What is the general clearing account used for and how is it used?

  • The GENERAL CLEARING ACCOUNT is used for a multitude of things and is an extremely handy account to have in your Chart of Accounts.
  • The GENERAL CLEARING ACCOUNT is set up as a BANK Type Account in the Chart.
  • A Few examples of when we use the General Clearing Account are:
    • Recording the payment of “PAYG Withholding” as part of the BAS (so that it also gets tracked through the Pay Liabilities Tracker AND can also be entered as part of the BAS as one total figure).
    • Recording Contra Payments (ie, when you buy something from someone and sell something to them at the same time, and no cash transaction occurs)
    • Recording the GST correctly on Imported Goods
    • Dealing with bounced cheques (when they go in and out of the bank account)
    • Dealing with transactions you are querying with the bank (while you are waiting to hear from the bank)
    • Etc etc etc
  • The General Clearing Account, is a Clearing Account and doesn’t really exist so it should always be reconciled to $0.00 at the end of every quarter.
  • Everything that goes through it should involve two transactions, one transaction will Debit the General Clearing Account, and the other will Credit it, both for the same amount so that once both transactions are recorded they will zero each other out.