12.1.1. Accounting Schema

Accounting Schema

The Accounting Schema window, located in the Performance Analysis -> Accounting Rules menu, allows you to define the accounting method and the elements that determine the accounting structure. The primary accounting schema is defined when initializing the tenant, but it can be modified and further schemas can also be added. The following fields are available:

• GAAP (General Accepted Accounting Principle) - the GAAP accounting system;

• Commitment Type - depending on the selection, accounting transactions will be generated from orders:

  • "None" - no accounting transactions will be generated from orders;

  • "Commitment Only"

  • "Commitment & Reservation"

• Accrual - indicates how the revenue and expenses are registered:

  • checked - based on invoices;

  • cleared - based on actual payments/receipts, (Cash Accounting);

• Costing Method - method used for cost calculation. The following methods are available: FIFO, LIFO, Average PO. Average Invoice, Standard Costing, Last Invoice, Last PO Price;

• Cost Type - cost classification method;

  • Costing Level - the lowest level where costing information is accumulated;

• Adjust COGS (Cost of Goods Sold) - if checked, you can adjust the cost of goods sold using the amounts on vendor invoices registered later (e.g. freight, customs, insurance);

  • Details in Costs;

• Currency - the currency used for the resulting accounting transactions, regardless of docuemnt currency;

• Automatic Period Control - if checked, the corresponding accounting periods are opened automatically, and is used as an alternative to the accounting calendar. The following fields will be available:

  • History Days, Future Days - are used to define the time interval for opening the accounting periods, relative to the current date. For example, if the current date is 20th April, History days = -10 and Future days = +10, you will only be able to transfer documents with the account date within the 10 - 30 April interval;

  • Period

• Element Separator - symbol used to separate accounting dimensions when displaying an accounting combination;

  • Use Account Alias - check to allow the definition of generic account aliases for the accounting combinations. These can be used in searches and quick accounting combinations selections;

  • Post Trade Discount - check to post the discounts to specific accounts. If unchecked, the discount will be deducted from the revenue account;

• Post Services Separately - check to post products, services and resources to separate accounts. If unchecked, the posting will be done to the accounts defined at product/product category level;

  • Tax Correction - check for VAT systems based on "pro-rata", and it indicates the fact that the tax is based on the discounted amount and not on the original amount on the document;

  • Explicit Cost Adjustment - check to view the debit/credit accounts when transferring the vendor invoices with costs allocated to stocks. If unchecked, the accounting transactions will include an Invoice Price Variance (Cost Adjustment), a Tax Credit and a Vendor Liability account;

• Only Organization - is used when there is no principal accounting schema and only the selected organization's transactions will be generated based on this accounting schema. You can also select a parent organization (summary level) when you want to restrict the transactions to an organization group.

  • For example: a tenant has 3 organizations: 2 in Romania and 1 in Bulgaria. For the Bulgarian organization, you need to generate the transactions in Leva, whereas for the other 2, RON will be used as the currency on the documents. The principal accounting schema will be defined for the organizations in Romania so that, when you transfer a document from the Bulgarian organization, 2 postings will automatically be generated: one in Leva for the Bulgarian specific accounting schema, and one in RON, for the principal accounting schema.

  • Save Accounting Fact Account-Corresponding Account - each accounting transfer will also be registered in the "Accounting Fact Account-Corresponding Account" window, which is used to generate specific accounting reports (indicated by the "(RO)" prefix);

  • Copy GL/Default button - is used to copy the default accounts/GLs from an accounting schema to another. This process is useful when you want to use an alternative accounting schema with similar accounts;

Note: For any changes to the accounting schema to be applied, they must be followed by a system reconnect and restarting the accounting processor.

Account Schema Elements

The Account Schema Elements tab is used to define accounting elements combinations used for the accounting schema. The Account and Organization are mandatory elements. The other elements such as Business Partners, Products, Project and Campaigns can be included to provide additional information used for reporting. The following fields are available:

• Name - relevant name for the record;

  • Type - the following accounting dimension types are available: Account, Asset, Activity, BPartner, Contract,Employee, Location From, Locator, Location To, Campaign, Organization, Org Trx, Project, Product, Sub Account, Sales Region, User List 1, User List 2, User Element 1, or User Element 2.

  • User List and User Element are user defined accounting elements;

  • if the type is Account, the corresponding account element must be selected in the Element field;

    • the "Activity" type elements can be defined in the Activity (ABC) window, located in the Performance Analysis -> Accounting Rules menu. The following fields are available:

    • Search Key, Name, Description, Comment

      • OHE (overall work effectiveness) - the hours entered for an activity with this checkbox are considered to be effective work hours;

      • Use on HH - this activity can be used on records entered using hand held devices;

      • Locator - corresponding locator for the activity;

  • depending on the type, a default value can be selected in the corresponding field;

  • Balanced - the accounting element must to be balanced;

• Mandatory - if checked, on resulting accounting transaction, this accounting element must have a value;

• Sequence - determines the element order within the accounting combination;

Note: The Account and Organization are mandatory elements. Usually, mandatory elements will never be "Balanced".

The Account Combination window, located in the Performance Analysis -> Accounting Rules menu, displays all the available accounting combinations and allows you to assign aliases for specific accounting combinations.

User Defined Elements

It is possible for the predefined document elements to not satisfy the organization's requirements, therefore SocrateCloud allows the used to define 4 additional elements: UserList1, User List 2, User Element 1 and User Element 2.

The "User List" elements can be defined following the steps described below:

1. The first step is to define the element tree. To define a tree, open the Tree window, located in the System Admin -> General Rules -> System Rules menu:

   • Type | Area = "User 1" or "User 2"

   • Table = "C_ElementValue_Account Element"

   • Details in Trees.

2. The next step is to define the user element and its corresponding values in the Account Element window located in the Performance Analysis -> Accounting Rules menu:

   • Type = "User Defined"

   • Tree = tree defined at step 1;

   • the corresponding element values are be defined in the Element Value tab

   • Details in Account Element.

3. The last step is to add a new element for the accounting schema. To add a new element to the accounting schema open the Account Schema Element tab from the Accounting Schema window:

   • Type = "User List 1" or "User List 2";

   • Element = the record defined at step 2.

The "User Element" dimensions can be define in the Account Schema Element tab and contain the records within a table column.

General Ledger

Go to the General Ledger tab to enter the accounting combinations that will be used for the transfer of certain transactions. The following fields are available:

• Use Suspense Balancing - check to allow the journal to be unbalanced, in order to force the posting. The unbalanced amount will be posted in the "Suspense Balancing" account;

• Use Suspense Error - check to display the errors when they are posted. The volume of the errors will be posted in the "Suspense Error" account;

• Use Currency Balancing - check if you want to allow the journal to be unbalanced from the currency point of view, in order to force the posting. This might result in the rounding process when the currency is exchanged. The unbalanced amount will be posted in the "Currency Balancing" account;

• Retained Earnings Acct and Income Summary Acct - are used when posting the entries at the end of the year.

• Intercompany Due To Acct and Intercompany Due From Acct - are used to post the inter-company transactions. These accounts need to be defined even when you do not plan on using them.

• PPV Offset - is used to register the purchase price variances.

• Commitment Offset - is used to register the commitment and reservation transactions. These will be generated if you have selected Commitment only or Commitment & Reservation for the Commitment Type field for the accounting schema.

Note: This is one of the windows where you can enter an alias for an accounting combination. All of the accounts need to be defined even if they will not be used.

Default Accounts

The Defaults tab is used to enter the default accounts that will be used for posting, if the specific accounts have not been defined. The following fields are available:

The default accounts are defined at accounting schema level and they are imported during the tenant setup. You can update the accounts for the Business Partner, Product, Warehouse, Project, Bank, Tax, General and Cash Book.

For example,

• when selling a product, the corresponding revenue account will be used. This default account is taken from the revenue account defined for the product category, which in turn is taken from the accounts defined for the accounting schema.

• when defining a new product category, the values in the Accounting tab will represent the default accounts for the products corresponding to the category. Therefore, any editing should be done only in exceptional cases.

The Copy Accounts button will overwrite all the accounts defined in SocrateCloud with their default values. For a new accounting schema it is used to add the corresponding accounting records in the Accounting tab for all SocrateCloud entities.

The following table highlights the accounts used to generate the postings and where there are default values defined:

Note: This is one of the windows where you can enter an alias for an accounting combination. All of the accounts need to be defined even if they will not be used.

Multiple Accounting Schemas

Multiple accounting schemas are necessary when transferring transactions in multiple currencies or when using multiple GL Journals with specific accounting rules. To define multiple accounting schema, first you need to determine if you need a new set of accounting elements. If necessary, follow the steps described below to define a new accounting schema:

1. First you need to define a tree for the accounting elements. To define a classification open the Tree window located in System Admin -> General Rules -> System Rules. The classification must have the following properties

   • Table = "C_ElementValue_Account Element";

   • Type | Area = "Element Value";

   • All Nodes = Checked;

   • Details in Classifications;

2. The second step is defining the classification components, the accounting elements:

   • to define the account plan open the Account Element window, located in Performance Analysis -> Accounting Rules, for which you need to select the classification defined at step 1;

   • the corresponding elements are defined in the Element Value tab or can be imported. Details in Account Element;

3. The next step is to define the accounting schema. To define an accounting schema open the Accounting Schema window, located in Performance Analysis -> Accounting Rules. Details in Accounting Schema

4. To generate within the system the corresponding record for the new accounting schema you need to run the Copy Accounts process from the Default Accounts tab, Accounting Schema window.

As a result, all the operational documents transferred will also generate accounting transactions for the new accounting schema.

The Accounting Schema Mapping window, located in the Performance Analysis -> Accounting Rules can be used to define accounting transaction mapping rules from the base accounting schema to a secondary accounting schema. According to the records in the Element Value Mapping tab, transactions registered in the primary accounting schema account selected in the Account Element field, will be also registered in the secondary schema account selected in the Account Element to field.