Categorizing the debit and credit

whynot_weddingwhynot_wedding Member Posts: 1

Hi guys,

I'm new to WAVEAPPS and have alot of things to ask particularly on the categorizing all the debit and credit / inflow and outflow. The business have the norm activities like :

  1. rental
  2. utilities
  3. loan repayment
  4. invoicing

as far as i know, points 1-3 are the debit and 4 is the credit. but how do i categorize these things to ensure my cashflow is correctly align with the connected bank account.

thanks in advance!

Comments

  • SophiaSophia Administrator Posts: 147 admin

    Hi @whynot_wedding, welcome to Wave :)

    If I'm understanding your list correctly, #1-2 are expenses (things you purchase for your business) and #4 is income (money your business earns). In that case, if they're all coming out of the same bank account, say, your business checking account, you will just need to assign the expense transactions (rent, utilities) to the proper expense categories and the invoice income to the correct income category and Wave will take care of the proper debits/credits automatically. If the category you want to use doesn't already exist in Wave, you can create it any time under Accounting > Chart of Accounts.

    For example, you might categorize your utility payment to an account called "Utilities Payments" and your invoice income to an income account called "Sales." As long as the categories make sense to you and help you remember what each transaction was for, you're good to go!

    Loan repayment is a little more complicated because while it's technically an expense for your business (you pay it every month!) you're actually paying down the balance on a liability (a debt). This article has a really thorough overview of how to do that in Wave: https://support.waveapps.com/hc/en-us/articles/360000041883

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