Can someone here who have been using the pay slip function in Manager help out so that the salaries raised through the pay slip will be part of the cashflow statement without the need of it separating itself from other group of expenses.
What I am trying to say is that, when I use the pay slip as salary payment method, the cash flow statement does not add that to the other expenses to arrive at the net profit before tax. It is always separated, which I find it disturbing.
You are confusing the Profit and Loss Statement with the Cash Flow Statement. A payslip records the salary expense and the amount owed to the employee. That salary expense is already included in the Profit and Loss Statement when calculating profit. When the employee is later paid, Manager reduces cash and clears the Employee clearing account; it does not record the salary expense again.
The Cash Flow Statement explains movements in cash, not how expenses are combined to calculate net profit. That is why payroll-related movements can appear separately there.
If you are to use the pay slip function and you generate your cash flow statement, you will understand what I am talking about.
What I am trying to say is that, the salaries that are recognised in the profit or loss should be part of the net profit or loss before tax, which appears as the first line item in the cash flow statement. But Manager separate that line item (the salary) from the profit before tax and treat it separately, which is not supposed to be such.
If you are to use journal entries, for the salary payments and not the pay slip function, such a thing won’t happen in the cash flow statement.
So I am looking for a way that the salaries will be part of the profit / loss before tax.
I think the confusion is that you are using the indirect Cash Flow Statement but expecting it to look like the direct method.
With the indirect method, Manager starts with profit before tax. The salary expense from the payslip is already included in that figure and has already reduced the profit.
Manager then separately shows the movement in Employee clearing because the indirect method must reconcile accounting profit with actual cash movement. That separate line is therefore an adjustment, not salary being excluded from profit before tax.
Okay, thank you for the clarification.
I am really grateful.
