Open item accounting

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The open item accounting is a simplified version of the accounting system for small businesses .

During the year, incoming and outgoing invoices are not posted, but only stored in a folder of the respective supplier or customer . The open items of the current account , i.e. the receivables and liabilities towards the individual business partners, are therefore not recorded in the books during ongoing business operations. The record-keeping obligation is still fulfilled if the receipts are in paper form and kept in chronological order. The orderly collection of documents takes over the function of the journal .

First the payment is posted directly against a G / L account , similar to a cash posting . In contrast to the conventional method, open item accounting therefore manages the business transactions of buying and selling with only one instead of two postings . The workload in smaller accounting departments is reduced.

In this procedure, the accounts receivable and accounts payable are so-called dormant accounts . They only have to be posted in the annual financial statements , with the invoices that have not yet been paid on the balance sheet date . These open items are added up and posted to the dormant accounts to complete the books.

Open item accounting is permissible under Section 146 of the Tax Code if it complies with the principles of proper accounting .

comparison

Processing a sale in conventional accounting:

  • During invoicing : An outgoing invoice is posted, created and sent to the customer. Posting record : Receivables from revenues
  • When paying: The customer's incoming payment on the bank account is posted against the open receivable on the customer account. The open item is cleared and the claim expires. Posting record : bank to receivables

Procedure in open item accounting:

  • During invoicing: The outgoing invoice is created, sent and a copy is kept. A booking does not take place.
  • When paying: The incoming payment is posted to a revenue account, the invoice is added to the cleared item. Posting rate : Bank to proceeds

Demarcation

In some software systems ( e.g. DATEV ), current account management with the help of accounts receivable and accounts payable is also referred to as open item accounting. However, the administration, posting and clearing of the open items does not correspond to the simplified method described here, but takes place in the conventional way through ongoing recording of receivables and liabilities during the year.

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