Configuring the Chart of Accounts

Configuration Process Designing the Chart of Accounts Restricting access to specific Account Types Adding and modifying individual accounts Splitting postings across multiple AR or AP accounts Understanding the COA Hierarchy FAQs & Diagnostic Tips

The Chart of Accounts (COA) is used to organize financial data via account numbers (including organizational structure, such as company, division, department, etc.), which facilitates financial reporting (balance sheet, income statement, cash flow statement, etc.).  It is a list of all general ledger accounts by number, along with attributes such as Account Type (cash, inventory, etc.) and Chart Group (used for security). The default accounts that should be used for transactions throughout the system are generally assigned within Accounting Options, however different or more specific accounts may be selected on various master records (Bill-to, Item Master, Routings, etc.). The rules of which account selection takes precedence are provided in the "Understanding the COA Hierarchy" section of this page.

Configuration

Refer to the Process section for Configuration information.

Process

Designing the Chart of Accounts

What configuration is required prior to creating an account?

Chart of Account Groups - At least one default Chart of Account Group must be configured in DEACOM. COA Groups, used in conjunction with Chart Group Security, are used to restrict User Group access to groups of accounts and can provide finer security than that provided by the account's Type. Both Account Types and available security are discussed in subsequent sections on this page.

Account Structure - The COA structure, defined via Accounting > Maintenance > Account Structure, in DEACOM can contain multiple numeric positions and individual accounts may contain up to 28 digits. The first position is the base account number. This base account number is required, cannot start with a 0, and cannot be overridden by GL Overrides. Additional positions can be used to designate companies, divisions, cost centers, and departments, but are optional. Most companies typically operate using an Account Structure with 3-5 positions or segments. Each numeric position can be any number of digits that are needed to distinguish one account, company, division, or department from another. The first position, the base account number, is usually 4 or 5 digits, depending on the amount of posting detail required in the General Ledger (GL). Two considerations should be taken into account when using additional positions: the ability of Financial Statements to filter GL data when creating Financial Statements and the concept of GL Override by Facility. A typical set of base accounts would be:

• 1000 - Assets - Debit Balance Sheet
• 2000 - Liabilities - Credit Balance Sheet
• 3000 - Capital - Credit Balance Sheet
• 4000 - Revenues - Credit Income Statement
• 5000 - Expenses - Debit Income Statement
• 6000 - Expenses - Debit Income Statement

What information should be considered prior to creating an account?

Available Account Types - The assignment of Accounts to Account Types has no bearing on Financial Statement design. Any Financial Statement row can contain any account, referred to by base account number, not by Account Type. Account Types factor in system operation, however, as only certain Account Types are allowed for certain types of transactions. Additional restrictions can be enforced through the use of Chart of Account Groups. The account types and their functions are described in the Chart Of Accounts Encyclopedia page and include: Assets, Capital, Cash, Expenses, Expenses - Fixed, Inventory, Liabilities, and Revenues.

Number of Digits Per Position - The number of digits in each account position can be defined in the Account Structure to represent as many companies, divisions, or departments as necessary. Some items to take into consideration include:

• Each unique instance of company, division, or department should be given its own unique code number in the account position.
• The capability for growth, such as new companies, divisions, or departments.
• Financial Statement design is not built into the account structure when the GL accounts are defined. In some accounting software systems this is true, so only one financial report, with various degrees of detail, can be printed. With Financial Statement design separate from the account definitions, it is possible to design many types of reports, each with the desired degree of detail in each section.
• How DEACOM assigns revenue to the revenue accounts. Companies can have as many or as few revenue accounts as desired, but it is important to realize that DEACOM assigns revenue based on the item sold. Each Item Master indicates the revenue account to be credited when that item is invoiced, so a system can have as few as one revenue account, or as many accounts as there are saleable items (but usually somewhere in between). Each revenue account indicates the associated cost of goods sold (COGS) account, which is debited when an item with that revenue account is shipped. The associated COGS account contains the inventory value of all items invoiced to the revenue account, allowing gross profit calculations.

Restricting access to specific Account Types

What security is available to restrict access to Account types?

Chart of Account Groups and Chart Group Security - The assignment of Accounts to Chart Groups allows additional security to be configured, controlling which User Groups can use which Groups of Accounts, in the transactions where they are allowed to override default GL accounts. Capital accounts, for example, are typically adjusted via general journal entry, not AP invoices. To prevent mistaken access of Capital accounts in AP processing, a Capital Account Group can be created via Accounting > Maintenance > Chart of Account Groups, and all Capital type accounts can be marked as being in that Account Group. Then the group of AP Clerks could be prevented from accessing these accounts by marking a "No" for that Group in Chart Group Security via System > Maintenance > Chart Group Security. All accounts must have a Chart Group indicated, which usually begins as one generic Group for all Accounts, until detailed Groups can be created and assigned, if desired.

Adding and modifying individual accounts

1. Navigate to Accounting > Maintenance > Chart of Accounts.
2. Click the "New" button to add a new account or select an existing account and click "Modify" to display the Edit Account form. If adding a new account, continue with step 3; if modifying an existing account, skip to step 6.
3. On the General tab, fill in all system required fields, which are marked in blue. Be sure to select the correct "Type". See account types for more information.
4. Fill in any additional information or fields as needed. Note that a field may not be required by the system but may be required by your company's requirements. One example is often the "COGS Account" field. Most companies will require a Cost Of Goods Sold account when selecting a "Type" of Revenues. Additional information on how best to use the fields on the "Edit Account" form is available via the chart of accounts link above.
5. If using COA allocation fill in the appropriate information on the Allocations tab of the Edit Account form. If there are any entries in the Allocations tab, they must add up to 100% or the account will no longer receive any postings. An account cannot be added to itself as an allocation account. This feature is useful in situations where companies wish to allocate indirect expenses.
6. Once all the information has been added or updated on the form, click the "Save" button to complete the process.

Splitting postings across multiple AR or AP accounts

How can multiple facilities/companies be managed within one DEACOM database?

Enabling Multi-Company GL Balancing - This feature allows users to split and balance postings across companies (in the same database), facilities, divisions, or other relevant sub-account structures in DEACOM. It allows users to run balanced sub-account level financial reports and provide visibility to what a facility, division, department, or other sub-account structure owes corporate or each other on accumulated transactions. This functionality can be used in AR and AP transactions, in inter-company transfers, and cross-facility orders. This allows users to keep sub-account level AR, AP, and inventory balances with a single corporate wide cash account, and allows users to track inter-company transfers and asset movements. Users can then use the account balances to determine if asset transfers are required to balance books at any point in time.

Understanding the COA Hierarchy

The default accounts that should be used for transactions throughout the system are generally assigned within Accounting Options, however different or more specific accounts may be selected on various master records (Bill-to, Item Master, Routings, etc.). The rules of which account selection takes precedence are provided below.

DEACOM Field	Type	Brief Description	Transactions that create the entry	Comments	Required	First Source	Second Source	Third Source	Adjust on Transactions
Account (Depreciation)	Expense	Account to which depreciation charges will be credited. The corresponding entry is a debit to the "Depreciation Expense" account in Accounting Options.	Production > Maintenance > Work Centers > "Post Depreciation G/L"		If posting depreciation expense from Work Center	Work Center			No
Accrued Burden	Liability	Machine costs; overhead costs.	Production > Input Production		If using Routings	Accounting Options			No
Accrued Payroll	Liability	Account used for paying payroll.	Production > Payroll Reporting > "Post Payroll"		If using payroll function	Accounting Options			No
AP	Liability	Accounts that establish what is due to a vendor.	Purchasing > Receive (If not using AP Suspense) Purchasing > Invoice (if using AP Suspense)		Yes	Vendor	Accounting Options		Yes
AP Adjustments	Expense	Differences between the Purchase Order and the Vendor invoice get posted here.	Purchasing > Invoice Accounting > Order Adjustments		Required for transactions, but not required in Accounting Options.  However, it if it is in Accounting Options, the account will pre-populate when invoicing.	Accounting Options			Yes
AP Suspense	Liability	AP clearing account. Used if there will be a lot of adjustments on Purchase Orders.	Purchasing > Receive		Yes	Vendor	Accounting Options		Yes
AR	Asset	Accounts that establish what is due from a customer.	Print Outs > Invoices		Yes	Bill to	Accounting Options		Yes
Cash Payments	Cash	Account that will be used to pay bills. Can be the same account as the "Cash Receipts".	Accounting > Check Run Accounting > Manual Checks		Required for transactions, but not required on Payment Type or Accounting Options	Payment Type	Accounting Options		Yes
Cash Receipts	Cash	Account that will be used to receive money. Can be the same account as the "Cash Payments".	Accounting > Cash Receipts		Required for transactions, but not required on Payment Type or Accounting Options	Payment Type	Accounting Options		Yes
COGS Account	Expense	Attached to Revenue accounts. Account to be used to book the cost of goods sold.	Sales > Ship Sales Orders	A COGS account is required even if it will never be used	Yes	Chart of Accounts			No
COGS Variance	Expense	Allows companies to update the cost of lots and shipped lots based on the actual price of items that may be priced after Sales Orders are shipped.	Inventory > Cost Updates > "Update Type" of "Shipped Orders COGS Delta"		If need to update COGS after shipping	Accounting Options			No
Commission Accrual	Expense	Account where commissions for this item will be accrued until paid.	Sales > Ship Sales Orders		If using Commissions	Accounting Options			No
Commission Expense	Expense	Account where commissions for this item will be charged.	Sales > Commissions / Rebates		If using Commissions	Item Master	Accounting Options		No
Currency Gain/Loss	Expense	If using different currencies; the exchange rate difference is posted here.	Accounting > Cash Receipts Accounting > Manual Checks Accounting > Check Run		If using foreign currency	Accounting Options			No
Depreciation Expense	Expense	Expense account to which Work Center depreciation expenses will be debited.	Production > Maintenance > Work Centers > "Post Depreciation G/L"		If posting depreciation expense from Work Center	Accounting Options			No
Facility Elimination	Asset	Used to balance accounts across divisions/Facilities.	Sales > Ship Sales Orders (Cross Facilities) Sales > Receive In-Transit Orders Accounting > Cash Receipts Accounting > Check Run Accounting > Manual Check		If parent (corp) pays bills for divisions/Facilities	Accounting Options			No
Freight Expense	Expense	Account that will be used when creating freight PO's from Sales Orders	Purchasing > Receive		If creating freight PO's from Sales Orders	Item Master			No
Freight In	Expense	Account where freight will be charged when product is received.	Purchasing > Receive		Yes	Accounting Options			No
Freight Revenue	Revenue	Account to which freight costs portions (or_qship * or_frtcost) of Sales Order lines will be credited upon invoicing.	Print Outs > Invoices		If creating freight PO's from Sales Orders	Item Master			No
In-transit	Asset	Account that is charged when inventory is moving from one Facility to another.	Sales > Ship Sales Orders (Inter-Company Orders)		If there is more than one Facility and transfers between Facilities will occur	Item Master	Accounting Options		No
Inventory Adj	Expense	Expense account that inventory variances are charged to.	Inventory > Adjust Inventory On Hand	When performing PI's it is required on the Item Master, otherwise the "Negative Inventory Variance" account in Accounting Options is used.	Yes	Reason Code	Item Master	Accounting Options	Yes
Job Burden Std	Expense	Standard cost of burden when relieved.	Production > Input Production		If using Routings	Item Master	Accounting Options		No
Job Labor Std	Expense	Standard cost of labor when relieved.	Production > Input Production		If using Routings	Item Master	Accounting Options		No
Job Material standard	Expense	Standard cost of material when relieved.	Production > Input Production		Yes	Item Master	Accounting Options		No
Labor Expense	Expense	Labor account for production.	Production > Input Production		If using Routings	Operation	Accounting Options		No
Labor OT Expense	Expense	Overtime labor account for production.	Production > Input Production		If using Routings	Accounting Options			No
Material Burden/Burden Expense	Expense	Any additional cost that should be added to a purchased good.	Purchasing > Receive		Only needed if applying additional burden	Item Master	Accounting Options		No
Material Expense	Expense	Job finishes and relief of inventory are handled as two separate transactions in DEACOM. Offsets Job finish material.	Production > Input Production		Yes	Item Master	Accounting Options		No
Negative Inv Variance	Expense	Used to capture miscellaneous rounding issues and to correct negative lots.	All		Yes	Accounting Options			No
Payment on Account	Liability	When a customer submits payment to the company but does not specify what invoice the payment should apply to.	Accounting > Cash Receipts > "Report Type" of "Payment on Account"		Yes	Accounting Options			Yes
PO Pre-Payments	Asset	When payment for a product is given prior to receiving the material.	Accounting > Manual Checks > "Report Type" of "Payment on Account"		Yes	Accounting Options			No
POA Cash	Cash	Default cash clearing account to which customer payments on account are debited.	Accounting > Cash Receipts > "Report Type" of "Payment on Account"		Yes	Accounting Options			No
POS Gain/Loss	Expense	Used to balance POS differences between starting and ending balances and the bank.	Cash Register		If using POS/Cash Register	Accounting Options			No
POS Paid In/Out	Expense	Used to record petty cash in the register.	Cash Register		If using POS/Cash Register	Accounting Options			No
POS Reconciliation	Asset	This is the account that receives funds when they are removed from the cash drawer at the end of the day.	Cash Register > Reconciliation		If using POS/Cash Register	Payment Type			No
Progress Billing COGS	Asset	Account to which the COGS of Sales Orders attached to Progress Billings are debited.	Sales > Ship Sales Orders (orders tied to Progress Billings)		If using Progress Billing	Accounting Options			No
Progress Billing Loss	Expense	Account to which Progress Billing gains, the difference between progress payments and shipment revenues, are recorded.	Sales > Progress Billing > "Report Type" of "Invoices"		If using Progress Billing	Accounting Options			No
Purchase Cost Variance	Expense	Shows purchase price variances from standard.	Purchasing > Receive (only occurs when Purchase Price is different from standard)		Yes	Item Master	Accounting Options		No
Purchase Discount	Expense	Account where Vendor Term discounts are posted. Example: 2/10 Net 30. The 2% discount would be posted here.	Accounting > Check Run Accounting > Manual Checks		Yes	Accounting Options			No
Purchase To Account	Expense	Account to which service costs/utilities are posted. This is also where inventory will be posted if it is a stocked item.	Purchasing > Receive Inventory > Issue/Reserve Inventory Production > Input Production Sales > Ship Sales Orders	Required on Item Master, optional on Vendor record.	Yes	Item Master	Vendor		Yes
Revenue	Revenue	Where sales are posted.	Print Outs > Invoices	Note the COGS account must be populated on the account.	Yes	Item Master			Yes
Sales Discount	Expense	Account where Bill-to/Ship-to Term discounts are posted. Example: 2/10 Net 30. The 2% discount would be posted here.	Accounting > Cash Receipts		Yes	Item Master	Accounting Options		No
Sales Tax Account	Liability	Liability account to which sales tax amounts will be posted when using the tax calculation integration with DEACOM.	Sales > Ship Sales Orders		If using Tax APIs	Accounting Options			No
SO Pre-Payments	Liability	Account used if a customer pays for an order before it ships.	Accounting > Cash Receipts > "Report Type" of "Pre-Payments"		Yes	Accounting Options			No
Standard Freight	Expense	Account where freight is charged when product is received.	Purchasing > Receive		If adding freight to an item	Item Master			No
Std Inv Gain/Loss	Expense	When revaluing inventory, the variance gets recorded in this account.	Inventory > Cost Updates > "Update Type" of "Lot Costs"		Yes	Item Master			No
Transfer Markup	usually Expense	Added cost when transferring between Facilities.	Sales > Ship Sales Orders (Inter-Company Orders)		If there is more than one Facility	Item Master	Accounting Options		No
Transfer Variance	Expense	Difference between what one Facility claims was shipped and what the other Facility claims was received.	Sales > Receive In-Transit Orders		If there is more than one Facility	Item Master	Accounting Options		No
Unrealized Gain	Expense	Represents the difference in value for each posting at the time it was made and at the current exchange rate.	Print Outs > Invoices Purchasing > Invoice		If using foreign currency. Should only be on the accounts that float.	Chart of Accounts (account defined on cash account used in posting)	Currency Gain/Loss account defined on the Currency record (beginning in version 17.02.013)	Currency Gain/Loss account in Accounting > Options (beginning in version 17.02.013)	No
WIP Burden	Asset	Account to which burden costs associated with Production Jobs in process are recorded.	Production > Input Production		If using Routings	Accounting Options			No
WIP Labor	Asset	Account to which labor costs associated with Production Jobs in process are recorded.	Production > Input Production		If using Routings	Accounting Options			No
WIP Materials	Asset	Account to which material costs associated with Production Jobs in process are recorded.	Inventory > Issue/Reserve Inventory	If the item will have the same account as what is in Accounting Options, then there is no need to populate this field on the item.	Yes	Item Master	Accounting Options		No
WIP Mtc Burden	Asset	Account to which maintenance burden costs associated with Production Jobs in process are recorded.	Production > Input Production (Maintenance Jobs)		If using Routings	Accounting Options			No
WIP Mtc Labor	Asset	Account to which maintenance labor costs associated with Production Jobs in process are recorded.	Production > Input Production (Maintenance Jobs)		If using Routings	Accounting Options			No
WIP Mtc Materials	Asset	Account to which maintenance material costs associated with Production Jobs in process are recorded.	Production > Input Production (Maintenance Jobs)		If using Routings	Accounting Options			No
WIP Mtc Purchases	Asset	Account to which maintenance service costs associated with Production Jobs in process are recorded.	Production > Input Production (Maintenance Jobs)		If using Routings	Accounting Options			No
WIP Purchases	Asset	Account to which service costs associated with Production Jobs in process are recorded.	Purchasing > Receive		If purchasing WIP	Accounting Options			No

FAQs & Diagnostic Tips

My company wants to track sales by customer. How can I achieve this?

The initial idea is often to create an account that relates to a specific customer, however this is not a scalable practice. The better option is to book customer transactions to one account and run a Sales > Order Reporting "Profit Detail" or "Profit Summary" report for that account and the desired customer.

For purchasing items that relate to specific Bill-to Companies - an extra Quality Control Test required by a customer for example - users may add a Purchase Order line, enter a description for the charge, and select the corresponding Bill-to Company.

What is wrong when I click the Search 'S' button to select an account and no accounts come up or the account is not showing?

Check the user has the proper Chart Group Security under System > Maintenance > Chart Group Security. Also certain areas of DEACOM know only to show Revenue or Inventory accounts, so confirm the Account type for the Account is correct.

I am trying to create a new account and I am getting a message; “Please Note -This name already exists in the table.” What do I need to do?

Account numbers must be unique, and the message is saying that this account number already exists. Please note that Inactive accounts are also included in this check.