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Chart of Accounts FAQs
Summary: Frequently-asked questions about setting up G/L accounts in Clients & Profits. General Ledger accounts are the foundation of your financial statements. Each account (of which you can have hundreds) represents a specific, meaningful dollar amount for your assets, liabilities, equity, income, and expenses.
Q. Am I stuck using the standard Clients & Profits chart of accounts?
No, your chart of accounts is fully customizable. There is no rigid, pre-formatted chart of accounts in Clients & Profits. Every account you create is user-defined, containing a custom number and description. Every account is identified by a unique number, which is used throughout Clients & Profits to enter debit and credit amounts into accounting records. You can freely delete or edit any of the sample account numbers created with a new database. However, do this before posting any accounting records that use these account numbers, otherwise it take more work to change account numbers or delete an account (see the next question).
Q. Is it possible to change account numbers once they're used?
Yes, but not quickly. An account number can't be changed, nor can the account be deleted, if it has a balance (on the trial balance) or activity (i.e., debits or credits in the G/L). Changing an account number with a balance or activity is done by creating a new account with the number you want, then making journal entries moving the net activity for each accounting period to this new account number from the old account number (can utilize the Transfer Account Balances feature). Once the old account has a zero balance, mark it inactive so that it can't be used. Update any preference or task settings to reflect the new account. Then, after closing the year, when all the G/L debit and credit detail is purged from periods Beginning through 12, the old account can be deleted (in fact, the close year process automatically deletes inactive accounts with a zero balance and no activity). Because of the work involved to change account numbers, make sure you've carefully considered your numbering system before entering data.
Q. Can G/L account numbers contain letters?
No. The account number is a numeric field, so it can't contain letters or special characters.
Q. What are the two digits to the right of the account number?
Those two digits normally represent the department (departments aren't required). They track department costs, such as rent, supplies, and salaries. They are different than profit centers. Profit centers are used to track performance of different business units or divisions within the agency. Departments exist within profit centers (e.g., salaries expense for the San Diego office). However, if you will not be using departments, many agencies will use the extension to match their profit center ID (e.g. 10 is the San Diego office profit center ID, so accounts with a .10 extension are the San Diego accounts). If no such account number breakouts are needed, then use the .00 default extension on all your accounts.
Q. Do I have to include department numbers on my G/L account numbers?
No. Departments are optional. An account number that ends with ".00" has no department.
Q. Are there any limitations to G/L account numbers?
Yes. A G/L account number shouldn't exceed 6 digits to the left of the decimal. Each account also has an optional 2-digit department suffix, for a total of 8 digits (for a total of 9 characters including the decimal). C&P performs an error check to prevent you from adding an account longer than 9 characters. As well, an account can't begin with a zero and can't contain letters, dashes, or other special characters.
Q. Why can't I delete an inactive account that has no balance?
An account can't be deleted if it has activity, even if the balance is zero. For auditing reasons you need that G/L account as long as there are journal entries in the General Ledger for the account. Once these JEs are purged by the year-end closing procedure, the account can finally be deleted.
Q. Does the account number affect the way financial statements are subtotaled?
The account number doesn't affect subtotaling on financial statements. Financials use the account class (i.e., asset, liability, etc.), and sub-class (i.e., current assets, etc.) to make sub-totals. However, accounts are sorted by account number within these groups.
Q. Can I set up G/L accounts for clients and jobs
Yes, but it's not recommended and unnecessary. Clients & Profits already uses the job tickets and tasks to produce job and client profitability reports, not the General Ledger. This means the General Ledger can focus on the agency's overall profit and loss. Creating and managing accounts for every client is complicated and prone to error. As well, each job related accounting record (job billing and job cost invoice) is posted with a job number and client number into the general ledger. You can print audit trails by client and job number, and print gross margin income statements by client and job number, without adjusting your account numbers to reflect individual clients or jobs.
Q. Are profit centers required?
No. An account number doesn't need a profit center, but depending upon your office structure, they might be necessary. To set up Profit Centers, choose Setup > Chart of Accounts then click on the Profit Centers link.
After setting up profit centers, there is an option on each account to designate a profit center. It's not literally part of the account number and can be freely changed at any time. Moving an account into a different profit center is easy, choose Setup > Chart of Accounts then double-click on the account you wish to edit and change the profit center value. Given how agencies often reorganize themselves, this option makes it easy to control how your financial statements appear, which have the option to print them for one or all profits centers.
Q. Where do I enter the profit center in a G/L account number?
The profit center is not necessarily part of the G/L account number. Instead, it is an attribute of the G/L account. It's simply a category you choose that's used for grouping and sorting financial statements (it also has an impact on which tasks can be added to job tickets if you've fully implemented profits centers to the job and task table level). If an account name is generic, like Office Supplies, to help immediately identify the profit center, you can include it within the account number as the last two digits to the left of the decimal point. Some agencies will use the two digit department extension for their profit center if they don't use departments.
Q. Can I subtotal accounts within a classification? For example, I want to subtotal my payroll accounts together in the Expenses section of the Income Statement.
Yes. Accounts with the same classification (e.g., Expenses) can be grouped together using sub-classes. Sub-classes are user-defined, so you have complete flexibility in how accounts are sorted and subtotaled on financial statements. First, you'll set up your sub-classes: choose Setup > Chart of Accounts then double click on the Sub-Classes link. The G/L Sub-Classes window lets you add, edit, and delete account subclasses.
Also, there is the roll-up account option where when printing the financial statements the option at the bottom to "Use roll-up accounts" can be selected. Make sure the accounts they roll-up into are in the same class (and sub-class if used), since can't roll up cross class or sub-class. See the question below for more information about roll-ups.
Q. How do I assign a subclass to a G/L account?
Choose Setup > Chart of Accounts. Double-click on the account you wish to edit. In the Edit Account window you'll see a pop-up menu listing your sub-classes. Choose a sub-class from the menu, then click Save. That's it -- the changes take effect immediately. You can change your mind anytime by simply choosing a different sub-class for a G/L account.
Q. What is the roll-up option and how is it used?
The roll-up option is a way of combining two or more account balances into one account on the printed financial statement. In the chart of accounts, an account can be set up as the account into which the other accounts will roll-up. When a financial statement is printed and the roll-up option is selected, balances from other accounts roll up into the designated account (an account defaults to roll-up into itself).
To use the roll-up feature, choose Setup > Chart of Accounts. Double-click on the account you wish to edit. In the Edit Account window, find the Roll-up into: field. Enter the account number you want this account to roll into. You can also have accounts that are used strictly for rolling up; no amounts can be charged directly to them. To prevent accidental postings to these accounts, select the "Roll-up only account" checkbox. This is good for accounts like accumulated depreciation, where you make actual journal entries to the various depreciation accounts, but may want to roll them all up into a parent account when printing more condensed financial statements. Marking the parent account as "roll-up only" will block C&P users from using this account when adding accounting records, since in theory it should never have G/L activity added to it.
Q. When printing a G/L accounts list, our accounts are not showing in correct order. For example: 11, 12, 1101, 1102 ... instead of 11, 1101, 110101.00, 110101.01, etc. Why?
Since G/L account numbers are numbered fields, your accounts are actually sorting correctly. To make it sort the way you'd expect, all of the account numbers need to have the same length -- the same number of digits. In this case, all of your account numbers need to have 6 digits plus the optional 2 digit department number.
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