Paying and Outstanding Purchase Invoice Credits the Banks Account

Could someone help straighten me out on this. I am presently testing several functions in ERPNext and in general having good success. However, I have created an opening balance in a bank account (a substantial credit) and a purchase invoice including VAT and all goes well with an increase in liabilities through creditors.

However when I make the payment entry (make payment from the purchase invoice) the creditors liability reduces as expected and the VAT account looks fine, but the bank account is credited rather than debited.

Thus the more bills I pay the more money I have in the bank??


Thanks for elaborating your query.

As per the accounting standards, Bank is a Debit account, under Current Assets. It means, when receiving payment, Bank Account will be debited. When making payment, Bank Account will be credited.

While making payment, if your Bank Account is getting credited, that’s just fine. If Bank Account’s balance is increasing on Credit Entry, that indicates that you have wrongly added Bank Account on the liability side. Please check if that’s the case.

Thanks for the fast response…all is clear