General Ledger Sets

To access General Ledger Sets, select Maintenance|General Ledger Sets from the main menu.

A general ledger set is a table of general ledger account code cross-references. Each set requires that you match the account code in your chart of accounts to one of the account types in the set table. The set table acts as the communications link between CAPITAL Office and CAPITAL GL Controller.

For more information on entering and editing general ledger set entries see: General Ledger Set Reference.

The following account codes are found in the table:

• Debtors

• Creditors

• Creditors suspense

• Stock (on hand/inventory)

• Stock adjustments

• Stock purchases

• Stock purchases (variance)

• Sales

• Cost of sales

• Cost of sales (variance)

• Discounts given

• Freight

• Tax collected

• Discounts received

• Closing purchases

• Suspense (general)

• Exchange variance - purchases

• Exchange variance - sales

• Bank account

• Reserved for future use

• Finished Goods Stock

• Customer Pre-payments

• Transfer Cost of Goods

• Transfer Sales

• Miscellaneous Charges #1

• Miscellaneous Charges #2

• Miscellaneous Charges #3

• Excise

Set Overview

These references should be assigned to an account code in your chart of accounts. You may assign more than one of these references to the same account code if you wish. For example, if exchange variance (the difference in payment caused by finalising a transaction in a foreign currency) is not applicable to your business because you do not import or export, it would be advisable to assign both these references and any others you feel are not applicable to you to a special suspense account in your chart that you expect will never be posted to.

If an amount is posted to an account you expect to be inactive, then the balance serves to show that you have made a set-up mistake in the communications link. The more references you lump together under the one account code, the more difficult it will be to find the cause of the problem. It is strongly advised that you create a separate account code in your chart of accounts for each reference in the set table, with the expectation that some of those accounts will or should never be used.

You may specify an unlimited number of general ledger sets. The default general ledger set is mandatory and it referred to as set "0". Each customer or supplier account, cashbook, stock group, individual stock item and even foreign currencies, can be assigned to a different general ledger set code. If a particular stock item, currency or account is not assigned to a general ledger set, CAPITAL Office will use the account codes contained in set "0" to generate automatic journals. Set "0" is the first (default) general ledger set in the system.

A stock item, currency or account will not use every reference contained in the set table. Many references are redundant. Only the references that the stock item, currency or account transaction is concerned with will be used. Transactions involving customer balances (such as invoicing) for example, never directly effect supplier balances. There would be no need for CAPITAL Office to look-up the "creditors" or "purchases" account in the general ledger set table in order to generate automatic journals for customer invoices, credit notes or payments. The following table titled Journal entries automatically created by CAPITAL lists the automatic journals that are produced by CAPITAL Office for each area of the system.

You may also specify whether each reference should produce detailed or consolidated journals, by clicking in the Con column for "consolidated". Consolidated account code references only produce a single automatic journal for the entire period. Unconsolidated journals produce multiple journals that correspond to each transaction processed by CAPITAL Office. Consolidated journals save a small amount of disk space but may be extremely difficult to reconcile. It is usually better not to consolidate them.

Debtors

Any transaction that effects a customer account balance will generate an automatic journal for the account assigned to this reference.

Creditors

Any transaction that effects a supplier account balance will generate an automatic journal for the account assigned to this reference.

Creditors Suspense

This account serves as a control account to trap "errors" in your supplier entries. Editing an old (pre-general ledger) supplier transaction may cause the missing debit or credit portion of the transaction to be sent to this account. If the total debits do not add up to the total credits because of missing or damaged data due to hardware malfunction, operator error or some other fault, a correcting adjustment will also be generated automatically that will effect this account.

Stock (on hand/inventory)

The "inventory" account is effected by any transaction that effects the quantity in stock or the CIS (cost in store) price, if the quantity in stock or CIS price is not zero.

Stock Adjustments

Debits or credits may effect this account when direct adjustments have increased or decreased the quantity in stock, or has changed the CIS price (provided the quantity in stock or CIS price was not zero.) If you are using the opening/purchases/closing stock method of calculating the value of your stock, your "inventory" account is normally assigned to both the stock and stock adjustments account.

Stock Purchases

Used by the purchase order system to update your purchases of stock. If you do not have a "purchases" account in your chart of accounts you may wish to assign this to your "inventory" account. Note that you would also then assign closing purchases to your "inventory" account.

Stock Purchases (variance)

When the "purchases" and "inventory" accounts do not agree, the difference is taken up by this account. This can commonly occur, for example, if you are not using the average stock costing method, or even when the total average stock cost differs slightly from the purchase price due to rounding error. For example, if you purchase 2 stock items for $10.17 there is no way this amount can be placed into stock as the stock control system only tracks unit prices to two decimal place accuracy. The stock value will be calculated as two times $5.09 (the unit price), with the 1 cent difference taken up as a variance. The opening/purchases/closing stock method of valuing stock does not suffer from this problem. The variance would be accounted for as part of the current period's "cost of sales".

Sales

Used by the invoicing system and the stock control system (during invoicing). Regular invoices will generate automatic credits to sales; credit notes will produce debits. One way of splitting your sales into various categories is to assign a general ledger set to each of your stock groups. Each set would be identical except for the "sales" account reference, which would be assigned a different general ledger sales code.

Cost of Sales

Cost of sales can be calculated directly as each invoice or credit note transaction is entered, or at the end of the period when this is determined by your opening/purchases/closing stock set of journals. If you want cost of sales calculated for you, assign your chart of accounts "cost of sales" code to this reference. Otherwise, assign cost of sales to your "inventory" account. When a sale is calculated, "inventory" will be decreased (credited) and cost of sales (also your "inventory" account) increased (debited). The net effect on your inventory will be nil.

Cost of Sales (variance)

This account will be updated if the cost of the sale, according to the transaction raised, does not agree with its effect on your stock control system. A cost of sales variance can sometimes (although not always) indicate a set-up error. For example, if you ignored CAPITAL's warning message and assigned a cost to a non-diminishing product, each sale would generate a variance equivalent to the entire cost of the item. This is because the full cost of the stock item was recorded on the invoice, yet no stock was removed from stock control.

Discounts Given

In customer entries or when raising an invoice, assigning a transaction to the discount type will direct the sale amount to the "discounts given" account rather than the "sales" account. If you do not wish to separate sales from discounts, assign this reference to "sales" as well.

Freight

The freight portion of an invoice may be allocated to your "freight" account. If you do not wish to show freight as a separate sales category in your chart of accounts, assign this reference to "sales".

Tax Collected

The tax portion or tax liability that a sale incurred. If your organisation is sales tax exempt, the "tax collected" account will always have a zero balance.

Discounts Received

Similar to discounts given, except for suppliers.

Closing Purchases

Closing purchases is sometimes used to offset the debit/credit balance of the purchases account, especially if the "inventory" account is being directly updated. See the section on stock and the general ledger for a detailed discussion about this reference.

Suspense (general)

This is the suspense account that CAPITAL Office will post to if only one side of a double-entry is available or one side of a double-entry does not balance. This might occur, for example, if a pre-general ledger cash book entry without an expense code allocation is edited. (That is, an attempt was made to transfer transactions from CAPITAL Office during a period when the General Ledger had not been installed or activated.)

Exchange Variance - purchases

An overseas supplier transaction such as an invoice is assigned a particular exchange rate at the date of the purchase. The difference between this amount in Australian dollars and the exchange rate of the payment that fully pays it is taken up as the exchange rate variance for purchasing. If you do not have the foreign currencies system activated in CAPITAL Office, this reference need not be assigned an account code. A gain or profit resulting from a foreign exchange dealing is expressed as a credit. The account "bank" is credited the lesser amount, the extra debit to creditors is balanced by a corresponding credit to the exchange account.

Exchange Variance - sales

If your organisation bills in a foreign currency, the difference between the exchange rate at the time of invoicing, and the exchange rate of the payment that fully pays it, is taken up as the exchange rate variance for sales. If you do not have the foreign currencies system activated in CAPITAL Office, this reference need not be assigned an account code. A gain or profit resulting from a foreign exchange dealing is expressed as a credit. The "bank" account is debited the greater amount and a corresponding credit is made to the exchange account to balance the transaction.

Bank Account

The bank account may be used by the customers, suppliers or cash book systems to determine which chart of accounts code to effect during entry of a payment or a receipt. The cash book system will always use this account code as the first half of its set of double-entry journals.

Finished Goods Stock

When an assembly is built, the cost value of the inventory involved will be transferred (debited) to this account. The Stock (on hand/inventory) account will be credited. This should be set to the same account code as Stock (on hand/inventory) in order to remove any affect on the general ledger if this is desired.

Customer Pre-Payments

Pre-payments and deposits are posted to this account when applicable. If not specified, the payment is credited against the debtor control account.

Transfer Cost of Goods

During a stock transfer, the stock item's cost value is credited against this account for the transfer from (source) account and debited against the transfer destination account.

If this code is not specified under the applicable general ledger set, this automatic journal is not generated.

This feature is supported using Stock Transfers with the Enterprise Edition only.

Transfer Sales

During a stock transfer, the stock item's sale value (if one has been assigned) is credited against this account for the transfer from (source) account and debited against the transfer destination account.

If this code is not specified under the applicable general ledger set, this automatic journal is not generated.

This feature is supported using Stock Transfers with the Enterprise Edition only.

Miscellaneous Charges #1 - #3

This is a user defined or special charge associated with invoice transactions. You may redirect a miscellaneous charge to a particular general ledger account code using a general ledger set.

Miscellaneous charge redirection is optional. If you do not specify a general ledger code by leaving this entry blank, miscellaenous charges are included in the posting to the Freight account code of the set.

Excise

All excise charges are redirected to this general ledger account code. If you do not specify a general ledger code by leaving this entry blank, excise, if any, is posted to the Tax Collected account code of the set.

 

Journal Entries Automatically Created By CAPITAL
Cash Book	1. Bank Account 2. Expense Account/Overhead	CR or DR DR or CR
Customers (sale)	1. Sales|Discount 2. Freight 3. Taxes Collected 4. Debtors 5. Cost of Sales 6. Inventory 7. Cost of Sale Variance	CR (increase) CR (increase) CR (increase) DB (increase) CR (decease) CR (decrease) CR or DB
Customers (payments)	1. Bank Account 2. Debtors 3. Foreign Exchange 4. Debtors	DB (increase) CR (decrease) DB or CR CR or DB
Customers (pre-payments)	1. Bank Account 2. pre-payments/deposits	DB (increase) CR (increase)
Customers (pre-payment allocated)	1. Debtors 2. Pre-payment deposits	CR (increase) DB (decrease)
Suppliers (invoice)	1. Creditors 2. Expense Account/Overhead	CR (increase) DB (increase)
Suppliers (payment)	1. Creditors 2. Bank Account 3. Foreigh Exchange 4. Creditors	DB (decrease) CR (decrease) DB or CR CR or DB
Suppliers (purchase order delivery)	1. Creditors 2. Purchases 3. Inventory 4. Closing Purchases 5. Purchases Variance	CR (increase) DB (increase) DB (increase) CR (increase) CR or DB
Suppliers (stock receipt)	1. Inventory 2. Closing Purchases. 3. Purchase Variance 4. Creditors 5. Purchases	DB (increase) CR (increase) CR or DB CR (increase) DB (increase)
Suppliers (stock return)	1. Creditors 2. Purchases 3. Inventory 4. Closing Purchases 5. Purchases Variance	DB (decrease) CR (decrease) CR (decrease) DB (decrease) CR or DB
Stock (adjustments)	1. Inventory 2. Inventory Adjustments	DB or CR CR or DB
Assemblies	1. Stock On Hand 2. Finished Goods Stock	CR or DB DB or CR
Stock Transfer	1. Cost of Goods - configurable 2. Sale of Goods - configurable	DB or CR

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Related Topics:

The Priority Hierarchy

General Ledger Sets Priority Mode 0 and 1

General Ledger Sets: A Tutorial

General Ledger Sets Reference

Connecting to CAPITAL Office