You are here: Ajera Help (A-Z) > Company preferences > Setting up balance sheet and income statement account preferences

Setting up account preferences

Enter accounts to ensure consistent financial reporting and allow staff to enter data without having to make accounting decisions. Ajera automatically sets up default accounts, which you can change, as needed.

  1. From the Company menu, click Preferences.
  1. Click the Balance Sheet Accounts tab to identify the appropriate asset and liability accounts from your chart of accounts.
Account Description

Asset accounts:

Pending deposits

Debited when a receipt is entered without being included on a deposit.

Credited when the receipt is included on a deposit.

Accounts receivable

Debited when client invoices are final printed.

Credited when receipts and credit memos are applied.

Employee receivable

Debited when employee paid an advance toward reimbursable expenses.

Credited when the employee submits an expense report with an advance.

Work-in-progress:

Labor

Debited for the billable amount when employee time is entered.

Credited when final client invoices are printed or hours are written off.

Expense

Debited for the billable amount when vendor invoices or in-house expenses are entered.

Credited when final client invoices are printed or expenses are written off.

Consultant

Debited for the billable amount when invoices are entered when using a consultant type activity.

Credited when final client invoices are printed or expenses are written off.

Liability and Equity accounts:

Accounts payable

Credited when vendor invoices are entered.

Debited when vendor invoices are paid or credit memos are issued.

Salaries payable

Credited when employee time is entered.

Debited when time is sent to your payroll service.

Client prepayments

Credited when prepaid client receipts are entered.

Debited when the receipts are applied to pay invoices.

Sales tax payable

If you plan to bill your clients for sales tax, enter the sales tax payable account.

Credited when final client invoices are printed. Debit this account when entering the vendor invoice to pay the tax.

Retained earnings

It is used when you perform the Close Fiscal Year task. If you have a net gain, the account is credited. If you have a net loss, the account is debited.

Note: For financial reports to print correctly, select an account with an account type of Retained Earnings.

Intercompany accounts (multi-company only):

For more information, see Setting up company preferences for multi-company.

Due from receivable

Debited when invoice, expense, or time entries cross companies in your organization.

Relieved through an intercompany bank transfer, intercompany receipt, or a journal entry to an intercompany account.

Due to payable

Credited when invoice, expense, or time entries cross companies in your organization.

Relieved through an intercompany bank transfer, intercompany vendor invoice, or a journal entry to an intercompany account.

Cash basis other income (multi-company only):

For more information, see Setting up company preferences for multi-company.

Department Select the department to use for all cash-basis intercompany entries.
Account

Account used when cash-basis entries are created that have an intercompany impact.

  1. Click the Income Statement Accounts tab to identify the appropriate revenue and expense accounts from your chart of accounts.
Account Description

Revenue accounts:

Billed labor

Credited with the labor billed amount when final client invoices are printed.

Debited if invoices are written off.

Billed expense

Credited with the expense billed amount when final client invoices are printed.

Debited if invoices are written off.

Billed consultant

Credited with the consultant billed amount when final client invoices are printed.

Debited if invoices are written off.

Unbilled labor

Credited with the labor billable amount when time is entered.

Debited when the final client invoices are printed.

Unbilled expense

Credited with the expense billable amount when expenses are entered.

Debited when the final client invoices are printed.

Unbilled consultant

Credited with the consultant billable amount when consultant invoices are entered.

Debited when the final client invoices are printed.

Bad Debt write-off

Debited when you issue a credit memo for an uncollectible client invoice.

Ajera automatically selects the Miscellaneous Revenue account for this field. Change the account, as needed.

Miscellaneous

Credited when adjustment amounts are entered in Manage > Client Invoices > Text & Amounts tab.

Debited if invoices are written off.

Note: If no other account is selected when making adjustments, the Miscellaneous account will be used.

Labor write-off

Debited when labor amounts or hours are written off or decreased during the client invoicing task, or when billed labor is not decreased when writing off final invoices.

Credited when labor amounts or hours are increased during the client invoicing task.

Expense write-off

Debited when expense amounts are written off or decreased during the client invoicing task, or if billed labor is not decreased during final invoicing.

Credited when expense amounts are increased during the client invoicing task. 

Consultant write-off

Debited when consultant amounts are written off or decreased during the client invoicing task.

Credited when consultant amounts are increased during the client invoicing task.

Other Income accounts:

Vendor write-off

Credited when a vendor invoice is written off.

The Accounts Payable account is debited.

Finance charges

If you plan to assess finance charges for overdue client invoices, enter the finance charges income account.

Credited when finance charges are assessed.

Debited if finance charges are written off.

Payroll expense accounts - Employee Time:

Billable

Debited with the employee's cost amount (hours x standard hourly rateClosed) when time is entered to a billable phase.

Nonbillable

Debited with the employee's cost amount (hours x standard hourly rate) when time is entered to a phase with a billing type of nonbillable.

Marketing

Debited with the employee's cost amount (hours x standard hourly rate) when time is entered to a phase with a billing type of marketing.

Overhead

Debited with the employee's cost amount (hours x standard hourly rate) when time is not entered to a phase or entered to a phase with a billing type of overhead.

Payroll expense accounts - Principal Time:

Billable

For employees who have the Principal check box selected on their employee record, debited with the employee's cost amount (hours x standard hourly rate) when time is entered to a billable phase.

Nonbillable

For employees who have the Principal check box selected on their employee record, debited with the employee's cost amount (hours x standard hourly rate) when time is entered to a phase with a billing type of nonbillable.

Marketing

For employees who have the Principal check box selected on their employee record, debited with the employee's cost amount (hours x standard hourly rate) when time is entered to a phase with a billing type of marketing.

Overhead

For employees who have the Principal check box selected on their employee record, debited with the employee's cost amount (hours x standard hourly rate) when time is not entered to a phase with a billing type of overhead.

 

Payroll variance

Debited when the actual amount paid to a salaried employee is greater than the standard cost calculated at the time of entry.

Credited if the actual amount paid to the salaried employee is less than the standard cost calculated at the time of entry.

Example

An employee's salary is $1,000.00. The employee is paid weekly for a normal pay period of 40 hours. The standard hourly rate is $25.00 ($1,000.00 / 40 hours).

When the employee works 40 hours in the week, the standard cost is $1,000.00 ($25.00 x 40 hours) and the actual cost is $1,000.00 (employees salary). The variance is zero ($1,000.00 - $1,000.00) and no payroll variance is calculated.

When the employee works 50 hours in a week, the standard cost is $1,250.00 ($25.00 x 50 hours) and the actual cost is $1,000.00 (employees salary). In this case, the payroll variance is $250.00 ($1,250.00 - $1,000.00), and this amount is credited to the payroll variance account.

When the employee works 35 hours in a week, the standard cost is $875.00 ($25.00 x 35 hours) and the actual cost is $1,000.00 (employees salary). In this case, the payroll variance is $-125.00 ($875.00 - $1,000.00) and the amount is debited to the payroll variance account.

Note:

This account is also debited and credited if rounding discrepancies occur when you process payroll for hourly or salaried employees.

 

 

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