hello, i have read article here but i dont understand them,
i use the software in my hospital, i give services to people in different componies then i send to then one bulk invoice, and they may pay after three month or more. to me it is an asset.
but i created an account in asset group using chart of accounts, then i directed all invoice to that account. the amount was negative value. and it had no effect in balance sheet. but when i directed all invoice to any account in income group the amount was positive as required and it was availble in account receivable but i have not received its just an asset. in my compony all loan i give to other compony its an asset to me and not income.
how to direct all loan i am providing to an asset accout and not income???
i think they will be available in income after i receive
Can you explain it better? It’s quite hard to understand your explanation. By the way… an account receivable is receivable and not received, so it’s an asset
yes @Davide account receivable is an asset, but the problem is, money to appear in account receivable you should create an invoice and at the botton of the invoice where to select an account you should select an account from income group. this makes that account in income group to increase the amount while i have not received yet its just an invoice which may not be paid. i want it to appear in account receivable as an asset and it should not have effects in income group accounts
This was incorrect. The account you select on a sales invoice controls where the credit side of the transaction is posted. Since you created and selected an asset account, the amount shows as negative because all asset accounts are debit accounts. See https://www.manager.io/guides/8965 for an explanation.
Yes it did. That asset account you created is a balance sheet account. If it became more negative, you were affecting the balance sheet. The reason the total assets did not change is because the debit to Accounts receivable was offset by the credit to your self-made asset account.
What you should do is select an income account. There, as you have seen, the effect will be positive.
You have not extended loans. You have raised sales invoices, which are demands for payment in return for goods or services delivered. A loan involves the giving of money for use by the other party with the expectation of repayment.
What you just described, @Hosea_Leonard, is the difference between accrual and cash basis accounting. See https://www.manager.io/guides/7129. If you use accrual basis, you have no choice—the invoice must appear in an income account (as a credit) to balance the account receivable (a debit).
You should understand that cash basis reporting still debits and credits amounts the same places. The difference between the two methods lies with when they are reported. Under cash basis accounting, the income will not be reported until you receive payment.
For a business as complex as a hospital, almost any accountant would recommend accrual basis accounting. Your local law may require it. And if customers do not pay their invoices, the proper thing is to write them off as bad debts. See https://www.manager.io/guides/14465. This will result in the loss being shown as an expense, reducing net income.