This included Asset Groups and then Specific Accounts in those groups. For example
Photography Equipment (Group)
Camera and Lens Equipment (Account)
Camera and Lens Equipment Accumulated Depreciation (Account)
and other Asset groups and accounts I want to track individually.
As I progressed through the guides I got to Control Accounts (Add custom control accounts | Manager) and how to set them up. For me, it appears that it does the same/similar thing as in Chart of Accounts but I suspect they are quite different.
Using the example in the guide, Brilliant Industries wants to separate specific Asset types. When you scroll down and see the section Where Brilliant edits individual fixed assets the screen under it is only seen when it is a control account rather than a chart of Accounts Account item.
I have read through the guides but I am still not sure what the difference is and how each one is used to set this all up properly. Please help me understand the differences and when to use one or the other.
Maybe I am going too deep in the Asset levels and need to just put them under Foxed Assets and not track them individually, but is that a Chart of Accounts Group/Account or a Controlled Account?
Cheers for your help in assisting me to understand what is used where and when.
The difference is simple. A standard account stands alone and appears on the balance sheet as itself. An example would be an account you create for a mortgage under the liabilities group.
A control account has subsidiary ledgers of a specific type. Only the control account appears on the balance sheet. Examples are Accounts receivable, made up of customers and Fixed assets, obviously comprising individual assets such as machinery and buildings. Bank accounts are also subsidiary ledgers that appear in the control account Cash & cash equivalents. Many control accounts appear by default when certain tabs are enabled. Subsidiary ledgers, like fixed assets, can be assigned to custom control accounts rather than their defaults.
Custom control accounts can be assigned to the main groups, or they can be assigned to subgroups, which is what is illustrated in the Guide.
It is almost impossible to really understand how the system works just by reading about it, no matter how good the documentation is.
The solution in Manager is exploit the fact you can have as many business as you like in Manager for no additional cost. Use this by creating multiple test businesses just to try things out.
With your very limited example, Photography Equipment would be a group, just as you have shown. That group could be under a main Fixed Assets group. Camera and Lens Equipment would be a control account made up of fixed assets. It would be assigned to the Photography and Lens Equipment group. Individual cameras would be the fixed assets.
However, unless you have other categories of fixed assets to track, you could leave everything in the default Fixed Assets control account. For accounting purposes, the groups make no difference. They only affect the display.
If you want, you can also just rename the default Fixed Assets control account as Photography and Lens Equipment. But that would only make sense if you have no other types of fixed assets.
As a final note, read my first post again. I said the difference between standard and control accounts was simple. I did not say setting up the complete chart of accounts was simple. But don’t make it more complex than necessary. I would guess you could get by with only the default Fixed Assets control account. You can always recategorize assets later for a more complex display if you feel the need. But you have to ask yourself whether the extra visibility really serves any purpose.
This was one of the reasons why we wanted to have camera and lens equipment separate as these can be purchased and disposed of individually. For example this year we spent $9600 on a camera, but we already have 2 others that were purchased the previous year. We also got a new lens for $5600 this year but will likely buy another next year.
So your suggestion to keep it simple may be to have them listed under fixed assets as a whole.
My confusion do I add them as Chart of Account Accounts or as Control Accounts. From what you have said and what I have read they should be control accounts unless I misunderstand it still.
It is almost impossible to really understand how the system works just by reading about it, no matter how good the documentation is.
This is my issue, I learn better from watching than reading. Reading the Manager guides is where I got stuck and confused about what Chart of Account Accounts are vs what Control Accounts are. I am still not 100% sure but I think I can try it all out and see where I go.
I am still looking for good bookkeeping video lessons/tutorials but most cost a fair bit or are for other software like quickbooks, xero etc
Use this by creating multiple test businesses just to try things out.
I am trying that but there is a steep learning curve if you have not done any of this before.
I assume that these assets are all for use by the business itself otherwise if they are for sale then these would be inventory items, Usually fixed assets are items that meet a specific minimum cost and be used for longer than an accounting year, so for example a camera memory card would just be an expense but a camera body of more than $1,000 that is used for several years would be a fixed asset.
Now as for using Manager:
Notice that typical Balance Sheet Fixed Asset “Summary Groups = Control Accounts” usually consist of items like:
Control Account: Land
Control Account: buildings
Control Account: Furniture and fixtures
and in your case, e.g. Control Account: Photography Equipment
You would also setup the same named control accounts for Depreciation Entries with the exception for “Land” as that usually can not be depreciated.
All these appear automatically in the Chart of Accounts, you thus do not have to create any yourself using Chart of Accounts settings.
Control Accounts only exist for Balance Sheet items such as Fixed Assets, however you will buy these, depreciate and dispose of these and that is usually recorder as part of the Profit and Loss account. Disposal in case the assets are sold is usually an Income Account and purchase, depreciation, etc are Expense Accounts. These you have to setup yourself in the Chart of Accounts.
As @Tut explained it would be clearer to “Group” the Balance Sheet Accounts and the P&L accounts using the Group function in the Chart of Accounts and move the relevant accounts under each group.
Assuming you enabled Fixed Assets in Customize you will see the Fixed Assets Tab and can create each single identifiable fixed asset. So for example for every camera body that you use you create a separate Fixed Asset item and assign:
Depreciation rate For example 10% would indicate that the item is expected to be written of in 10-years.
Control account - acquisition cost. Select the control account you created in the Balance Sheet such as “Photography Equipment”
Control account - accumulated depreciation. Same here select the Depreciation control account
Custom depreciation expense account. Select the one created in the Profit and Loss account.
Disposed fixed asset. You only enable this at the point of disposal of the asset, usually some years later and then select the income account you created in the Profit and Loss account.
If you like you can attach a picture of the asset but that is only helpful when reviewing the list of fixed assets under the Tab.
Now that you have setup the item you need to purchase it and you could enter a Purchase Invoice and/or a Payment for the Fixed asset. You just have to select under “account” the control account for the Fixed Assets such as “Photography Equipment” and another column will show where you can select one from the fixed assets you created under the fixed assets tab.
That is all and as recommended by @Patch it is advisable to experiment with this in a Test Business that you create for the purpose of learning and follow the instructions here or in the guides on fixed assets.
That is almost certainly not going to be true for accounting software. You will learn better by doing—in a test business—than by watching a cursor moving around on a screen.
To answer this question more specifically. I use control accounts for asset groups I want to track separately. So the question you need to ask yourself is, what asset groups do I want to track separately.
@Patch has furnished an excellent example. It highlights a fact that has been hinted at but not mentioned explicitly. No individual fixed asset appears on the balance sheet. You would be stuck with it forever, long after the camera wore out or was replaced by better technology. But, because all cameras are subsidiary ledgers of a photographic equipment control account, the control account will remain the same even as its constituent cameras come and go.
@Patch and @Tut, a big thank you very much. Your help is greatly appreciated and I now feel I finally have a grasp on the differences and how they work. I will continue to play with a test business and also utilise accountingcoach.com.
