25/11/2020 0 Comments
An organisation that supplies goods or services on credit to another organisation.
A supplier is also referred to as a vendor, manufacturer or distributor.
To account for goods or services on credit the following entries are made:
* DEBIT – purchases or expense account
* CREDIT – credit control account (supplier account)
Once payment has been made the following entries are applied:
* CREDIT – Bank Account or equivalent
* DEBIT – Supplier Account
When a supplier chases for payment of invoices this is called credit control.
It is vital to maintain supplier accounts ensuring timely payments are made.
The profit and loss report will differ depending on whether a business reports using cash or an accrual accounting.
In cash accounting the date of when payments were made or received is recorded.
In accruals accounting the date the invoices and bills were issued or when services were provided is recorded,
regardless of whether payment has been made.
Knowing the accounting system will ensure that supplier transactions are accurately recorded.