ACCOUNTING OF PAYMENT TRANSACTIONS

Disbursement (payment) is the process of partial or complete settlement of a debt by payment (transfer to the counterparty) in money or other payment method.

When we consider the payment transaction in terms of the enterprise and the accounting transactions to be made in terms of the enterprise; It is the termination or reduction of the relationship subject to the transaction by recording the transactions previously recorded as resources by obtaining resources as receivables.

Payment transactions are made on the date when the transactions subject to payment are determined (at maturity). Again, if there is a transaction organized in advance, the payment transaction is made at the time of the transaction. If there is a maturity in the transactions in question, accounting records are made on maturity. Again, if the transaction in question is in cash, the date of the transaction is taken into account.

It should not be forgotten that, whether it is a cash transaction or a deferred transaction, an accounting entry cannot be made for the payment unless the payment is made.

In Turkey, the Uniform Chart of Accounts is used to follow the accounts and perform accounting transactions. In this chart of accounts, some accounts are designated as payment instruments. These accounts are

• 100- Cash Account,
• 101- Checks Received Account,
• 102- Banks Account,
• 103- Checks Given and Payment Orders Account (-)
• 121- Notes Receivable Account,
• 321- Notes Payable Account,
• 329- Other Trade Payables Account (Company Credit Card).

Among these accounts, 101- Checks Received Account is used for endorsement of a check received from another transaction as payment, while 103- Checks Given and Payment Orders (-) account is used for payment transactions by issuing a check itself. Again, 121- Notes Receivable Account is used for endorsing a bill received from another transaction as payment, while 321- Notes Payable Account is used for payment transactions by issuing a bill itself. While 100- Cash Account is the account used for payment transactions made with cash reserves in hand, 102- Banks Account includes the cash reserves in the company's bank accounts.

In addition to all these, there is also the credit card payment method, for which there is still no consensus and unanimity of use, and it has recently gained importance. While some professionals use 329- Other Trade Payables account, 336- Other Miscellaneous Payables account is used for company credit cards. This issue can be explained as follows; Since companies are commercial enterprises and payment transactions are generally due to their commercial needs, company credit cards should be followed in 329- Other Trade Payables Account.

All of these accounts are accounts that are credited against the transactions and debit accounts that are broken down below.

Since all of the above accounts are credited, they can cause an outflow of assets from the firm, while the following transactions cause an end of liabilities.

Payment Transactions Resulting from Financing Transactions

In some periods, financial needs of enterprises may arise or they may make some financing transactions due to a financial management transaction. For example; in cases where there is cash support, they can take out loans, issue bonds or promissory notes. Therefore, these transactions are considered as financing transactions. As a result of these transactions, liabilities arise. The accounts in which these transactions are recorded as payments are as follows according to the Uniform Chart of Accounts;

• 300- Bank Loans Account,
• 301- Payables from Financial Leasing Transactions Account,
• 303- Principal Installments or Interest on Long Term Loans Account,
• 304- Bond Principal, Debt, Installments and Interest Account,
• 305- Issued Bonds and Notes Account,
• 306- Other Securities Issued Account,
• 309- Other Financial Payables Account.

All of these accounts include financial transactions and in the payment records made to these accounts, the related transaction is debited in all of these accounts.

Payment Transactions Resulting from Purchasing Transactions

The biggest goal of businesses is to make a profit. In order to earn profit, it is necessary to engage in a number of commercial activities. Therefore, as a result of these commercial activities, raw materials, materials, commercial goods, tangible and intangible fixed assets or inputs required for production and selling them as a result of passing through the relevant processes are among the most important elements that will provide profit. Therefore, the goods or services received as a result of these purchasing transactions have a price. This price gives rise to the firm's obligation to pay for the purchase. The liability dimension of the accounts in which these transactions are followed is as follows according to the Uniform Chart of Accounts;

• 243- Capital Commitments to Associates Account,
• 246- Capital Commitments to Subsidiaries Account,
• 320- Sellers Account,
• 321- Notes Payable Account,
• 329- Other Trade Payables Account.

Of these accounts, 321- Debt Securities Account and 329- Debt Securities Account were given as payment instruments at the beginning of the subject. The fact that it is included in the payment transaction category here is that the payment is made with debt. In other words, the debt paid by issuing a promissory note may have ended an obligation, but that promissory note is also an obligation. When the promissory note is paid, it is recorded as payment in the debit of this account.

All of these accounts include purchase transactions and in the payment records made to these accounts, the related transaction is debited in all of these accounts.

Payment Transactions Arising from Equity Movements

The process of enterprises earning profits at the end of a certain period and distributing these profits to their shareholders is considered in this category. Therefore, the profit share (dividend) to be received by the shareholders of the enterprise is a liability for the enterprise. The account in which this transaction is followed is as follows in the Uniform Chart of Accounts;

• 331- Due to Shareholders Account.

The amount recognized after the related dividend calculations are made and the amount to be paid to the last shareholder after the necessary virement transactions are made is recorded in this account. Therefore, the payment transaction is also made through this account. As soon as the payment transaction is realized, it is written to the debit of this account and the dividend payment is made to the shareholder.

Payment Transactions Resulting from Personnel Payroll Transactions

Businesses may employ personnel to carry out their activities. Payments are made to the employed personnel in return for their work. While making these payments, some deductions are followed in the accounts to be paid to the necessary institutions and persons. Therefore, the liabilities arising as a result of this employment are followed in the following accounts in the Uniform Chart of Accounts;

• 335- Payables to Personnel Account,
• 360- Taxes and Funds Payable Account,
• 361- Social Security Deductions Payable Account,
• 369- Other Legal Liabilities Account.

From these accounts; net wages and minimum subsistence allowance to be paid to the personnel are recorded in 335- Payables to Personnel Account, taxes deducted are recorded in 360- Taxes and Funds Payable Account, social security deductions (premiums, etc.) to be paid are recorded in 361- Social Security Deductions Payable Account and Private Pension System deductions deducted from the personnel are recorded in 369- Other Legal Liabilities Payable Account. These transactions that are credited become the obligation of the entity and must be paid. As soon as they are paid, all of these accounts are debited.

Payment Transactions Resulting from Financial Transactions

Businesses submit declarations due to their transactions. Accrued taxes such as VAT, Corporate Tax, VAT 2, Recycling Participation Share Tax (Gekap (Bag Tax)) are accrued to the following account in the Uniform Chart of Accounts;

• 360- Taxes and Funds Payable Account.

The related tax is written to the credit of this account as soon as it is accrued and is a liability for the company after it is accrued. It must be paid. Therefore, this account is debited as soon as the payment of the credited taxes is made.

Payment Transactions Resulting from Advance Transactions

Payment transactions made without any liability for the company are followed in the following accounts according to the Uniform Chart of Accounts to be offset in the future;

• 159- Order Advances Given Account,
• 195- Work Advances Account,
• 196- Personnel Advances Account,
• 259- Advances Given Account.

These advance accounts are debited as soon as the payment transaction is realized. Depending on the type of the advance, it is deducted from the related account in the following periods. For example; the payment made to the personnel even though they do not deserve it is a personnel advance and is followed in 196- Personnel Advances Account. When the related personnel earns a salary, the salary earned is recorded in 335- Payables to Personnel Account. The salary recorded in the payables to personnel account is offset against the 196- Advances to Personnel account, which is the payment previously received, and the remaining amount is made as salary payment.

When the related advance account is offset with the related account, the advance accounts are written as credit and the related counter account is written as debit and the offsetting process is performed.

All payments made without any obligation are advance payments. It should be recorded in one of the relevant accounts above.

Payment Transactions Resulting from Deposit and Collateral Transactions

Businesses can receive and give prepayments, i.e. deposits, for the transactions they will make. If the enterprise makes a prepayment in return for the goods or services it will supply, it is the deposit given, and if it receives a prepayment for the sale of goods or services, it is the deposit received.

Deposits given in the Uniform Chart of Accounts are followed in the following accounts;

• 126- Deposits and Guarantees Given Account,
• 226- Deposits and Guarantees Given Account (long-term, more than 1 year).

Deposits received in the Uniform Chart of Accounts are followed in the following accounts;

• 326- Deposits and Guarantees Received Account,
• 426- Deposits and Guarantees Received Account (long term, more than 1 year).

Deposits given are the subject of payment transactions and deposits received are the subject of collection transactions. Deposits given are recorded as debit and deposits received are recorded as credit in the accounting records.