Basic Financial Accounts
There are three basic financial accounts: Income accounts, Cost of Goods Sold (COGS) accounts, and Inventory accounts. In addition, there are accounts for Inventory, Payroll, and Taxable items. Rounding out the accounts are your Accounts Payable (A/P), Accounts Receivable (A/R), and Sales Tax Payable accounts.
Income accounts track the sale items.
- Cost of Goods Sold (COGS) Accounts
COGS accounts track your cost of sale items.
- Inventory Accounts
Inventory accounts can be used to track your cost of sale items rather than the COGS accounts.
- Accounts Payable
Used to track what you owe your vendors. In your accounting software the account type must be A/P (Accounts Payable).
- Accounts Receivable
Used to track what your customers owe you. In your accounting software the account type must be A/R (Accounts Receivable).
- Sales Tax Payable
Used to track how much you owe for sales tax. In your accounting software the account type must be OCLIAB (Other Current Liability).
The income and cost of goods sold can each be marked as taxable, payroll, or inactive.
Each accounting item must be marked as taxable/non-taxable, reflecting your shop’s taxing procedure. Only the income account is affected by the taxable choice.
Each accounting item must be marked as payroll/non-payroll, reflecting your shop’s payroll procedure. Only the income account is affected by the payroll choice.
- Inactive Accounts
If you do not wish to set up one or more user-defined account groups to track a unique sale item, you must mark the group inactive. The entire item: income, cost of goods and inventory accounts are affected. Inactive accounts will not transfer to your accounting system.
Note: Do not mark a mandatory account group inactive. These account groups are required based upon your estimating systems. (See Profit Center Setup for the mandatory account group.) |
See Also