This chapter explains how to structure the general ledgers in both accounting systems to accommodate the financial transfer processes.
Use the DBA chart of accounts for guidance
As you set up various accounts in your outside general ledger, refer to the DBA chart of accounts for guidance as to account locations, descriptions, and account classifications and groupings. The accounts flagged as ‘AA’ are the accounts designated in the Account Assignments screen that will be given cross-reference accounts in your outside general ledger.
Refer to GL posting specifications for reference
For details on how various processes post to the DBA general ledger, click the link below to review GL posting specifications.
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Screen Help – GL Posting Specifications
DBA account totals are cross-referenced and transferred to your general ledger
Account totals in the DBA general ledger are cross-referenced and transferred to corresponding accounts in your outside general ledger using the GL Summary Transfer screen.
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Accounting Periods
Use the GL – General Ledger Setup – Accounting Periods screen to create parallel accounting periods with those in your financial accounting system.
Asset Accounts
Make sure the following Asset accounts exist in your financial accounting system’s chart of accounts:
AR Invoice Transfer
Locate this account immediately following your Accounts Receivable account.
This account will act as a clearing account. When you create an invoice in your outside accounting system with a special AR Transfer Line Item ID, it will credit the AR Invoice Transfer clearing account. The balancing debit to the clearing account was created in the DBA invoice process, and will be transferred to your financial accounting system with the GL Summary transfer. The net result is that the AR Invoice Transfer account zeroes out and you are left with Accounts Receivable in your financial accounting system.
Inventory
DBA uses a single inventory account, so if you currently have multiple inventory accounts, you must designate one account as your inventory account. The other inventory accounts will be zeroed out and inactivated on system startup day.
Picked Not Invoiced
Locate this account immediately following your Inventory account.
Work in Process
Locate this account immediately following your Picked Not Invoiced account.
Liability Accounts
Make sure the following Liability accounts exist in your financial accounting system’s chart of accounts:
Received Not Invoiced
Locate this account immediately following your Accounts Payable account.
AP Invoice Transfer
Locate this account immediately following your Received Not Invoiced account.
This account will act as a clearing account. When you enter the supplier bill in your outside accounting system to this AP Invoice Transfer clearing account. The balancing entry was created in the DBA PO Invoice process and will be transferred to your financial accounting system with the GL Summary transfer. The net result is that the AP Invoice Transfer account zeroes out and you are left with Accounts Payable in your financial accounting system.
Sales Tax Payable
This is a current liability account.
Purchase Tax
If you use international VAT/GST style taxation, this is normally a Liability account. If you use USA-style taxation, this is normally an Expense account.
Income Accounts
Make sure the following Income accounts exist in your financial accounting system’s chart of accounts:
Sales
All invoice sales amounts will post to this account unless exceptions by item category or customer type are specified on the Exceptions sub-tab.
Shipping Income
Customer invoice shipping charges are credited to this account.
Shipping Cost (contra account)
Freight bills pertaining to customer shipments are debited to this account. Even though it is a cost, it is usually classified as an Income account because it offsets the Shipping Income account and is located directly adjacent to it.
Sales and COGS Exceptions
Sales and cost of goods sold transactions post to your default Sales account and default Cost of Goods Sold account. If you wish for a more detailed breakdown on your income statement, you have the option of assigning sales and COGS exception accounts based on Item Categories or Customer Types.
Item Categories
Sales and COGS posting by item category is used when your business model relates to the types of items you make instead of the types of customers you serve. Item categories are defined in the Item Categories screen and are assigned to items in the Stock Items screen or through the Data Import - Stock Items (Update) screen. Create an item category to correspond with each pair of Sales/COGS exception accounts and make appropriate item assignments.
Customer Types
Sales and COGS posting by customer type is used when your business model relates to the type of customers you serve instead of the type of items you make. Customer types are defined in the Customer Types screen and are assigned to customers in the Customers screen or through the Data Import - Customers screen. Create a customer type to correspond with each pair of Sales/COGS exception accounts and make appropriate customer assignments.
Exception Accounts
The next step is to create pairs of Sales and Cost of Goods sold exception accounts in DBA to correspond with your item categories or customer types. Make sure each such account has a corresponding account in your chart of accounts.
Account Assignments
The final step is to go to the Sales – Exceptions tab within the Account Assignments screen and select the Item Category or Customer Type option. All your item categories or customer types are listed on the screen. Specify a Sales Account and COGS Account as desired against appropriate lines.
Cost of Sales Accounts
Make sure the following Cost of Sales accounts exist in your financial accounting system’s chart of accounts:
Cost of Goods Sold
All invoice costs of goods sold will post to this account unless exceptions by item category or customer type are specified on the Exceptions sub-tab.
Accrued Service Labor Cost
When a sales order line is invoiced for a descriptor with a Descriptor Type of ‘LABOR’, this account is credited for the sales order line’s total estimated cost, with the corresponding debit made to Cost of Goods Sold or a COGS exception account. Locate this account at the end of your Cost of Goods Sold section.
Misc Sales Cost
When invoice costs are posted for a descriptor with a Descriptor Type of ‘MISC’, this account is credited and the offsetting debit entry is made to Cost of Goods Sold or a COGS exception account. Locate this account at the end of your Cost of Goods Sold section.
Inventory Adjustments
Most likely this account already exists in your chart of accounts. Make sure it is a Cost of Sales account.
Received Not Invoiced Adjustments
Locate this account immediately following your Inventory Adjustments account.
WIP Adjustments
Locate this account immediately following your Received Not Invoiced Adjustments account.
Expense Accounts
Make sure the following Expense accounts exist in your financial accounting system’s chart of accounts:
Misc Purchases
PO receipts for non-stock miscellaneous purchases get posted to this account.
Purchase Tax
If you use USA-style taxation, this is normally an Expense account. If you use international VAT/GST style taxation, this is normally a Liability account.
Final Step – Cross-reference your accounts
After your chart of accounts is finalized, you must cross-reference each of your account numbers with the corresponding account in the DBA chart of accounts. This enables the GL Summary Transfer screen to post DBA account totals to the appropriate accounts in your general ledger.
To do so, go to the GL – General Ledger Setup - Chart of Accounts screen and on the Detail tab select each DBA account and enter your corresponding account number in the X-Ref Account field.
