FAQ: Money Concepts

FAQ: Money Concepts

Why is my profit so much lower than my revenue?

Revenue is the total money in. Profit is what's left after you subtract the cost of goods sold and all operating expenses (salaries, rent, utilities, taxes, etc.). If you sell 1,000 AFN but it cost you 600 AFN to buy the goods, and your fixed costs are 300 AFN, your net profit is only 100 AFN. This is normal and healthy as long as your profit margin is positive.

If I make a sale, why doesn't my cash increase by the same amount?

Because sales can be on credit. When you invoice a customer, you record revenue immediately (per accrual accounting), but you don't receive cash until they pay. If they haven't paid yet, your accounts receivable increases, not your cash. Cash and profit are different; profit is based on transactions, cash is based on money actually received.

What is "accrual" accounting, and why does Usystems use it?

Accrual accounting records revenue when it is earned, and expenses when they are incurred—not when cash changes hands. So an invoice you create today is recorded as revenue today, even if the customer pays next month. This gives a more accurate picture of your business's actual performance. Most professional businesses use accrual accounting.

Can I delete an invoice I posted?

No, not directly. Once an invoice is published (moved out of Draft status), it is in the journal and cannot be deleted. Instead, you should issue a credit note or refund to reverse it. This preserves your audit trail and keeps the journal balanced. Deleting a posted transaction would leave orphaned entries.

How do I know if an old customer balance is actually uncollectible?

Usystems can't tell you that—it depends on your business judgment. But an aging report can help. If a balance is 90+ days old and the customer is unresponsive, it may be time to write it off as a bad debt. Consult with your accountant before writing off balances.

If I return goods to a vendor, how should I record it?

You can issue a debit note or record a credit against the vendor's bill. This reduces the amount you owe them. Usystems typically handles this via a refund or credit transaction linked to the original purchase.

Why do the numbers on my balance sheet and profit & loss statement seem disconnected?

They're actually closely connected through the retained earnings account. Your profit (or loss) for the period flows directly onto the balance sheet as retained earnings. If you show a 500 AFN profit this month, your equity increases by 500 AFN.

What's the difference between "Partial" payment and a partial refund?

• Partial payment: The customer owes you 1,000 AFN but pays only 500 AFN now. They still owe the other 500 AFN.
• Partial refund: You sold them 1,000 AFN but are returning/crediting only 500 AFN. The customer's new balance is 500 AFN.

How does currency exchange affect my profit?

If you sell in one currency and buy in another, exchange rate fluctuations affect your COGS and expenses. When you record a transaction in a currency different from your reporting currency, Usystems uses the exchange rate on that date to convert it. Over time, exchange gains or losses flow through your profit & loss statement.

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