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4. Creating a Chart of Accounts
1) Concept
2) Create an account
3) Define the account
4) Set addresses
5) Set Customer, Supplier details
6) Set Product details
7) Link to documents
8) Account Balances
9) Web Settings
10) Create Trial Balance Number
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4.1 Concept
Creating a Chart of Accounts requires both a bottom-up and a top-down approach to arrive at the solution.
Unlike other ERP applications, with Acceptum you are not limited to a 10 digit account code.
Account codes can be up to 30 characters long - so instead of using a code, you can use the name of the account.
Within Acceptum 3 tiers need to be considered:
top - Financial Report Structure
middle - Trial Balance Structure
bottom - individual accounts
Top-down
Financial Report Structures need to consider the financial and management reporting requirements of the organisation. These range from internally defined management reports to external financial reports for statutory bodies like Companies House, Inland Revenue, Pension Authorities, etc. and these must take into consideration the latest legal requirements, Accounting Standards and Statements of Recommended Practise (SORP) or GAAP, etc.
The best method to achieve this top level structure is to take an existing report, and map its detail lines to Trial Balance Numbers. To achieve the necessary detail across all financial reports, there will normally be several Trial Balance Numbers mapped to each report row. As in turn there is normally several accounts mapped to a Trial Balance Number.
Data reported under Financial Report Structures can be filtered on a row by row basis using Analysis 1 Report Sets. This allows a single account (like Salaries and Pensions) to be used on several rows of a report structure but only report relevant 'department' data on each occurrence. This approach avoids the need for numerous Salary accounts just to get a departmental/main function Profit & Loss report.
Bottom-up
Within Acceptums unified ledger system 'Accounts' can be classified into 5 areas:
- products (stock items)
- customers
- suppliers
- other Balance Sheet accounts
- Profit and Loss acounts
This approach is suitable for small organisations with limited staff and resources, as it removes the need for reconciliations between control accounts, sub-ledgers or sub-systems; thereby directly increasing user productivity. With individual products, customers and suppliers, as main accounts within the ledger, they can be accumulated together via a single Trial Balance Number for each category, to produce the total value of stock, customer receivables and supplier payables, directly from the main ledger. Should sub-classifications be desired (eg. foreign currency customers and suppliers), this can be easily achieved by splitting a category across 2 (or more) Trial Balance Numbers. Then amalgmating them togther in a Financial Report Structure.
Other Balance Sheet accounts for - bank accounts, fixed assets, accumulated depreciation, sundry debtors, sundry creditors, accruals, prepayments, loans, VAT, corpoaration tax, etc. will be needed.
Profit & Loss accounts for - revenue/sales income, cost of sales, salaries, pensions, travel, rent, insurance, professional fees, office expenses, etc. will again be needed.
Each account needs to be assigned to a Trial Balance Number, so that they are accumulated correctly under the financial reports.
Remember - an account can only be allocated to a single Trial Balance Number.
Trial Balance Numbers are then assigned to detail reporting rows within financial reports. A Trial Balance Number can be used in many financial reports and assigned to as many financial reporting rows as required.
The art is in getting all the detail required within financial reports, without creating a voluminous Trial Balance structure.
The application is delivered with accounts (across all categories), a Trial Balance structure and several Financial Reports to help users get started. Users are advised to study existing accounts from the same category to help determine how to set attributes on new accounts.
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4.2 Create an account
Select the menu option Setup|Accounts to open the Accounts List window.
Right click on the window and select 'Add Main Record' to insert a record.
Type in the new account code. Then press F3 to open the Accounts Detail window.
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4.3 Define the account
Set the accounts:
- description to fully define the account
- Trial Balance Number - its place within the Trial Balance and Financial Reports
- Account Type - defines how the application uses the account
- whether 'Open Item Clearing' is required (on Balance Sheet accounts only)
- whether foreign currency amounts need revaluing (on Balance Sheet accounts only)
- User 1/2/3 are organisation defined fields - use them how you want
- general text to describe the accounts use and purpose, plus on-going information
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4.4 Set addresses
Click the Address tab, and then click 'Add Address'. Change the address code to the required code, and enter the full address. Put a tick in the 'Main' column on the row which holds the default address.
Numerous addresses can be held; so for a customer there may be different addresses for:
- quotes
- deliveries
- invoices
- statements
Use an address code to help distinguish how the address is used - i.e. QUTE, DELV, INV, STMT.
If you double click an address attribute, it will open the Address dialog, to provide a different input format.
Address information is only required for customers and suppliers; plus they may be useful on bank accounts.
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4.5 Set Customer, Supplier details
Only accounts that represent customers or suppliers need to have this information completed.
Click the Customer/Supplier tab, then:
- set a default VAT code for invoicing purposes.
- enter the Customers 'Credit Limit' (how this is used depends on System Parameters).
- Payment Term is narrative and is only copied into Sales Orders by this version.
- set Days to Clear to the number of days that the customer normally takes to pay invoices. Or the days that the organisation takes to pay its suppliers. This attribute is used to project Cash Flow within the ledger report of the same name.
- enter Customers/Suppliers VAT code; a statutory requirement for export customers within the EU.
- when the Customer/Supplier belongs to a group of companies - identify it here.
- set name of the Sales Rep. responsible for the customer within your organisation.
- set the default discount offered to a Customer on all Sales Orders - it can be changed on individual Sales Orders.
- set the default currency of the Customer/Supplier - this will determine the currency and pricing of Sales/Purchase Orders.
- the banking data is only used on Remittance Advices to suppliers, the information can be entered as narrative.
- enter the Customers website code and password if you maintain an active website for customers to log into.
- set the Address data for the various document types. If an attribute is left blank, the 'Main' address is used.
- set the Header and Footer Text data for the various document types. This information is used to place the respective text into documents sent to Customers/Suppliers
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4.6 Set Product details
Only accounts that represent products need to have this information completed.
Click the Product tab, then:
- set the Unit of Measure by which you stock and sale the product
- set the Tariff Code for statutory statistical reporting purposes
- set the product group a product belongs to
- set the weight and units of the product - if required
- set the Barcode (a EAN 13 digit barcode) for printing and warehouse control purposes
- enter the default Purchasing Information that is used when Buying Goods, Services by POs. The Last Purchase Price is maintained by the application as a product is invoiced; although it can be manually maintained at any time.
- enter the Sales Information that is used when the product is sold; see Selling to Customers. Completing this information will result in less work when a Sales Quote or Invoice is raised and yields consistent ledger postings. The Cost of Goods Sold account MUST be entered, otherwise an error will be encountered when posting to the ledger.
On Sale or Return products, the 'Preferred Supplier' becomes the actual supplier and the 'Last Purchase Price' becomes the products actual purchase price from the supplier. Refer to Sale and Return Stock items.
When System Parameters are set to use Price Lists, the Product tab changes. In place of the GBP and Euro sales prices a new tab is added - 'Sale Prices'.
Click 'Add Item' to add Price List/Currency combinations of product Sales Prices.
For manufactured or assembled products a standard Bill of Materials and Labour Operations can be built.
The Moving Average Cost of all sub-parts and assemblies are used to construct the top level Cost Price.
The Bill of Materials and Labour are used to provide an editable template of 'consumed' parts/labour hours when Product Assembly or Production Orders are used.
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4.7 Link to documents
Click 'Add Document' to insert a link to an external document. On the standard Open File window, select the document to be linked too, then click 'Link'. Double click the linked document to open the document launching the associated application.
Use this feature so that agreements, letters, etc. with the Customer/Supplier/Bank etc. are readily available.
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4.8 Account Balances
Click the Balances tab, to show which companies and financial years are using the account.
Select a line and press F4 to open the Monthly Movements window.
The Budget data comes from the Budget Version marked as 'Active' for the Company/Financial Year.
On navigation through the accounts, double click a Company/Financial Year row to refresh the Monthly Movements window.
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4.9 Web Settings
Acceptum data can be used to populate web pages via the XML Export facility.
A common approach is to have a web site showing products sold.
Full Product descriptions, links to pictures and sort codes/web page keys can be set in these attributes; exported in XML format; then uploaded to the web for incorporation into site pages.
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4.10 Create Trial Balance Number
Select the menu option Setup|Trial Balance Structure to open the Trial Balance Structure List window.
Right click on the window and select 'Add Main Record' to insert a record.
Type in the TB Number and description.
Alternatively, press F3 to open the Trial Balance Structure detail window to enter the data.
TB Numbers can be upto 8 digits long.
TB numbers should increment in progression through the Balance Sheet and Profit & Loss structure, ending with any memorandum type accounts for reporting headcount, vehicles used, square footage, etc.
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