Claim (bookkeeping)

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How I usually incorporate a claim or vordering in an administration, e.g., around invoicing:

Send an invoice

Account kind | Debet - Balance     |  Credit - P&L    | Credit - Balance
Account      | Accounts receivable |  Revenue         | VAT to disburse
             | (debiteuren)        |                  |                       
Figure       | <amount incl. VAT>  | <amount ex. VAT> | <VAT amount>

When I wrote this article, I found it hard to grasp that accounts receivable is a debet balance account: As a rule of thumb, debet balance accounts are for me like what you do with the stuff that you got on the left, and accounts receivable doesn't always look like that, at it is doesn't always look like I am doing something with it. However, it does make sense now: It's capital tied-up with your customers, and that's very real

Income statement

In The Netherlands, there are two systems for bookkeeping: Cash-based and invoice-based. An example of a cash-based system, is selling stuff on a market. In this case the bookkeeping is based on actual cashflows.

The invoice-based bookkeeping system is the most common: Bookkeeping is primary based on invoices. E.g.: Profit is recognised by virtue of a invoice being send, not the reception of the corresponding cash. This kind of bookkeeping is probably by far the most common. All articles on this wiki assume a invoice-based bookkeeping system:

Within the invoice-based bookkeeping system, sending an invoice directly affects the income statement: It's the primary revenue-generating bookkeeping mutation.

Balance sheet

Sending an invoice, impacts the balance sheet:

  • Accounts receivable is a form of asset
  • Through the equity equation, equity is affected: Equity = Assets -/- Liabilities → Equity increases.

Receive payment

Receiving payment for the invoice send above, is easy to incorporate in an administration. It's just an exchange between two debit balance accounts:

Account kind | Debet - Balance     | Debet - Balance
Account      | Accounts receivable | Bank account
             |  (debiteuren)       |
Figure       | <-amount incl. VAT> | <amount incl. VAT>

Income statement

Profit was already booked at the moment the invoice was introduced in the administration - No changes here.

Balance sheet

  • On the balance sheet, there is a mutual change between two debit posts: From accounts receivable to bank account - Quite easy.
  • VAT has also already been addressed at the moment the invoice was introduced in the administration.