It may be useful for Trustees of funds registered for GST on a cash basis to understand the correct procedure for accounting for GST when paying Liabilities.
You should not allocate the GST when recording the Liability if your fund operates on a cash basis for GST.
When you pay the liabilities, you should create a Journal to DEBIT the total amount due and payable to the Accounts Payable account to which you credited the invoice.
The corresponding journal will credit the Bank or Cash account from which the payment was made.
You will then add additional lines to the Journal entry to CREDIT the expense account(s) to which the expense was originally allocated and DEBIT Account 2-1000 GST paid.
The invoice for ABC Accounting that was entered above as:
Would require the following journal entry when paid:
