Management Accounts draw figures from the Trial Balance (TB). The TB records VAT separately from sales or purchase values. Management Accounts therefore display net values.
Gross figures, which include VAT, do not appear in this report layout.
Users often expect sales totals to match the full amount received at the till. The system splits each transaction into separate ledger postings. This structure produces a net value in Management Accounts.
How Transactions Post in the Ledger
When a sale is recorded, the system separates the transaction into different ledger accounts.
Example
Sales account
-100
VAT account
-20
Till or bank account
120
The ledger stores the sales value and VAT value in separate accounts.
Result in Reports
Because of this structure, reports display the following.
Sales value in Management Accounts
100
VAT value
Reported separately in VAT control accounts
Gross value
Not combined in Management Accounts
Why Gross Values Do Not Appear
Management Accounts pull balances directly from the Trial Balance.
The Trial Balance structure separates:
• Sales or income values
• VAT liabilities
• Cash or bank receipts
Since the TB holds net sales values, the Management Accounts report reflects those same net figures. The report does not combine sales and VAT into a single gross figure.
Why This Matters
The Trial Balance structure keeps sales values and VAT values separate. This supports accurate financial reporting and VAT liability tracking. Management Accounts follow this structure. VAT does not form part of the sales value shown in the report.