G/L Accounts Used by Order Entry
This topic describes the general ledger accounts used by the Order Entry program and tells you where the account numbers are assigned.
This page contains the following sections:
Inventory Control account sets
Project and Job Costing accounts
Inventory Control account sets
Inventory Control account. An asset account containing the total value of the inventory on hand (at actual cost). The account increases when you receive goods, and decreases when you ship goods.
The word "control" in the account name means that the account contains only totals, whereas the information stored by Inventory Control contains details on an item-by-item basis.
When you process all accounting entries correctly, the total cost of the inventory in the Inventory Control system equals the totals in the Inventory Control accounts in the general ledger.
Payables Clearing account. A suspense account to which Inventory Control posts the "other side" of the accounting entries for inventory you receive (and for previous receipts you return to suppliers).
Inventory Control normally generates credit entries to this account for inventory you receive; therefore, the account can be thought of as the accrued amount payable for goods received into inventory. Inventory Control debits this account when you enter receipt returns.
As you post the related vendor invoices in Sage ERP Accpac Accounts Payable, offsetting journal entries (debits) related to the inventory purchased are generated against the Payables Clearing account to clear the balance that is left in this account from posting the inventory receipt.
Adjustment Write-Off account. The account to which you post inventory adjustments and write-offs. Entries to this account are normally expenses (debits); therefore, the account number you specify should be in the expenses or cost of goods sold section of your general ledger.
Assembly Cost Credit account. The account to which you post the variable and fixed costs of assembling items. The program credits this account with the variable and fixed cost of assembly. You may want to create manual entries in the general ledger to redistribute the assembly cost credit to accounts such as labor costs.
Non-stock Clearing account. The account which you credit when you ship non-stock items, and debit when you enter shipment returns for non-stock items.
You can use non-stock items to handle specially ordered items which you do not stock in your inventory, and to handle service charges that appear on invoices.
Transfer Clearing account. This account is used for the additional cost amount in the Transfer form.
Shipment Clearing. Debited instead of Cost of Goods sold when shipping goods from Order Entry.
The Shipment Clearing account is required because the shipment and invoicing functions in Order Entry are separated. The COGS account is debited when you invoice the shipment.
Disassembly Expense. Used if you specify an expense amount when you disassemble items that were previously assembled in Inventory Control.
Physical Inventory Adjustment. The expense account that balances the change in inventory value when you adjust inventory quantities after making a physical inventory count.
Credit/Debit Note Clearing. Debited instead of the I/C Control account or the Damaged Goods account in Order Entry returns sent to Accounts Receivable. The G/L transaction credits the clearing account instead of COGS and A/R Control.
The Credit/Debit Note Clearing account is required because the inventory return and credit note functions in Order Entry are separated, with one side of the transaction going through the Accounts Receivable program.
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Inventory Control item categories
For each category that you add in Inventory Control, you specify general ledger account numbers for the five following accounts (Sage ERP Accpac Order Entry uses the Sales account, Returns account, and Damaged Goods account — Inventory Control does not use them):
Sales. A revenue account which Order Entry credits with the revenue from goods sold.
Returns. A revenue contra account which Order Entry debits to record the reduction of revenue caused when previously sold goods are returned or credit notes are issued.
Cost of Goods Sold. An expense account which Inventory Control automatically debits with the cost of goods sold, and credits with the cost of goods returned.
Cost Variance. An expense account in which Inventory Control records the cost variance between the actual cost and either the standard cost (for items using the standard costing method) or the most recent cost (for items using the most recent costing method) of inventory items sold.
Damaged Goods. A revenue contra account that is debited instead of Sales Returns whenever goods are returned as damaged in Order Entry.
Internal Usage. The default expense or asset account that is debited when an item in this category is used internally. You can override this account when you enter transactions.
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Miscellaneous charges
You specify the following accounts when you add miscellaneous charges to Order Entry.
Miscellaneous Charge Revenue. The general ledger revenue account to which amounts entered as miscellaneous charges are posted.
Miscellaneous Charge Expense. For job-related orders, Order Entry credits the expense account and debits the miscellaneous charge clearing account when you ship goods and run Day End Processing. (When you post the invoice, it credits the clearing account and debits cost of goods sold.)
Miscellaneous Charge Clearing. For job-related orders, the miscellaneous charge clearing account is similar to the shipment clearing account.
Order Entry debits the clearing account and credits the miscellaneous charge expense account when you ship goods (and run Day End Processing). It then credits the clearing account and debits cost of goods sold when you post the invoice.
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Project and Job Costing accounts
If you are processing job-related orders with Project and Job Costing, the following accounts can appear on the item detail lines, depending on whether or not you are using project invoicing.
Order Entry will also send information to Accounts Receivable and Project and Job Costing for the Overhead Allocated and Labor Burden accounts. You specify those accounts on the Account tab for the category in Contract Maintenance, but you cannot edit those accounts in Order Entry.
Revenue/Billing Account (orders). If the sales order is job-related, and you did not select Project Invoicing, you also specify the Revenue/Billings account for each order detail.
The default account number comes from Project and Job Costing and is used instead of the Sales Account specified for the item in the item category record.
WIP Account (orders). If the sales order is job-related, and you selected Project Invoicing, you also specify the Work In Progress account for each order detail.
The account number specified in Project and Job Costing will appear by default, but you can change it. (The level at which the WIP account is specified in Project and Job Costing depends on the project type and accounting method.)
COGS (Cost of Goods Sold) Account. If the order is job-related, and you did not select Project Invoicing, the program displays the default cost of goods sold account from Project and Job Costing for each order detail. You can change the account number.
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See also
Using Order Entry with Project and Job Costing
Setting Up Miscellaneous Charges
Entering Miscellaneous Charge Details