I think that I just need to see if I have clearly understood how to best use
- Custom Control Accounts
- Sub Accounts
- Tracking Codes
- Custom Income and Custom Expense Accounts
Custom Control Accounts - This is used to split a control account on the summary page into the different accounts contained within a control account on the summary page.
For example, Cash and Cash Equivalents could have bank account and petty cash when you drill down. But if you want to see bank account and petty cash on the summary page instead of Cash and Cash Equivalents you need to use Custom Control Accounts to break this up.
I wonder if this should be called Sub Accounts as Petty Cash and Bank Accounts are both sub accounts of Cash Accounts Tab. To me the name Sub Accounts is more relevant and more logical here!
Tracking Codes - This is used to split the company into divisions such as LA Branch and New York Branch, or Retail Office and Warehouse etc. Basically Tracking codes is about company divisions.
Sub Accounts - This is bascially where you have headings like Client Expenditure, Company Expenditure and Employee Expenditure and you can categorise the expenses under Client Expenditure for things like delivery fees, Inventory-Cost and basically any purchase that you make in order to generate a sales (COGS).
Company Expenditure would be non client related stuff like Accounting Fees, Advertising and Promotion - in short Company Running Costs that incur regardless of any clients or sales.
To me sub accounts should be called Account Categories or multi step summary or summary sections or something like that as from what I understand one is dividing the expenses/income/asset/liabilities up into sections on the profit and loss statement - they are not really sub accounts as in an account that goes under another account. To me the concept of Custom Control Accounts is what I would call the Sub Accounts as you are breaking up the Control Account into Sub Accounts per se! This is why I always get confused with sub accounts and Custom Control Accounts as the current names are not logical names for these functions.
Custom Income and Custom Expense Accounts I am not really sure that I understand the difference between these and Custom Control Accounts unless Custom Control Accounts for inventory items for example would lump both purchases and sale of inventory items into that Custom Control Account - something that I cannot see the point of under any circumstance. Is this the difference between Custom Control Accounts and Custom income and Custom Expense Accounts?
Usage for Inventory Items I think that I need to use Custom Income and Custom Expense Accounts to create income and expense accounts like Laptop Sales and Laptop Purchase to break up the inventory sales and inventory purchases into the categories that I want. However, neither myself nor my accountant want to see a long list of Inventory Categories such as computer, laptops, whiteboards, projectors, printers, software, Network equipment as its not relevant to end of year return and I would find it more useful most of the time to have the total for inventory sales and inventory purchases. So I would need to use Sub Accounts and create two sub accounts called Inventory Sales and Inventory Purchases and put all my custom income and Custom Expense Accounts underneath these two headings.
This would give my accountant the information that she needs which is the inventory sales total and inventory purchases total - as well as myself as that figure is the more relevant one. This would also give me the ability to view the individual inventory categories such as computers and laptops so that I can see how well each category does etc.
The problem sill hower is the long list of Inventory Categories that don’t need to be permanently visible on the summary page.
My Recommendation - would be to enable one of two features
- When we click on Inventory Sales (i.e.) drill down, we get a view of inventory by category - that is the Custom Income Accounts such as Computer Sales and Laptop Sales and then we can drill down on say computers to view all computer sales.
- Another Option would be to retain the Sub Accounts Concept, but allow Sub Accounts to be hidden or expanded by clicking on a plus box sign next to Sub Account such as Inventory Sales
I would prefer the second option for several reasons. It can be easily used by all sub accounts, not just Inventory Sales and Inventory Purchases. If you want to look at two sections of the summary page and compare figures etc, you can mimimise (hide) all other sub account sections to prevent having to scroll up and down the summary page. Thirdly it allows you to compare two different sections of the summary page which you cannot do if you are drilling down. Lastly, it allows you to hide infrequently used sections of the summary page which would solve my main issue of not showing all the inventory categories on the summary page or in profit and loss statement.
Sorry for the very very long post, but I am trying to get this right for my inventory. Currently I am using tracking codes for inventory items, but this is unsatisfactory as tracking codes are meant to be used for divisions not to differentiate between computers, laptops and whiteboard sales especially when the company is a small IT Company. Secondly, using tracking codes means that I have to create reports everytime I want a quick overview at what inventory categories are selling well and what is not. Yes I could create a report, but I think that inventory sales and inventory Purchases should have some kind of useful breakdown of the inventory on the summary page in the same way that you can break down the cash and cash equivalents into all the different accounts that make up cash and cash equivalents. Just having a list of all the inventory transactions is not sufficiently useful whereas breaking up inventory into categories like laptops, computers etc would be far more useful.