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docs/docs.user.accounts.purchase_invoice.md
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@ -11,11 +11,11 @@ To make a new Purchase Invoice, go to:
or click on “Make Purchase Invoice” in Purchase Order or Purchase Receipt.
The concept of “Posting Date” is again same as Sales Invoice. “Bill No” and “Bill Date” help you to track the bill number as set by your Supplier for reference.
The concept of “Posting Date” is again same as Sales Invoice. “Bill No” and “Bill Date” helps to track the bill number as set by your Supplier for reference.
#### Accounting Impact
Like in Sales Invoice, you have to enter an Expense or Asset account for each row in your Items table to indicate if the Item is an Asset or an Expense. You must also enter a Cost Center. These can also be set in the Item master.
Like in Sales Invoice, you have to enter an Expense or an Asset account for each row in your Items table. This helps to indicate if the Item is an Asset or an Expense. You must also enter a Cost Center. These can also be set in the Item master.
The Purchase Invoice will affect your accounts as follows:
@ -36,17 +36,15 @@ To see entries in your Purchase Invoice after you “Submit”, click on “View
#### Is a purchase an “Expense” or “Asset”?
If the Item is consumed immediately on purchase or if it is a service, then the purchase becomes an “Expense”. For example, a telephone bill or travel bill is an “Expense” - it is already consumed.
If the Item is consumed immediately on purchase, or if it is a service, then the purchase becomes an “Expense”. For example, a telephone bill or travel bill is an “Expense” - it is already consumed.
For inventory Items, that have a value, these purchases are not yet “Expense”, because they still have a value while they remain in your stock. They are “Assets”. If they are raw-materials (used in a process), they will become “Expense” the moment they are consumed in the process. If they are to be sold to a Customer, they become “Expense” when you ship them to the Customer.
Note: In ERPNext, this conversion from “Asset” to “Expense” is not clear. As of the current version, you will have to manually convert an item from an “Asset” to “Expense” via a Journal Voucher. We know its a shortcoming and will be fixed in an upcoming version pretty soon.
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#### Deducting Taxes at Source
In many countries, your laws may require to deduct taxes by a standard rate when you make payments to your Suppliers. Under these type of schemes, typically if a Supplier crosses a certain threshold of payment and if the type of product is taxable, you may have to deduct some tax (that you pay back to your government, on your Supplier’s behalf).
In many countries, the law may require you to deduct taxes, while paying your suppliers. These taxes could be based on a standard rate. Under these type of schemes, typically if a Supplier crosses a certain threshold of payment, and if the type of product is taxable, you may have to deduct some tax (which you pay back to your government, on your Supplier’s behalf).
To do this, you will have to make a new Tax Account under “Tax Liabilities” or similar and credit this Account by the percent you are bound to deduct for every transaction.