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Management Accounts vs The Books

how do businesses in practice deal with the fact that management accounts may need to have things showing in different periods to the books/ Vat records?

eg invoice from supplier A relates to event on 28 Feb but invoice is dated 3 March?

Is it common practice to download the books into excel and then move things around? Surely most small businesses then have problems with the management accounts not actually reconciling to the books or balancing in terms of double entry?

Any light you can shed on this process would be much appreciated. My boss who is not an accountant currently gets our assistant to retype each Purchase Order and Invoice into an excel Tracker. Everything is then individually reentered into a cloud accounts package similar to basic sage.

Do any versions of Quickbooks deal with this problem automatically without entering everything twice?

Thanks in advance...

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By tom123
01st May 2012 07:28

There should only be one set of accounts, rather than two sets in parallel. There should be no difference in dates - management accounts follow the same accounting principles with presentational differences to statutory accounts. Are you able to get more reporting out of your cloud system?

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01st May 2012 08:22

Accruals

The example given is simple to deal with.  You accrue for it in February and reverse it in March.  If it happened at the year end, that's exactly how you would deal with it in the statutory accounts.

No need to make loads of entries, just keep track of late invoices in total and adjust the provision up and down each month end.  Same with stock, if movement is material and other accruals

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Single ledger

In my experience client small business owners have caused themselves real headaches by not using the source accounting information for producing management information.

Once data is exported out of an accounting system and into Excel for manipulation, one is introducing the potential for errors and mis-matching data. If this is going to be a monthly exercise, the potential for problems and/or wasted time and additional work is massive.

My advice to clients was always to run management reports directly from the original, source accounting data - the data that is being used to "keep the books" (and, eventually, produce the year-end accounts). If the accounting software is not capable of / suitable for producing the required management reports then the answer is to move to a better accounting package, not to apply an Excel sticking plaster to the problem.

This video: http://www.xero.com/cloud/ is clearly promoting Xero, but I think illustrates my wider point very well. Whatever accounting software flavour a client uses, it must be capable of providing adequate management information directly from the same ledgers.

With what other category of software would users accept a major limitation in capabilities and spend time and money on a workaround every month?

Adrian Pearson

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