Lesson 31-- Accounts

This lesson covers Goldenseal accounts. The Goldenseal accounting software uses accounts for customers, employees, bank accounts, and other "real world" people, businesses and financial entities.

NOTE-- For intangible items like Accounts Payable and Accounts Receivable, Goldenseal uses Utility Accounts. For tracking expenses, you don't need accounts at all since you can use Cost Categories or Cost Locations.

There are four basic types of accounts-- jobs, assets, liabilities and costs.

Job Accounts

Job accounts consume expenses, and generate income (either directly or indirectly). When you track job costs, you'll assign every expense to a job account.

There are three classes of job accounts:

Customers-- Use Customer accounts for people or businesses that give you money for the goods or services that you provide to them.
Overhead accounts-- Use Overhead accounts to allocate your cost of doing business. Overhead accounts handle any expenses that can't be assigned to a specific customer or project.
Projects-- Use Project accounts for pieces of work that you do for a customer, or as part of your overhead.

Asset Accounts

Asset accounts are for items that you own that have value.

There are seven classes of asset accounts:

Cash-- Use cash accounts for cash registers, cash drawers, petty cash and money hidden in mattresses.
Checking-- Use checking accounts for bank accounts that you can draw on by writing sequential checks.
Equipment-- Use equipment accounts for machinery, vehicles, large tools, computers and similar items. Equipment is considered as both an asset and as a cost account.
Inventory-- Use inventory accounts for materials that you store for retail sales or for use in projects.
Investments-- Use investment accounts for any assets that don't fit into one of the other classes.
Real Estate-- Use real estate accounts for buildings and land that you own or manage.
Savings-- Using savings accounts for bank accounts that don't use sequential check numbers.

Liability Accounts

Asset accounts are for money that you owe to others, or for money that you manage on their behalf.

There are four classes of liability accounts:

Credit Cards-- Use credit card accounts for 'revolving' credit cards or credit lines that you can draw on or use for purchases.
Escrows-- Use escrow accounts for money that you manage for others. Escrow accounts don't show up on your balance sheet at all.
Loans-- Use loan accounts for mortgages, notes, and other debts.
Owner Equity-- Use owner equity accounts to track ownership of your business. In accounting terms, equity is a liability since you 'owe' it to the owners.

Cost Accounts

Cost accounts are for people or businesses that you pay for expenses.

There are five classes of cost accounts:

Employees-- Use employee accounts for each person that receives wages from you.
Equipment-- Use equipment accounts for machinery, vehicles, large tools, computers and similar items. Equipment is considered as both an asset and as a cost account.
Material Suppliers-- Use material accounts for anyone who provides you with tangible materials or supplies.
Subcontractors-- Use subcontractor accounts for anyone who provides you with services but who isn't on your payroll.
Other Costs-- Use other cost accounts for vendors who don't fit into one of the other cost account classes.

Overhead Accounts

Use Overhead accounts to track expenses that you can't assign to a specific customer or project.

You only need one overhead account, but you can create more if you'd like to track different types of overhead separately.

To create a new overhead account, follow these steps:

Choose Overhead from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name.
If you'd like to track overhead expenses against a budget, enter an estimate into the Job Cost Budget field.
Fill in the other fields (see the Reference Manual for details, or look at the help messages in the left side of the window).

Using Overhead Accounts

When you enter expenses that you can't assign to a specific customer or project, enter an overhead account into the Job field.

When you do large projects for use by your own company, create a Project account and assign it to an overhead account.

Cash Accounts

Use Cash accounts for currency, traveler's checks and other cash items that you keep in cash registers, cash drawers, or petty cash accounts. You can create a separate account for each location where cash is kept.

To create a new cash account, follow these steps:

Choose Cash from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name.
Enter an address.
Enter the starting balance, and the minimum balance you'll maintain.
Enter the Company Division in which to include this asset.
Enter any comments you have about this account.

Using Cash Accounts

When you use cash to make a purchase, enter a Material Purchase, enter Cash as a payment method and enter the cash account for an 'instant purchase' transaction.

To transfer money in or out of a cash account, use Cash Transactions.

To deposit money from a cash register or cash box, use the Deposit Funds command.

Checking Accounts

Use Checking accounts for bank accounts that include sequential checks that draw on your funds. Checking accounts are often the accounts that you'll use most frequently.

To create a new checking account, follow these steps:

Choose Checking from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name (for use in menus), and the full account name (for printed forms).
Enter an address, phone and account number. Then enter the starting balance, and the minimum balance you want to maintain.
Enter the company division in which to include this asset. HINT: To change the list of company divisions, click on the popup button next to the clairvoyant field, then choose Edit Company Divisions from the bottom of the menu.
Use the checkbook table to enter each checkbook that draws on this account. For each checkbook, enter the next available check number.

Using Checking Accounts

When you use cash to make a purchase, enter a Material Purchase, enter Checking as a payment method and enter the checking account for an 'instant purchase' transaction.

To pay multiple bills by check, use the Pay Bills command.

To write paychecks, use the Write Payroll command.

To transfer money in or out of a checking account, use Checking Transactions.

To deposit money into your checking account, use the Deposit Funds command.

Multiple Checkbooks

Each checking account can include one or more checkbooks. Each time you write a check, you can choose which checkbook to use for the payment.

To add a new checkbook to a checking account, follow these steps:

Choose Checking from the Accounts menu, and find the account you'd like to change.
Click anywhere in the last checkbook row in the checkbook table (at the right side of the window).
Press the Return key to add a new row.
Enter a new checkbook name, and the next available check number for that checkbook.
Repeat steps 3 and 4 for each additional checkbook in the account.
To change the next number for a checkbook, click in the Next # cell and type in a new number.

HINT: You may need to change the check number if you void a check, lose a checkbook, or otherwise get a mismatch between the next check number in Goldenseal and your actual checkbook.

Using Checkbooks

When you use the Write Payroll or Pay Bills commands, Goldenseal will ask you which checkbook to use for the payment .

To use a checkbook when you enter a check transaction directly, choose a checkbook from the Checkbook popup menu.

Inventory Accounts

Use Inventory accounts to keep track of goods that you store for a while before you sell them or use them in projects (see Lesson 47).

To create a new inventory account, follow these steps:

Choose Inventory from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name .
Choose the way you'd like to value the inventory in this account, and how items in the account should be aged.
Fill in the other fields (see the Reference Manual for details).

Using Inventory Accounts

When you buy materials for inventory, create a Material Purchase transaction, and enter an inventory account as the Job account.

When you sell items from inventory, enter the inventory account into the Sales transaction.

When you use inventory items in a project, create an Inventory Used transaction for the account.

To adjust inventory quantities or value, create an Inventory Transfer for the items.

Investment Accounts

Use Investment accounts for any assets that don't fit into one of the other categories.

To create a new Investment account, follow these steps:

Choose Investments from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name (for use in menus), and the full account name (for printed forms).
Enter an address, phone and account number. Then enter the starting balance, and the minimum balance you want to maintain.
Fill in the other fields (see the Reference Manual for details, or look at the help messages in the left side of the window).

Using Investment Accounts

To transfer money in or out of an investment account, choose Investment Transactions from the Bank menu.

Real Estate Accounts

Use Real Estate accounts for property that you own or manage (see Lesson 41 for more about rental management).

To create a Real Estate account, follow these steps:

Choose Real Estate from the Accounts menu.
Click the New button.
Enter information about the property (see the Reference Manual for details, or look at the help messages in the left side of the window).

Rental Units

Each rental property can contain one or more rental units. Enter them into the rental unit table. For each unit, type in a short name, choose rental payment terms, and enter the rent that you charge. For more about rental units in the Reference manual, click here.

NOTE: To enter rental payment terms, choose Payment Terms from the Options menu, then choose Rentals from the submenu.

Using Real Estate Accounts

When you enter expenses for a property, enter a Real Estate account into the Job field.

Enter Leases for tenants who rent, and enter Rental Transactions for the rent that they owe.

To create rental bills, choose Billing from the Bank menu, and choose Rentals from the submenu.

Savings Accounts

To create a new Savings account, follow these steps:

Choose Savings from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name.
Fill in the other fields (see the Reference Manual for details, or look at the help messages in the left side of the window).

Using Savings Accounts

To transfer money in or out of an savings account, choose Savings Transactions from the Bank menu.

Credit Card Accounts

Use Credit Card accounts for credit cards and similar 'revolving' lines of credit that you can draw on at any time.

NOTE: Don't create a separate account for debit cards. They can draw directly from the Checking or Savings account that provides funds.

To create a new Credit Card account, follow these steps:

Choose Credit Cards from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name (for use in menus), and the full account name (for printed forms).
Fill in the other fields (see the Reference Manual for details).

Using Credit Card Accounts

When you make a purchase and pay by credit card, enter a Material Purchase, enter Credit Card as a payment method and enter the credit card account for an 'instant purchase' transaction.

To transfer money in or out of a credit card account, choose Credit Card Transactions from the Bank menu.

Escrow Accounts

Use Escrow accounts for money that you manage on behalf of someone else.

To create a new Escrow account, follow these steps:

Choose Escrows from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name (for use in menus), and the full account name (for printed forms).
Fill in the other fields (see the Reference Manual for details).
You can enter multiple checkbooks into each escrow account.

Using Escrow Accounts

To transfer money in or out of an escrow account, choose Escrow Transactions from the Bank menu.

Loan Accounts

Use Loan accounts for any loans that aren't credit cards.

To create a new Loan account, follow these steps:

Choose Loans from the Accounts menu.
You'll see a browser window.
Click the New button.
Fill in the data fields (see the Reference Manual for details).
You can enter multiple checkbooks into each loan account.

Using Loan Accounts

To transfer money in or out of a loan account, choose Loan Transactions from the Bank menu.

Owner Equity Accounts

Use Owner Equity accounts to track ownership of your business.

HINT: You probably need only one owner equity account, even if there are multiple owners.

To create a new Owner Equity account, follow these steps:

Choose Owner Equity from the Accounts menu.
You'll see a browser window.
Click the New button.
Enter a short account name (for use in menus), and the full account name (for printed forms).
Enter an address, phone and account number. Then enter the starting balance, and the minimum balance you want to maintain.

Employee Accounts

Employee accounts store information about each employee.

To enter payroll information for an employee, follow these steps:

Choose Employees from the Accounts menu.
Click the New button.
Enter a brief name for the employee. It will appear in the Chart of Accounts and in popup menus. Also enter a job title and the employee's full name (for use on printed checks).
Enter the employee's address, phone, e-mail address and tax identification number. You can also enter an emergency contact person, and any comments you may have.
Enter the time and materials billing rate that is used for this employee. If the billing rate uses a variable amount, enter the amount that is used for this employee.
Enter the time and materials billing rate that is used for this employee (see page 329). If the billing rate uses a variable amount, enter the amount that is used for this employee.
Enter the billing rate and the optional billing amount that is used to calculate job costs for this employee.
Click the Payroll Setup button to enter the employees usual wage rate, tax withholding, benefits and vacations.

Using Employee Accounts

To track the work done by each employee, enter Labor Hours.

To write paychecks, use the Write Payroll command.

Goldenseal stores payroll information for each employee in Payroll Records.

To see contact records for an employee, click the View Appointments button, or one of the other action buttons.

Equipment Accounts

Create equipment accounts for equipment, vehicles, large tools, machinery and similar productive items that you own or lease. You can also use them for livestock, intellectual property or other productive units.

To create an Equipment account, follow these steps:

Choose Equipment from the Accounts menu.
Click the New button.
Enter an account name for use within Goldenseal, and a full name for printed forms.
Enter the employee who usually uses the equipment, and any comments you have about this equipment.
Enter the places where you ’d like to display this account in the Chart of Accounts.
Enter the company division to which this item belongs.
Enter a cost grouping for the equipment in the Cost Type field. This is just a convenient way to classify and group your cost accounts.
Enter the category system you’ll use when entering expenses for this account. You can also enter an estimate to use for a job cost budget.
To enter billing and depreciation info for this account, click the More Info button.

Using Equipment Accounts

To track the time that you use equipment, choose Equipment Hours from the Costs menu.

Goldenseal applies the equipment expense to time and materials billing and to job costs.

When you spend money on equipment, create an expense transaction and enter the equipment into the Job field (see page 240). That way you can track maintenance costs for each piece of equipment.

NOTE: Equipment is a cost account when you use it for work on projects, and an honorary job account when you need to repair it.

Goldenseal includes the value of your equipment as an asset on the Balance Sheet report.

Material Accounts

Before you start to enter material purchases, create a Material account for each supplier with whom you do business.

To create a Material account, follow these steps:

Choose Material Suppliers from the Accounts menu,.
Click the New button.
Fill in the data fields (see the Reference Manual for details).

Using Material Accounts

To enter purchases, choose Material Purchases from the Costs menu.

To pay invoices, choose Pay Bills from the Bank menu.

Subcontractor Accounts

Create a Subcontractor account for each person or business that provides professional services to you. To do so, follow these steps:

Choose Subcontractors from the Accounts menu.
Click the New button.
Enter an account name and other contact info.
Click the Billing Setup button, and enter billing info for this account.
Click the Insurance Setup button, and enter insurance expiration dates, and how you’ll handle expired insurance.

Using Subcontractor Accounts

To enter subcontractor invoices, choose Subcontractor Costs from the Costs menu.

To pay invoices, choose Pay Bills from the Bank menu.

Other Cost Accounts

If you pay money to someone and they aren't a material supplier or subcontractor, enter them as an Other Cost account. Use Other Cost accounts for government entities, and for those who provide you with services such as insurance, utilities, advertising, shipping and mailing.

NOTE: You can also create one or more Other Cost account to cover 'one time' vendors who don't need their own separate account.

To create an Other Cost account, follow these steps:

Choose Other Costs from the Accounts menu.
Click the New button.
Enter information about the account.

NOTE: See the Reference manual for details about each field. They are similar to the fields in material and subcontractor accounts.

Using Other Cost Accounts

To enter other cost transactions, choose Other Costs from the Costs menu.

To pay invoices, choose Pay Bills from the Bank menu.

Finishing Up

In this lesson you have learned how to work with accounts in the Goldenseal accounting software.

Before you move on, you may want to take a break. Relax, lie on your back and put your feet up. Can you wiggle your ears? Can you make the sound of one hand clapping? Can you make the sound of one ear wiggling?

FACT FOR THE DAY: Article 151, Subchapter 14.240-b of the US Tax Code requires all IRS auditors to be able to wiggle their ears by at least 1/4 inch (6 mm). It's considered useful for intimidating auditees, and it's entertaining for co-workers.