Lesson 31-- Cost Accounts

There are four basic types of accounts used in Goldenseal small business accounting software--Jobs, Assets, Liabilities and Costs (described here).

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 Supplier 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.

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 Supplier 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.