Shouldn’t all accounts show up in the Journal Entry screen so manual adjustments can be made if necessary?
I discovered this because I was trying to move my WIP from the Income account to a Liability (contra-asset) account for uninvoiced WIP, as discussed under the topic “Unbilled time (Billable time - movement) and accrued income”, but the WIP account (formerly Billable time - movement) does not appear in the Journal Entry list.
I’ve noticed that the “missing” accounts are all what I think @lubos refers to as “control accounts.” (Maybe that’s not the right name, but accounts that are hard-coded and have specific internal functions; ones that automatically revert to pre-defined account names if you delete the name you gave it in the Chart of Accounts.)
Anyway, whether the accounts are special or not, shouldn’t I still be able to make a manual adjustment via to any account I need to, as long as I observe proper double-accounting practice? Isn’t that what the Journal Entries function is for?
@jon, you have correctly identified one of the reasons that accounts do not appear, probably the main one. And yes, those are the control accounts. Some of them interact with several other accounts in ways that are not obvious, such as when you mark up a billable expense with additional profit, or under- or over-bill an entry from billable time (maybe for goodwill, maybe for dispute resolution…), or when you do something with a fixed asset.
These transactions can get really wonky when multiple currencies are involved. So, just like bank and cash account transactions cannot be made with journal entries, so, too, with some others.
But I think you’ve got a point. Although you know I disagree with you on whether work in progress should be a liability, regardless of how you categorize it, you obviously cannot make the adjustment @tony mentions if you can’t select it.
That said, if you leave it as an income account, it won’t be included in the P&L once you reset the time period for the new accounting year. If you recategorize it as a liability, it could be with you forever. I believe the further into the accrual mindset you get, the more comfortable you might be with leaving that account where it started.
As I understand it, Control accounts can’t be amended directly, such as by Journal. You need to edit the original entry which in effect is doing a journal entry and that flows through to the control account.
To re-allocate your WIP you need to do this. First, as mentioned before, move the WIP to the base of the P&L under a heading like “Other Income”. Second, you need to create a Chart of Account called “WIP Clearing” and place it in the “Other Income” section. Third, you do a Journal Debiting the WIP Clearing which will contra out the WIP and Credit the Liability account. Takes a bit to set up, but then it would be plain sailing.
The only thing then will be for Manager to provide a Journal feature such as a tick box for automatic reversal in the following month
@jon If I recall you want to this adjustment monthly rather then just yearly, so here is a little time saving tip, personally, as the Other Income is below your net profit, each month I wouldn’t be creating and reversing journals. As the journal is only an internal management reporting adjustment rather then being an accounting transaction you could after the initial creation just leave it there. Then each month you just edit the date and value. The integrity of the accounting system is not impacted in any way.
@jon The exception would be year end, just make sure you don’t carry the journal over into the next year.
Technically, I could make journal entries to be able debit or credit any account (including control accounts).
Journal entries can access most control accounts however there are some accounts which cannot be accessed. For example, Accumulated depreciation, Billable time - movement or Currency exchange gains (losses).
Why? Because my thinking was that there is never good reason to messing around with these accounts.
Anyway, I will look into this again. This is more of a philosophical issue than technical.
Here’s a suggestion, then: Provide a Business-level setting called Expert Mode or something like that. These special accounts are included in the Journal Entry drop-downs only if the setting is on. The default setting is off. The screen where the option is selected can make it clear that tinkering with special accounts is an “at your own risk” affair. That way, expert users can make journal entries against special accounts, but casual users can’t do so inadvertently. Everybody is happy.
The program is in expert mode by default since using it properly requires knowledge of double-entry accounting principles.
Look, I don’t have a problem to enable access to these accounts from journal entry level. I just need to think about this. For example, with some accounts such as bank accounts or cash accounts I really really don’t want users to mess around with. Other accounts such as Billable time - movement I don’t care about as much. Accumulated depreciation account is gray area. The question is where do I draw the line not just for current accounts, but for future accounts too.
You’re absolutely right, especially with bank accounts. If journal entries were permitted, reconciling with the Bank Statement would be impossible, as the Bank could never have any knowledge that a journal existed.
As for allowing any Control Account journal entries at the chart of accounts level should be avoided because you then run into @lubos predicament - which to allow, which to prevent. It would be better for the overall integrity of Manager to have a standing of - no direct journal to Control Accounts.
Alternatively, on a case by case basis, a Control Account Tab may have a feature added which provides a journal type transaction, Take Billable Time which is the main focus of this tread. When selecting the tab, besides “New Billable Time” button you could have “Accounting Period Adjustment” button. This non-standard button could be generated by a setting selection and includes an automatic reversal on the first of the following period
This has several advantages:
It removes the need to decide who is in and who is out with regards to general Journals.
It keeps all activity relating to that Control Account TAB within that Tab
The “journal” can be designed to suit the particular Control Account rather then a one size suits all
The available features are more transparent to the user,
But journal entries do allow direct journals to control accounts. You can debit/credit accounts such as Accounts receivable, Accounts payable, Fixed assets, Capital accounts and many more without breaking the integrity.
The key here is that when you are selecting Accounts receivable control account, you have to specify which invoice balance you want to debit or credit. This way you can interact with control accounts from journal entry level without breaking integrity between general ledger reports and subsidiary ledgers.
