Special Accounts are required to setup the company’s integration between the GL and the sub ledgers. It is important that these are selected carefully as this controls the company’s financial information. The user that sets these up should have a good understanding of accounting or have someone with that knowledge review these settings before posting anything.
Special Accounts
Current Earnings – The current earnings are calculated automatically as sales and expenses are recorded. The current earnings balance is, income minus costs and expenses. Current earnings start at zero at the beginning of each year. The amount is not shown in the account or on the trail balance as is a calculation.
Accounts Receivable – The default AR GL account that is used when adding a new customer. There can be more than one AR account so the company can track groups of customers receivables separately.
Accounts Payable – The default AP GL account that is used when adding a new vendor. There can be more than one AP account so the company can track groups of vendors receivables separately.
Sales (revenue) – The default account that will be used when adding an invoice directly into the accounts receivable account.It is also the default account used for inventory sales if it is not changed using inventory “Sales Departments”
Purchases (expense) – The default GL account that will be used when posting an AP invoice if a vendor does not have one set.
Cash Receipts – The GL account that customer accounts receivable payments will be posted to by default.
Bank Account – The default company bank account.
Freight Charged – The GL account that freight will be posted to in sales invoicing.
Inventory-on-hand – The account that inventory will be debited to on receipts and credited on sales. If inventory sales departments are used then this can be changed to another account for each department.
Cost of goods sold – The account that invoices will post cost of goods to. If inventory sales departments are used then this can be changed to another account for each department.
GST – The GST/HST collected account used to charge customers on invoices and AR entries. (Canada)
PST – The Provincial Sales Tax account charged to customers on invoices and AR entries. (Some Canadian Provinces)
Sales Order Deposits – The account that is used to post customer deposits in a sales order. This is usually set as a current liability account.
Accrued Purchases – The GL account that is used to post purchase accruals if a vendors invoice is not posted at the same time as receiving the inventory. The inventory account is debited and this account is credited. Then when the invoice is received the user goes into the purchase order and clicks the invoice button, and the accrual is reversed.
Accrued Freight Charges – This account is used to post the landed freight on a purchase order. The landed freight on a purchase order is added to the inventory value and credits this account with that same amount. When a freight bill is received the user manually posts the amount to this account. In theory this amount will zero out if the amount accrued and the freight are the same. Inevitably these amounts are not always the same so this account should be manually reconciled regularly.
Accrued Duty and Brokerage – Same as accrued freight except for Duty and Brokerage.
Inventory Variance – The account used when purchase order receipt value does not match the accounts payable entry. This account can either be a cost of goods or expense. Some companies like to set this account as an asset and then manually disperse the variance to other accounts monthly.
Freight Expense – The default account used for freight expense on a purchase order if the freight is entered on the footer of a PO (not accrued freight). There is a company setting that makes the PO footer freight add to the value of the inventory instead of posting to freight expense. (Company Settings/Inventory/Enable Landed Costs)
Retained Earnings – When a year end is processed, the current earnings from ‘Last Year’ are rolled into this account. Posting can be made to this account if a closed year needs to be adjusted.
*Currency Gain/Loss – When there is a difference in the currency rate from when an invoice in AP or AR is entered and when it is paid that amount gets posted to this account when posting the payment. This account is also used to post the difference when ‘Currency Revaluation’ is performed in the GL.
Billing
(These are read only and set above)
Accounts Receivable
Sales (revenue)
Freight Charged
Inventory-on-hand
Cost of goods sold
GST
PST
AR Accounts
(Most are read only and set above)
Accounts Receivable
Sales (revenue)
Cash Receipts
Currency Gain/Loss
EFT Clearing – This account will be used to clear customer deposits in AR batch and then post a single transaction to the bank.
Optional Entry – This account will be added as an additional account when entering an invoice. The user can always add any account to an AR entry but if there is one common one used then add it here.
Finance Charges – The GL income account that will be used when adding finance charges in accounts receivable.
Discount (CR) Given – The account that is used when an early payment discount is given in accounts receivable.
Write-off (expense) – The account used when an AR entry is written off.
AP Accounts
(Most are read only and set above)
Accounts Payable
Purchases (expense)
Bank Account
Currency Gain/Loss
Discount Taken – Account used to post early payment discounts in accounts payable.
EFT Clearing – If this account is filled in, then AP batch paybles will clear the payments to this account and then post a single transaction to the bank.
Point of Sale Accounts
Cash Receipts – Set above
Optional Entry 1 – 6 – Add up to 6 additional payments that are used in invoicing and POS.