Advanced Options

The ability to include or exclude ranges of codes allows us to compute more complicated balances, such as cost of sales. Look at the following example:

We would create two financial formula entries that would hold the following information:

Pay attention to two critical points. Firstly, the group code for both entries is the same, namely, "costofsales". This tells CAPITAL that both entries should be treated as part of the one calculation.

The second point has to do with the total column. The first entry instructs CAPITAL to credit the sales total ($290), which is itself a series of credits. A credit plus a credit results, of course, in a positive addition.

The second entry is an instruction to credit the cost of goods accounts ($225 worth of debit accounts) to the total as well. The result is that $290 is added and $225 is subtracted, leaving a net balance of $65.

It is important that you understand this point. Another example will illustrate this further. Let's say we now wish to calculate our net profit. We then have the following accounts:

The financial formula would be:

The first netprofit account entry is a credit total, so for account range 10000-10900 credits are added and debits are subtracted. The second sales account entry is also a credit, so the same rule applies, with accounts 20000-20100 being subtracted (since they are debits). Exactly the same then applies to expenses - account code 30000.