.
2. Record Keeping: Store all EOFY records, including backup files, financial statements, and tax filings, as required by law for audit and reference purposes.

Watch

Watch the video below to find out more about Xero and Single Touch Payroll:

Quiz