Added ability to create divisional balance sheet

1

The latest version (21.6.27) adds ability to create divisional balance sheet.

A few weeks ago I’ve disabled ability to be able to set tracking codes on transaction lines if you’ve selected balance sheet account.

There was no built-in report that was leveraging tracking codes on balance sheet accounts but there have been requests to be able to create balance sheet for tracking codes just like it has been already possible on profit & loss statement.

Now, the issue is that balance sheet must represent real accounts, not movements in those accounts. So the tracking code (or division) needs to be set on account-level rather than on transaction-level.

Let me demonstrate.

Let’s say you have two divisions:

  • Awesome division
  • Brilliant division

For now, you create these divisions as Tracking Codes under Settings tab (I will be renaming Tracking Codes for Divisions because this term is better suited).

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Every balance sheet account (or sub-account) can now be assigned division. That is:

  • Bank accounts
  • Cash accounts
  • Customers
  • Suppliers
  • Employees
  • Inventory items
  • Fixed assets
  • Intangible assets
  • Special accounts
  • Capital accounts
  • Expense claim accounts
  • and the custom balance sheet accounts defined in Chart of Accounts.

For example, when you create a bank account, you can set division to which this account belongs to.

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Now let’s create fixed asset which will belong to the same division.

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Then let’s create payment transaction that will purchase this fixed asset.

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As you can see, when entering transactions and interacting with balance sheet accounts, you do not select division on individual transactions. Balance sheet accounts are always “owned” by single division. In other words, balance of the account is owned by division. Not the movement. You are not tracking movements like on P&L.

When we create divisional balance sheet.

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We will see

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Balances correctly show under Awesome division column.

You can do interdivisional transactions too. For example, fixed asset could belong to Brilliant division which could have been purchased using money from Awesome division.

Let’s edit fixed asset and assign it Brilliant division instead.

Then look at the balance sheet again.

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Now you can see the fixed asset we have purchased is under Brilliant division.

There is also new account called Interdivisional loan which automatically tracks loan between divisions so divisional balance sheet always balances.

If you have an existing business, you can migrate to divisional accounting by simply editing every balance sheet account and selecting division. This is enough to produce divisional balance sheet.

4 Likes
2

@lubos Thank you, great development. I observed that it seems you can for example only have one division for a bank account, but it would be much more useful if this could be one or more.

3

You do not have to select division on bank account. You can leave division empty. Then bank account will not belong to any division and will show on consolidated balance sheet only.

4

I understand, but we actually have one company with four divisions of which three share a bank and a cash account and one has its own bank and cash accounts. Indeed, without the division system we had to create two diffferent “businesses” for this with tracing codes used in one of them.

5

That’s fine. You can make one of those three divisions to own the bank account. It doesn’t mean that net assets of that division will be inflated because there will be interdivisional loan.

Try creating bank account for division A and record receipt which will be a sale attributed to division B (e.g. $100).

You will see net assets of division A will be still $0 even if it owns the bank account because even though it has $100 in the bank, it also owes $100 to division B which results in $0 net assets.

6

Dear @lubos

May I suggest making a link to Tracking Codes Profit and Loss. this will help in allocating suppliers and customers bank and cash based on tracking code in profit and loss account

having this option will close below idea from the list

we should have an option in Tracking Codes Profit and Loss Account to link the cost center to a division code

this approach will help in allocation on both entry level and account level in case it is set up in the system

7

Division codes are not being assigned to starting balances.
In the snapshot below the starting balance is $743.98

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8

@AJD I’m aware of this issue. It will be fixed within a few days.

1 Like
9

Thanks

10

Dear @lubos, is it possible in the “divisions” settings to set up it the division should be used for BS, P&L or both; so that, for example, if it set only for BS, a particular division should appear only for divisional balance sheet.

11

What are you trying to achieve by having this?

12

Being a property company some tracking codes, ie divisions, are used only for P&L. In my case it is divided by building. Some other divisions are used only for BS, in my case for each investor.

So having a flag to assign a division only to BS or to P&L it would be very useful. It should only be a filter on the list in the drop down menu.

But I admit that this should be optional because many times the divisions should be the same in BS and P&L.

So the options should be three:

  1. BS and P&L (default)
  2. BS
  3. P&L
14

I’m considering moving over from QuickBooks and checking that Manager covers my requirements. I’ve got cost-reimbursable contracts that require separating direct cost and indirect cost pools. Divisions seems like the right tool for that in Manager (analogous, more or less, to classes in QB), but this issue with the banking stymies me.

Call the direct pools Division A and Division B. The third division is General & Accounting. The COA only has two asset lines - one for Accounts Receivable and one for the Bank Checking account. I put the Checking account in the G&A division for this example, but the basic issue arises no matter where I put it.

My issue is that Division A and Division B each see their assets increase as they invoice via the Accounts Receivable allocation, but when the invoices are paid, the asset moves to Checking in the G&A Division. That means that the operational divisions are always heading back toward 0 assets as they are paid whereas one expects a payment to be a net-zero change in assets. As your note indicates, the Net Assets line has the expected value because of a negative liability in the fictitious Interdivisional Loan account that you made, but this approach has effectively turned all assets of the division into a negative liability.

I understand the math, and we could certainly concoct a non-standard but mathematically correct chart of accounts that “simplified” everything by eliminating all asset accounts in favor of negative-valued liabilities, but there are a lot of reasons we don’t do that. The approach also seems inconsistent with the handling of other asset accounts, e.g. it’s perfectly possible to represent the intuitive (correct) division of assets while they remain in Accounts Receivable.

This thread is a few years old, but I think it’s the most current on this specific topic. Is there any further development of this feature planned?

15

A simple search on the Forum Search results for 'divisions order:latest' - Manager Forum shows a continues stream of posts related to Divisions. You are advised not to search too narrowly as many topics may actually help in your quest.

Manager is different from Quickbooks with its own strengths and weaknesses. Note that Manager almost daily releases new versions and therefore lots of changes were made in these 3 years.

Using control accounts and groups may also help you build a COA that meets your needs. Note that the best way to learn Manager is to download and install the free Desktop version that has all the accounting features of Cloud and Desktop edition except multi-user properties and internet-related ones such as links to invoices (as not being accessible from the desktop). Once downloaded it is recommended to use the new under development guides at Manager.io and especially the older but far more extensive guides at Guides | Manager

Also notice that Manager, similar to when starting with Quickbooks or any other accounting software for that matter requires, a significant learning curve. Each application has unique user-interfaces, properties and ways of doing things. For example Manager does not allow direct Journal entries for Bank transactions, but always use Payments and Receipts tabs, to reduce user errors related to debit and credit.

Wish you all the best with experimenting and exploring.

16

Thanks for responding, but this isn’t really relevant to my question. I read the guides and did the search. I downloaded the program, did the example that was given, and then did my own. If I’ve missed something specific related to my question, a pointer to that would be appreciated.

17

Although your question is difficult to decipher using other than Manager terminology such as pools, you seem to be concerned about:

I advised you to explore creating Control Accounts because you can then segment the accounts receivable and payable accordingly. Also creating Groups in the COA will help with further organising them. You do not have to use negative liabilities if you would assign it to an asset control account.

18

@eko Your responses lead me to believe that you haven’t understood the issue.

The problem is not about accounts payable being segmented - That part works. It’s that, as described by Lubos above and seen by me in the tool still today, Manager has special handling of bank accounts with Divisions that seems impossible for the user to change. Specifically, the program creates a new account (Interdivisional Loan) on the COA and allocates transactions in that account in a predefined way. The programed behavior is not consistent with accepted principles in my locale and industry.

The term “pool”, as I’ve used it, is a standard accounting term. I understand that terms may vary in different locations, but this one has wide usage even if it’s not universal: Cost pool - Wikipedia

To be clear, it’s not unique to bank accounts, but to keep things from getting too broad, that works as a viable example. It seems to impact balance sheet accounts that have a special role tied to other parts of the system. Employee clearing account seems to also fit.

The original question was if there are plans to update this behavior so that I can make an informed decision before attempting to workaround that goes counter to the overall design of the tool and/or moving onto a different tool more suited to my needs.

19

There is no schedule for any change to Manager. I would strongly suggest if you can not make the program as it is meet your needs then you will need to find another program.

20

OK, thank you for the update.

It’s too bad. The traditional players have made room for something like Manager to take a big share of the market - I would have paid for a compliant desktop version - but it’s got some quirks that have it in a strange niche between being a double-entry system and correct accounting software. Maybe I’ll check back in a year or so.

21

That is simply not true. Thousands of users and businesses across the globe are submitting their accounts to audits and tax authorities and have no issues. It complies wiht doube-entry accounting, you have not raised any issue that is to the contrary. Yes, it is not bespoke to any industry or location. If you have very specific needs then it may not always a good choice and as you indicated look elsewhere.