Chart of Accounts

Chart of Accounts Setup

The single most important aspect of automated General Ledger processing is the setup of the Chart of Accounts.  The account number assigned to each account determines the order in which the accounts will print on the financial reports. You determine which accounts will be used as title accounts, as heading and posting accounts, or as total accounts. The format of the financial reports, such as line spacing and tabbing is all controlled by information that you will supply in each account file. 

Go to General Ledger > Chart of Accounts.

Account #

Each account must be assigned a general ledger account number.  Account numbers may contain up to 6 digits to the left of the decimal point, and 2 digits to the right of the decimal point.  However, you do not need to use all of those digits. For a simple chart of accounts (such as the sample chart of accounts that comes with The Farmer's Office), you can generally use 3-digit account numbers.

Account numbers may not be changed from this window.  If you need to re-number your chart of accounts, please contact Datatech customer support.

Description

Enter a description for this account.

Account Type

Select from: Title, Heading, Posting, or Total.

Title accounts are used for major groups, such as Assets, Liabilities, Cost of Goods Sold, Income, etc.

Heading accounts are typically used before a group of related accounts that are totaled on financial reports.

Posting accounts used for (what else?) posting transactions!  (The system prevents you from posting transactions to the other account types.)

Total accounts are used to subtotal accounts on financial reports.

Always Print

On financial reports, normally accounts will only be printed that have a balance.  Select this box if you want this account to always appear on your financial reports even if it has a zero balance.

Total Level

The Total Level setting allows you to set up multiple levels of subtotals for the financial reports. The total level must be set from 1 to 9.  The Total Level setting is only used for Posting and Total account types.  It is not used for Title or Heading accounts.

When the financial report print a total account, the total is calculated by adding together the balances of all posting accounts with a total level less than the total level of the total account, and the total accumulation starts over for all totals levels equal to or less than the total account's total level.

If you had trouble understanding that last sentence, don't worry.  It easier to understand how total levels work by looking at some examples.  First, here is a simple example of how total accounts work:

All of the posting accounts in this examples are set to total level 1, and the total accounts are set to total level 2.  When the Total Cash in Bank account is reached the total for these accounts, the total is printed, and the financial report starts the total level 1 "accumulator" over at zero   That means that the next total account (for Employee A/R) will only reflect the total of the Employee A/R group (even though they also have total level 1). 

Now imagine that the Total Cash in Bank account wasn't there; what would happen?  The "Total Employee A/R" account would print 29,375--the total of all of the cash in bank and the employee A/R accounts.

Here is more complicated example showing sub-totals:

In this example the Direct Labor accounts are all set to total level 1, and the Total Direct Labor prints out the sub-total.  The "Total Farm Labor" account is set to 3, however, so that means that it's total will include both the "Contracted Labor" amount and the total of all accounts in the "Direct Farm Labor" section.  The following posting accounts (chemicals and Crop Insurance) are set to total level three.  Since the Total Direct Crop Expenses account is set to four, its total includes all of the accounts listed.

Suppose instead of a single "Chemicals" account, we wanted to have different accounts for Fertilizer, Herbicides, and Pesticides, and a total account for all of the Chemical accounts.  In that case, the accounts in this group could all be set to 2, without affecting the total levels of the accounts around them.

Line Advance

Enter a number for the number of blank lines to print after this account on the financial reports.

Special note for total accounts:  By default, financial reports will automatically print a single blank line after every total account.  If you want to print more than one blank line, enter a 2 or higher.  If you do not want a blank line to print after a total account, do not enter anything for the line advance setting.  (Entering a zero will trigger the default behavior of printing a single blank line after the total account.)

New Page

Select this box if you want to start a new page when the financial reports print this account.  For instance, if you wanted the Balance Sheet to print a separate page for the Assets, Liabilities and Capital sections, you would check this box on each of the title accounts for those sections.  This setting can only be used on title and heading accounts; it will have no effect if selected on a posting or total account.

Tabs

This setting is used by the financial reports to indent the account descriptions.  Typically, when you have a group of accounts that are being sub-totaled, you would want to increase the tab setting for the accounts.

Report Type

Select either Balance Sheet or Profit or Loss.  Be careful to choose the correct setting; it can cause the General Ledger to be out of balance if an income or an expense account is mistakenly set to Balance Sheet.

Special Report

The Special Report Type is used to group accounts together for special financial reports.  When printing a financial report, you can choose a special report number, and only accounts with that number will be printed out.

If you have set up your chart of accounts for cost center reporting, you can enter “C” on the Special Report entry for total, heading, and title accounts to indicate that those accounts should be printed on a cost center report.  This eliminates the need to enter multiple titles, heading and total accounts for each cost center.

Normal Balance

Select either debit or credit, appropriate to the account type.  In general, the normal balance should be set to debit for Assets and Expenses, and credit for Liabilities, Capital, and Income accounts.

Budget

Enter a budget amount (for the entire fiscal year).

Cash Basis Acct

When printing a cash basis financial report, you can treat an account as an “accrual basis only” account.  By entering another general ledger account number for the Cash Basis Account, the program will move the balance on this account to the specified Cash Basis Account (only when printing a cash basis financial report).

For instance, for accrual basis, you might have a “Prepaid Land Rent” account in the assets section.  For cash basis reporting, you want this to appear in the expense section.  In this case, you can enter the “Land Rent” expense account as the Cash Basis Account for your “Prepaid Land Rent” account.

Print On Summary Report

Select this box if you want the account to print on a summary financial report.

Print On Summary Update

Select this box if you want the account's transactions to be printed on a Partial Summary General Ledger Update report.

Cost Center Required

Select this box if you want to require a Cost Center when using this account.

Report on 1099

When this box is selected, amounts expensed to this account on vendor checks or invoices will be included in the total amount reported on 1099's.  Deselect this box if you do not want amounts expensed to this General Ledger account to be reported on the 1099 (this applies to all vendors).

Report Formatting

If you want the account description to be printed in either bold and/or italic, select the appropriate box.

Active

Ensure that this box is selected for the account to be active. If it is deselected, the account will be inactive and not available for use.

Print

Click Print to open the Print Chart of Accounts window.

Print Chart of Accounts

This window will open when you click Print on the Chart of Accounts window:

Report Type

The Posting report will print a report listing the account numbers and descriptions for all Posting accounts.

The Detailed report will list all settings (account type, tabs, total level, etc.) for each account.  This is useful in diagnosing problems with financial reports not printing correctly due to incorrect settings in the Chart of Accounts.

The Formatted report mimics the layout your Chart of Accounts will have on a financial report, listed all of the accounts with the tab settings, line advance, formatting options, etc. applied.

Select Accounts

The chart of accounts can be printed for active, inactive, or all accounts.

Changing a G/L Account Number

To open this Chart of Accounts view, go to General Ledger > Chart of Account, then press Ctrl + G.

You can use this window to change G/L account numbers or edit additional information for multiple accounts.

1. Simply locate the G/L account you need to change.

2. Click into the G/L # column for that account and enter the new number for the account.

3. Use the down arrow to continue to the next line and save the new account number.

You can change a G/L account number after you have posted transactions to that number. When you change an account number in this window, it will automatically move all the current transactions with that number to the new account number you have entered.