Analysis types are grouped into Ledgers. Each ledger contains many accounts. The ledgers group analysis for one of the following reasons:

1. The classification of expenses for management reporting.
2. Identifying expenses for inclusion and exclusion on the VAT Return.

For the purposes of a VAT Return, certain expenses

1. must be excluded from VAT Returns.
2. for the supply of goods and services from the EU must be reported separately.

Any expenses under the ledger “Non VAT expenses” excluded from VAT Returns. These expenses are not reported to HMRC for VAT purposes. It is important that only those expenses that are excluded from VAT are listed under this ledger.

Any expenses under the ledgers “Expenses (EU)” and “Cost of sales (EU)” are shown as supply of goods and services from the European Union.

Select Tools, Accounts, Analysis Types from the main menu bar. Press the new button, and set the ledger and account name in the dialog box. Press the Ok button.