Special Ledger Number and Default Chart of Accounts
This page shows the default ledger accounts that the system automatically posts to. They have been entered according to standard accounting principles. Note that some of the fields are optional and are not required to be filled in. It is not recommended to modify these accounts unless you are absolutely certain you know how your accounting will be affected (if in doubt, call System Five technical support for assistance).
Note the "Select a Country" option. You can select what county you are in, and then press the Create Default Chart of Accounts button to set the chart of accounts automatically for you. This is much easier than manually editing each account. If this button is greyed out it means that either you have not selected a Country or that there are already some account numbers created. You can override this by turning on Supervisor Mode.
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Accounts Receivable: If you are taking payments on account or layaway's or work orders you will need this account. It should be an asset number, however if you wish deposits on work orders or layaway's to go to a liability number instead see the Deposits on Work Order Account. Do not post any amounts to this ledger number through journal entries, or bills except for the starting Journal Entry.
- Accounts Payable: This is the account that all bills are posted to. When a cheque is created, the amount of the cheque is deducted from the Accounts Payable. To not post any amounts to this ledger number through journal entries or Invoices except the starting Journal Entry.
- Accounts Payable Foreign: If you have a foreign bank account, you can designate each supplier as being a foreign or local supplier. Bills and cheques for foreign suppliers is posted to the Foreign Accounts Payable and the Foreign Bank Account. The value of this account is in the foreign currency. You will need a Foreign Bank Account and a Foreign Holding Account. See Foreign Bank A/P for more information.
- Main Bank Account: This your main bank account that you are using for posting Accounts Payable Cheques. If you are not using the Foreign Accounts Payable bank you can change the bank when you post cheques.
- Foreign Bank: This is your foreign bank account used in conjunction with the Foreign Accounts Payable. The value in this account is in the Foreign Currency.
- Cash Clearing: This account is used to hold all cash, cheques, and credit cards received from sales. It should also hold the value of your float. At any time the value of this account should represent your cash on hand (in the till), except your petty cash. When you make a bank deposit, the amount of the deposit should be removed from the cash clearing account into the appropriate banking or credit card account. After each deposit, the cash clearing account should only show your starting float value.
- Payments Received: This account is normally the same as Cash Clearing. It is the cash clearing account that all payments on account are deposited to.
- Deposits on Work Orders: If your business is one where you take a deposit on a special order, or an invoice that will remain open for several weeks you can specify a Liability account here. Some companies prefer a liability account because if you can not deliver the goods, you owe the money back. When a work order or layaway is converted to a completed invoice the money is transferred out of the liability account into the accounts receivable account. If your work orders are of short duration, and you do not wish to use this account, please leave it blank. Using the Deposit on Work Orders account makes the accounting and reconciliation a little more complicated. You should not change or remove this account if you have already taken payments on Work Orders.
Sample entries using the Deposit on Work Order
Deposit
Account Book Month Description Debit Credit
2020 2002-06 WO Deposits $50.00
1020 2002-06 Cash Clearing $50.00
After Converting to Invoice
Account Book Month Description Debit Credit
2020 2002-06 WO Deposits $50.00
1020 2002-06 Cash Clearing $50.00
2020 2002-07 WO Deposits $50.00
1050 2002-07 Accounts Receivable $50.00
- Paid Out Clearing: This is the account that Paid out invoices will clear to. At the end of the day this amount should be cleared to the appropriate account such as office supplies or freight. The point of sale transaction report will give you a list of paid out invoices for each day end.
- A/R Interest Account. This should be an Income account that you want interest on invoices to be posted to. You can automatically calculate and create interest invoices using the Create Interest Invoices routine.
- Inventory Account: This account is the holding account for all inventory on hand including all landed charges such as duty and freight. You can post each category to a different inventory account if you wish, but it is not required nor recommended as the value of inventory on hand can be reported many other ways.
- Retained Earnings: This account should be in the owner equity range. Do not post anything into this account except for the starting journal entry. Current earnings will automatically clear to this account at each year end.
- Duty: This account is no longer used.
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