The Priority Hierarchy

General ledger sets may be assigned to:

• customer accounts and departments

• supplier accounts and departments

• cash books

• currencies

• stock groups

• stock items

How do you determine which general ledger set is being used when a combination of the above entities are involved in a single transaction?

This is determined by the set hierarchy which is described in the table below.

The default set is assigned the set code "0" in the general ledger. This set is mandatory. CAPITAL always starts at the highest priority and works its way down until a general ledger set is found. If no set is explicitly defined, the default set, set "0", is used.

An example will help illustrate how this works:

An invoice has been raised for a customer who has been assigned general ledger set Abc. The customer is billed in a foreign currency that has been assigned the set Dm. CAPITAL will look up the foreign exchange sales variance in the Abc table, and not the Dm table. This is because the general ledger set assigned to the customer account has priority over the currency set.

The general ledger sets assigned to stock groups or stock items also have priority over the general ledger set assigned to the customer or supplier account. This means that if you want, for example, the sale of a particular stock item to affect a certain sales category or tax category or perhaps some other general ledger account, you need not worry that these settings will be canceled out. Sets assigned to stock items have a higher priority than those assigned to the customer account.

Also see: General Ledger Sets Priority Modes 0 And 1 for more information on altering the priority relationship.

Stock Sets & Departments

If you are operating CAPITAL with multi-location stock activated, where stock may exist at several locations, then special rules apply in relation to the selection of general ledger sets for stock items.

These rules are designed to support organisations that generally ship inventory from a central warehouse location, but have multiple departments who represent the true 'owners' of the sold stock. By default, CAPITAL will assume that the department that shipped the goods represents the 'owner' of the sale. As a consequence, the general ledger sets of the items at the 'shipped from' location are used to determine sales categories, etc., in the general ledger. You may, however, indicate that a particular department is the 'owner' of the sale which is distinct from the warehouse location (actual department of shipping). In which case, the alternate department's general ledger sets are used.

The rules are as follows:

1. The general ledger set of the stock item being invoiced will be used when the Location of the transaction is equivalent to the Department of the transaction.

2. If the Department of the transaction differs from the Location of the transaction, the general ledger set of the stock item located at the transaction's department will be used.

3. If a stock item does not exist at the transaction's department, general ledger set 0 is used.

For example, if you sell product Abc found at location 1, but the transaction's department is set to 2, then CAPITAL will retrieve the general ledger set of product Abc at location 2, if it exists. If product Abc at location 2 does not exist, general ledger set 0 is selected.

The terms 'Department' and 'Location' in CAPITAL are often interchangable, however there are some conceptual differences. A 'Location' is an area, warehouse, store, office or some other business entity (real or nominal), used to hold inventory. Every Location in CAPITAL is also, by default, a Department. A Department is a division within your organisation or company. You may not necessarily hold inventory at every Department, although CAPITAL permits you to do this if you wish.