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Bills, invoices and transactions
MarioLlige
Member Posts: 5
Is there somewhere I can look up how bills, invoices and transactions relate to each other in Wave? Or maybe someone can tell me please?
I understand what each is, but I don't have enough data to work out if transactions are generated by bills and invoices. I'm guessing that they'll also be generated by activity (deposits & withdrawals) in my linked bank account.
I want to make sure that I'm not duplicating entries.
Thanks.
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@MarioLlige,
Bills and invoices are self created while transactions that go through the bank account are the evidence of those self created items. For example, you create an invoice because you provided a service to a client. Let's $1000. You create your invoice. Wave records the invoice as revenue (credit sales) and Accounts Receivable (debit asset). Now your client pays you the $1000. On the transaction register it would show up as green (debit cash). You would match the $1000 that came through the bank to the Receivable (invoice). Wave records it by increasing cash (debit cash) and reducing the receivable (credit Accounts Receivable). In essence it is just a reclass of balance sheet accounts because the receivable has been converted to another asset (cash). Bills work the same way just the opposite. You purchase items for your business. You create a bill. Wave records it as debit expense (however categorized) and a credit to payables (liability). In your bank account when you pay your vendor, the transaction comes through in black (credit cash) and you match against the bill (reduces liability). Again a reclass of just balance sheet account (debit liability credit asset). The income statement effects were already recorded when the invoice or bill was created. This is known as accrual accounting.
@Mikeg,
It was really helpful.
Thanks for your detailed answer.
Cheers
Mario
@Mikeg As always, your helping hand is much appreciated! You are an accounting angel for sure.
@MarioLlige Glad the Community has been a helpful resource for you!
@ChelseaK It has. It's good to know that it's here and that the people here are willing to help accountancy-challenged people like me.
@MarioLlige We're all in the same boat! Yeah, having this support network is not only super helpful, it's a great way to connect with like minded business owners!
If you don't mind me asking, what's your business? How are you finding your experience with Wave's software?
@ChelseaK I'm just starting a tutoring business aimed at high school students. No customers yet so I don't have a lot of data to practice with.
Wave seems generally easy to use. It's the terminology and accounting concepts I'm getting a bit lost with. I've downloaded the Fearless Accounting Guide; now I just have to find the time to go through it.
@MarioLlige it can definitely be a tad overwhelming at first so take it slow. If you do have any specific questions, you can always reach out in the community and someone would be happy to help
Cheers @AlexL. Slow is the only option I have for now.
Lots of other work setting up the business.