About effective cost and the general ledger

When you enter time, effective cost and standard cost create the same entries for salaried employees because Ajera can calculate effective cost rates only.

With this general ledger account	Effective cost does this	Standard cost does this
Salaries Payable	Creates entries based on the employee's standard cost rate	Creates entries based on the employee's standard cost rate
Labor Cost	Creates entries based on the employee's standard cost rate	Creates entries based on the employee's standard cost rate
Work-in-Progress	Creates entries based on the employee's standard cost rate	Creates entries based on the employee's standard cost rate
Unearned Revenue	Creates entries based on the employee's standard cost rate, according to the billing rate table	Creates entries based on the employee's standard cost rate

When you process payroll, effective cost and standard cost create different cost entries.

With this general ledger account	Effective cost does this	Standard cost does this
Salaries Payable	Creates in/out entries to reverse at payroll cost	Creates reversing entry, based on employee's standard cost rate
Labor Cost	Creates in/out entries to recognize payroll cost	N/A
Payroll Variance	N/A	Creates an entry of the difference between standard cost and payroll cost

If the billing rates are based on effective cost, Ajera makes the following entries.

With this general ledger account	Effective cost does this	Standard cost does this
Work-in-Progress	Creates in/out entries to correct the billing amount	N/A
Unbilled Revenue	Creates in/out entries to correct the billing amount	N/A