Financial Services

Financial Services

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Internal Sales

Internal Sales Flow Chart

The sale of a good or service between Queen's University departmental units where the price of the good or service includes a "mark-up" which provides for a recovery of other indirect costs incurred.  This is no net impact on the cash flows or net income of the university.

Account 450101 has been created to be used exclusively to record internal sales.  Regular expense accounts are to by used for the expense side of the transaction.  Financial Services will ensure on an annual basis, as part of the year-end financial reporting process, that internal sales offset internal expenses for the purposes of the university's external financial statements.

There should be no entry to Accounts Receivable or Accounts Payable.  The internal sale is recorded as a sale by the selling department and as a cost to the receiving department at the same time.

Financial Objectives

​Transactions must be recorded in the fiscal period in which the goods are received or the services are rendered.  The primary concerns are:

  • Reporting Accuracy - when payments are from research grants or other restricted awards, attention must be paid to the fiscal period of the award.
  • Compliance with funding limitations - where restricted funding includes an expiry date - as it does with most research awards - internal billing for goods or services to be delivered after the expiry date is a violation of award terms.
  • Sound internal financial management - recording transactions on a timely basis supports a unit's ability to monitor and manage their financial resources.

Recording Internal Sales

Internal Sales are processed using either a journal entry or other internal administrative system.  When billing for goods and/or services, records should include:

  • a customer order
  • a detailed record of services provided and the date of delivery
  • a reasonable description of the goods or services should be provided - if the charges are not based on a price per unit,  there should be an appropriate description of the level of services and the basis of arriving at the charge for that services
  • the date or period the services was rendered

Taxes

​Internal Sales are not subject to HST.  However, these sales normally include any taxes net of HST rebate that may have been paid or collected.  For more information on HST, go to GST/HST

Examples

1.  Ancillary Operation A sells services to internal university clients.  The direct cost of the service is estimated by Ancillary Operation A to be $45/hour.  Ancillary Operation A charges other departments/units $46/hour for the service to allow for a partial recovery of the unit's facility costs.  Because the price of the service generates a contribution to indirect costs of $1/hour, this would be considered an internal sale.  Examples of Internal Sales within the University are Food Services, Donald Gordon Centre bookings for university departments, etc.

 

2. Queen's Event Services runs conference registration for Queen's School of Business Undergraduate Program

Internal Sales Debit Credit Example