About the GL Account Types
When adding a general ledger (GL) account to a product or product category, a user must specify the account's type. The Aptify Order Entry system uses this type to identify the appropriate account to debit or credit for a particular transaction. There are many different types of GL accounts that may be linked to products and product categories.
The following table lists the standard GL account types that are included with Aptify and describes how the system uses each type to generate GL entries.
(Note that a system administrator can modify the standard list as needed directly within the ProductGLAccount entity to include the GL account types required by the organization. The system will not automatically debit or credit a new account type but a user could specify an account of a particular type when manually creating a Scheduled Transactions record.)
GL Account Type | Description | Cash Basis | Accrual Basis | Accrual w/Deferred |
Sales | The Sales account is used by the Orders, Payments, and Scheduled Transactions services, depending on the accounting basis used for revenue recognition. | Used by Payment module. | Used by Order module. | Used by scheduled transactions to generate fractional credit entries to Sales over time. |
Returns | The Returns account is an optional account that, if defined, is used for debit entries when product line items are returned. This account is used for the debit entry for any product line item that has a negative quantity. | Used by Order module. | Used by Order module. | Used by scheduled transaction to create reversing entries for existing revenue recognition entries. |
Damaged Returns | The Returns account is an optional account that, if defined, is used for debit entries when product line items are returned as damaged goods. This account is used for the debit entry for any product line item that has a negative quantity and is marked as Not Returned to Stock. | Used by Order module. | Used by Order module. | If applicable, used by scheduled transaction to create reversing entries for existing revenue recognition entries. |
Discounts | The Discounts account is an optional account that, if defined, is used to record a debit entry for the discount portion of a line item in the order. This option should only be used if the financial reporting requirements include a distinction between Gross and Net Revenues. Aptify always maintains the discounting information, so reports are available. However, if the Income Statement in the accounting system needs to reflect sales discounts, this account must be set up. | Used by Payment module. | Used by Order module. | Used by scheduled transactions. |
Deferred Income | Deferred Income is a special GL account set up for products where revenue must be recognized over a period of time. In contrast to revenue recognition based on accrual or cash basis, deferred revenue accounting requires the revenue to be recognized during the term of commitment for the sale. This GL account is used to book the liability incurred upon order for a deferred account. | N/A | N/A | The Order module generates a credit entry to the Deferred Account upon placement of the order. The Scheduled Transaction module generates a debit entry to the Deferred Account each time revenue is recognized. |
Inventory | The Inventory account is the Asset account used to track asset value of all inventory for this product. The inventory accounts allows an organization to specify different inventory accounts for each product. | If the Calculate COGS option is selected for the product being sold, the order entry system generates a debit to the COGS account and a credit to the inventory account based on the costing method selected. | If the Calculate COGS option is selected for the product being sold, the order entry system generates a debit to the COGS account and a credit to the inventory account based on the costing method selected. | While not typically applicable to a deferred income product, if the Calculate COGS option is selected for the product being sold, the order entry system generates a debit to the COGS account and a credit to the inventory account based on the costing method selected. |
Cost of Goods Sold | The Cost of Goods Sold (COGS) account is used to track all costing information for product sales. | The COGS account is debited by the Order service when a product is sold based on the costing method chosen for the product. | The COGS account is debited by the Order service when a product is sold based on the costing method chosen for the product. | While not typically applicable to a deferred income product, if configured to Calculate COGS, the COGS account is debited by the Order service when a product is sold based on the costing method chosen for the product. |
Accounts Receivable | Each system must have one default Accounts Receivable (A/R) account. The default A/R account is used for any product, tax, or shipping charge that does not specify an A/R account. In the event that an account is specified at the product, sales tax rate, or shipping type level, the Orders and Payments services use that account in place of the default account. | Used by Payments service to credit out A/R when the product payment is received. | Used by Orders service to debit A/R when the product is sold. | Used by Orders service to debit A/R when the product is sold. |
Unearned Revenue | Unearned Revenue is a special holding account that is used only for cash basis products. If a cash basis product is sold, the Orders service does not generate a credit entry to sales. The Unearned Revenue account is used as a holding position for this amount until the payment is received, at which time the sales account receives a credit and the Unearned Revenue account receives a debit entry. | Used for temporary holding of sales amounts until recognition of revenue occurs at the time of payment. | N/A | N/A |
Inventory Excess | This account type is used to track write-offs for inventory that cannot be sold. Creating GL entries for this type of account is not within the scope of Aptify's Order Entry system and is typically handled in the organization's general ledger. If necessary, an organization can adjust inventory levels based on written-off inventory and manually create a scheduled transaction to record the appropriate GL entries. | N/A | N/A | N/A |
Inventory Shrinkage | This account type is used to track lost or stolen inventory. Creating GL entries for this type of account is not within the scope of Aptify's Order Entry system and is typically handled in the organization's general ledger. If necessary, an organization can adjust inventory levels based on missing inventory and manually create a scheduled transaction to record the appropriate GL entries. | N/A | N/A | N/A |
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