En este artículo
This page explains how to correctly record supplier-related accounting transactions using the VAT cash method, both during the year and at year-end, using Banana Accounting.
It is a practical guide, following the introductory page on VAT on a cash basis, and is intended for VAT taxpayers who apply this method (with prior authorization from the relevant office).
This page describes only the operational transactions and does not replace the introductory page on the principles of VAT on a cash basis.
Transactions during the year with VAT on a cash basis
With the VAT cash method, VAT is determined only at the time of payment.
For this reason, suppliers are not managed as open items during the year.
In practice:
- costs are recorded when the supplier is paid
- the VAT code must be entered on the same line as the cost
- VAT becomes deductible only at the time of payment
Practical example – Payment of a supplier invoice
The following example shows a possible entry in Banana Accounting for a supplier invoice open as of 31.12.
A bank account is used to pay a supplier invoice from Rossi for CHF 1,200.
The entry is recorded as follows:
- Debit: cost account
- Credit: bank account
- VAT Code: VAT code (e.g. V81)
In this way, VAT is recorded only on the amount actually paid.
Why additional transactions are needed at year-end
Even if the cash principle is applied during the year, at the end of the fiscal year it is necessary to correctly determine the financial result of the year.
For this reason, as of 31.12, invoices received from suppliers but not yet paid must be recorded, so that the costs are attributed to the correct fiscal year, without anticipating the VAT deduction.
Accounts needed for open supplier invoices
To correctly record open supplier invoices at year-end, certain specific accounts must be created in the Accounts table.
Balance sheet accounts
- Suppliers on open invoices (Liabilities)
- VAT on open supplier invoices (Assets)
Profit and loss accounts
- Costs on open supplier invoices
These accounts allow for a clear separation of:
- the cost attributable to the year
- the VAT, which will be deducted only in the following year
Recording open supplier invoices as of 31.12
At year-end, invoices received from suppliers but not yet paid must be recorded as follows.
Accounting transaction
- First row
- Debit: Costs on open supplier invoices
- Amount: amount excluding VAT
- VAT Code: empty
2. Second row
- Debit: VAT on open supplier invoices
- Amount: VAT amount
- VAT Code: empty
3. Third row
- Credit: Suppliers on open invoices
- Amount: gross amount including VAT
- VAT Code: empty
No VAT code should be entered in these entries because the VAT is not yet deductible.
Closing open supplier invoices in the new year
At the beginning of the following year (01.01), year-end entries must be reversed to allow for the normal recording of payments.
Reversal transaction
- First row
- Credit: Costs on open supplier invoices
- Amount: amount excluding VAT
- VAT Code: empty
2. Second row
Credit: VAT on open supplier invoices
Amount: VAT amount
3. Third row
- Debit: Suppliers on open invoices
- Amount: gross amount including VAT
When the invoice is paid:
- the payment is recorded normally
- the VAT is deducted in the VAT report for the period in which the payment occurs
