Temporary Holding Account
Hi hdna
The name of the account is personal preference, my personal rule when creating a new account was to name it something easily identifiable when looking at reports.
We're not permitted to advise which tax code you should use for transactions, that's something you should check with your accountant.
But if you look at the transactions recorded in that process:
- Income and GST collected account are credited when you record the original invoice
- Income and GST collected account are debited when you record the return (negative) invoice
Effectively clearing the income and GST amounts as the sale no longer exists.
A Receive payments transactions credits the Trade debtors account and debits the bank account the full payment amount. No GST is recorded in a payment transaction as it's been accounted for in the sale invoice.
A Refund transaction debits the Trade debtors account and credits the bank account the full refund amount. No GST is recorded in the refund transaction as it's been accounted for in the return invoice.
The only difference in paying the refund electronically and the above process is that you're posting the refund to a holding account instead of the bank account so that you can process an electronic payment transaction.
I hope that helps.
Please let me know if you need further help.
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