About Orders and GL Accounts

The process of creating orders affects several areas within Aptify. One of the most notable areas includes GL accounts. Upon shipping an order, order GL account entries are created. The amounts and specific GL accounts affected depend on the products contained in the order. When products are created within Aptify, they are associated with a set of GL accounts. The list of accounts is inherited from the Product Category selected for that products, but these may be changed at the product level. The most common GL account entries created upon shipment of an order are for the Accounts Receivable and the Sales accounts.

In a basic order (for Accrual basis products), the Accounts Receivable account is debited, and the Sales account is credited. Additional account entries are generated if the products ordered defer revenue (such as in the case of a subscription order), if discounts were applied during the order process, or if Cost of Goods Sold (COGS) is tracked for the products ordered.

Note that all orders placed within Aptify result in the creation of Accounts Receivable GL account entries, even if the order is paid at the time of purchase. In these instances, a true receivable does not exist. However, the order and its associated payments are treated the same in Aptify, no matter when the payment is received. Therefore, Accounts Receivable entries are created whether the payment was received at the time the order was taken or at some later date.

The following example illustrates the GL entries that Aptify generates for a $100 that is paid by a pre-paid check at the time the order is created:

Order GL Entry

Payment GL Entry

Once all GL account entries have been batched to the General Ledger, the net effect is displayed below: 

One common question about how GL account entries are created is "why do the GL entries for the order not simply reflect the net impact?" In other words, the question asks why the order cannot simply reflect the debit to the Cash account and the credit to the Sales account. The answer is that posting only the net impact would inaccurately attribute GL account entries to an order when those entries are actually related to the payment received for the order. If only the net impact entries were posted, no entries would exist for the payment received. To account for this discrepancy, Aptify is designed to operate in a uniform manner, regardless of the timing of the payment against an order. Therefore, all order and payment GL account entries are created for each order, whether the payment is immediate or received at a later date.

In the Orders service there are two fields that determine which GL accounts to use for an order transaction: Order Level and Order Type. Order Level determines which set of GL accounts to use. Order Type determines how the GL accounts specified by the Order Level are used, based on the products listed in the order's order lines. Refer to one of the following topics for more information:

• About Order Levels and GL Accounts
• About Order Types and GL Entries