Special Accounts are required to setup the company’s integration between the GL and the sub ledgers. Some special accounts are used as Control Accounts for reconciliation purposes, and others are used as default accounts for transactions if not specified anywhere else. 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 transactions are posted.
To add or modify a special account number, click on the cell in the Account No column and enter or select the desired account.
A set of special account groupings is available to display just those accounts related to to the selected group. Below is the full list of special accounts and the groups they belong to.
Current Earnings – [Special Accounts only] The current earnings balance is calculated automatically as sales and expenses are recorded, from 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 trial balance report, because it is a calculated amount.
Accounts Receivable – [Special Accounts, Accounts Receivable, Sales] The default AR Ledger account that is used when adding a new customer. There can be more than one AR account so the company can track and reconcile groups of customer receivables separately.
Accounts Payable – [Special Accounts, Accounts Payable, Purchasing] The default AP Ledger account that is used when adding a new vendor. There can be more than one AP account so the company can track and reconcile groups of vendor payables separately.
Sales (revenue) – [Special Accounts, Accounts Receivable, Sales] The default Ledger account that will be used when posting an invoice within the Accounts Receivable module, if the customer does not have one defined. It is also the account used for revenue when posting inventory Sales transactions, unless a different revenue account is selected within the Sales Department assigned to the inventory item.
Purchases (expense) – [Special Accounts, Accounts Payable, Inventory, Purchasing] The default Ledger account that will be used when posting an AP invoice within the Accounts Payable module, if the vendor does not have one defined.
Cash Receipts – [Special Accounts, Accounts Receivable] The default Ledger account that customer accounts receivable payments will be posted to.
Freight Charged – [Special Accounts, Sales] The Ledger account that freight will be posted to in sales invoicing.
Inventory – [Special Accounts, Inventory, Purchasing, Sales] The Ledger account that inventory will be debited to on receipts and credited on sales, with the total amount reflecting the overall inventory value. If inventory sales departments are used then this can be changed to another account, if you wish to separate valuation by different inventory departments.
Inventory Variance – [Special Accounts, Inventory, Purchasing] The Ledger account used when the purchase order receipt value does not match the accounts payable value. 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.
Cost of goods sold – [Special Accounts, Inventory, Sales] The Ledger account that Sales invoice cost of goods will be posted to. If inventory sales departments are used then this can be changed to another account, if you wish to track cost of goods by different inventory departments.
Sales Order Deposits – [Special Accounts only] The Ledger account that is used to post customer deposits in a sales order. Usually a current liability account is selected here.
Accrued Purchases – [Special Accounts, Inventory, Purchasing] The Ledger account that is used to post purchase accruals if a vendors invoice is not posted at the same time as receiving the inventory. For posted receipts, the inventory account is debited and this account is credited. Then when the vendor invoice is posted against the purchase order, the accrual amount is reversed and the Account Payable account is credited.
Accrued Freight Charges – [Special Accounts, Purchasing] 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 – [Special Accounts, Purchasing] Same as accrued freight except for Duty and Brokerage.
Freight Expense – [Special Accounts, Purchasing] 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 – [Special Accounts only] 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 – [Special Accounts, Accounts Payable, Accounts Receivable] 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.
EFT Clearing – [Special Accounts, Accounts Payable, Accounts Receivable] Using this account will reduce the volume of transactions posted to the Ledger bank account from Accounts Payable and Accounts Receivable. If an account is selected here, it will be used as an intermediary clearing account when posting AR batch customer deposits or AP batch vendor payments. Instead of posting each individual transaction to the Ledger bank account, they are instead posted here. Then a single transaction with a General Ledger source is posted that reverses this clearing account amount and posts to the bank account.
If this account is not used, then batch posting will create multiple Ledger transactions to the bank account, one for each customer receipt or vendor payment.
Non-Inventory – [Special Accounts, Inventory, Purchasing, Sales] If a miscellaneous item is added to a sales order, this account will be used in place of the inventory asset account.
Discount Taken – [Accounts Payable] The account posted to when an early payment discount is taken in Accounts Payable.
Discount Given – [Accounts Receivable] The account posted to when an early payment discount is given in Accounts Receivable.
Finance Charges – [Accounts Receivable] The Ledger income account used when Finance charges are posted in Accounts Receivable.
Write-off (expense) – [Accounts Receivable] The Ledger expense account used when a Write Off transaction is posted in Accounts Receivable.
Bank Account – [Bank Accounts] The default Ledger bank account used for payment transactions in Accounts Payable, unless the vendor has a different account assigned in the Payment field on the Billing tab.