Aid in understanding a simple accounting question.

SOLVED

I do not have a very robust accounting system as of yet. I have thousands of products and no time to individually enter each transaction at this point. Basically I want to track my sales and taxes so that "folks don't throw rocks at me". When I do a daily sales journal entry (keep in mind that I do not have a scanner set up to auto enter sales into Sage), I am debiting my cash accounts and debiting my sales accounts to balance the entry... When I do so I end up with negative numbers in my sales. Now I expect that in the future I will turn these negatives in to positives by reducing the negatives by the then current inventory against the negative inventory and sending that to a cash account as the actual income. Does this sound even close to right?

HH

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  • 0
    verified answer

    Sales Revenue accounts are generally credited when posting sales. Crediting sales revenue increases the cash flow. Unless monies are actually being lost then it would show a debit balance. Which would then descrease the sales income revenue.  The cash accounts when posting sales is debited. Debiting a cash account increases the cash balances. While crediting cash account such as when payments or withdrawels are entered reduces the cash balance.

    When selecting inventory on a sales this credits the inventory accounts. This is because the inventory assets are being depleted at the time of sales. On the other hand when inventory is purchased this creates a debit to the inventory account. Debits to inventory accounts increase the asset value until the items are sold.

  • 0 in reply to Pamela-2583

    Ok. I think I have it right then. Thank you for your reply.

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  • 0 in reply to MasterTinkerer

    Also I apologize for my misstatement, I did mean to say I am debiting my cash accounts and crediting my sales accounts. As far as credit accounts, I don't offer credit personally but do process credit card payments. The amount of sale payed with credit cards goes into an accounts receivable account and gets cleared to the bank cash account less the fees which go to a credit processing fee expense account.