What Are Payments?
Payments are amounts actually paid by a business for what are called acquisitions by the ATO. It is good business practice to make all possible payments by cheque as the resulting account records are additional evidence of your transaction. Of course, this is not always practical and some payments will be made by cash.
If you make cash payments from cash receipts or from your own resources then it is important that you record the payments and have a good filing system for your receipts or invoices. There is a column provided for cash transactions. It is also common to make business payments by credit card. Treat credit cards as being like a bank account and use one of the spreadsheets in the GSTJournal for each credit card if practical. (There is some discussion on the use of credit cards - see Good Small Business Bookkeeping)
Entering Payments into The GSTJournal
Omit the GST relevant parts of what follows if you are not registered for GST.
Write down the date of the transaction (optional) and the date the payment is actually made, the name of the business or person to whom the money is paid, and the cheque or transaction number (if applicable) in the columns on the left side of the payments journal. The creditor code is optional but if inserted will allow a dissection by creditor in the creditors summary
If you are registered for GST then proceed to fill in the GST columns first. When filling in the GST columns it is important that you make the right GST decisions and to help you we have developed a graphic GST decision tree. The BAS will only be correct if the GST columns have been correctly entered. The error flags provided at the extreme left of the spreadsheet will indicate whether you are right or not.
A transaction is either an account (e.g bank) or cash column entry and this is determined in a special indicator column headed up Transaction Type. When something is purchased until it is paid for it is accrued and accruals can be flagged by using the date of transaction data entry field. When the good or service purchased is paid for use the date payment column to show this. The grand total of the accrual column, account and cash column equal the sum of the individual amounts included in the various dissections columns and the GST column.
If a cash payment is made mark the relevant transactions by entering a "C" or "c" in the transaction type indicator column to cause the transaction to appear in the cash rather then account column. Enter all payments as a negative in the Amount of Debit or Credit column.
At The End of The Month or on a Regular Basis
Check your account statement to find any payments shown on the statement but not written in the cashbook. Examples are bank charges and interest and amounts transferred from other bank accounts. Other examples include payments made directly from the bank to pay for loans, leases or perhaps insurance. Write any such payment found into the cashbook.