Sub accounts in chart of accounts

Hi, I’ve set up my Chart of Accounts and under Income and Expenditure I have a number of Accounts and ‘Sub-Accounts’. However, when I enter transactions for example under Income, Subscriptions it doesn’t show me the Account heading only the sub-account. As far as I can see they are set up as Income, Subscriptions/ 2018/19 and the following years. Income is the headline account, Subscriptions show as Income and the 2018/19 sub account as Income>Subscriptions.
the Subscription Account shows however in the Proft & Loss report!
Can anyone help identify what’s wrong with the set up. Thanks.

Sorry, here’s the chart of accounts screenshot.46

You need to name the accounts Subs 2017/18, Subs 2018/19, etc

Don’t quite understand why you have separate accounts for each years subs.

Correct, as the dropdown only lists the actual accounts that can be selected for transactions, it doesn’t list / show heading titles (group names) as they can’t be selected for transactions. However, all heading titles are shown on reports and the Summary tab

@ObeOne, think about whether you actually want accounts for individual years. Once you have used an account in Manager, you cannot delete it without deleting all transactions posted to it. So as time goes on, your chart of accounts will get longer and longer.

More common practice would be to set up a Subscriptions income account and post to it continually. By setting the display period, only those transactions in the current period will appear on the Summary page. Profit and Loss Statement are then defined for the various accounting periods. As you have things now, your 2018 P&L will have accounts showing for future years.

@ObeOne, without knowing how your subscriptions and the account allocations are actually functioning, but technically, subscriptions received in advance should be held in a Balance Sheet > Liabilities account such as “Prepaid Subscriptions” as subscriptions received for 2019/2020 and beyond are not income until the financial year they belong to.

Also, in your Summary tab screenshot under Equity you are showing a Starting balance equity account, that account illustrates that there is an error in your setup. If you are coming from a previous accounting system and have entered Starting Balances in Manager then perhaps you haven’t added a Starting Balance for the previous Retained Earnings balance which would match / contra the Starting Balance given to the Cash at Bank account.

Thanks. We are a small social society operating a simple income and expenditure account on a cash basis only. Whilst I understand the Accruals and Prepayments system we do not operate that. We account for cash when it is received and expended. The sub accounts are only for reference to cross check with our member records.

The starting balances were set up using the forum guide which Tut signposted to me. I had previously entered a retained earnings balance and was advised that was incorrect.

As the reports work and the trial balance seems to work and are accurate. I am content to run with what we have even if its not perfect. Thanks.

No, they were not. The discussion about Starting balance equity in the other topic was never resolved. And now, the figures you are showing on your balance sheet are entirely different from the last ones shown in the other thread.

Again, not correct. You were advised that the way you had entered things was incorrect, not that a Retained earnings starting balance itself was incorrect. In fact, if you are migrating from another system, it is usually essential. Now, your revisions are incorrect.

This, of course, is your decision. But by following along your current path, your records are going to give you more and more trouble. If you are not willing or able to use a double-entry system correctly, you really will be better off to fall back to a spreadsheet. Otherwise, both you and your other owners are likely to looking at incorrect information.

Look I am really sorry if I have caused offence. I did follow the guide which you signposted me to. There is no need to be so aggressive. I think its probably best if we discontinue this conversation. Clearly this forum is not intended to help novices like me.

1 Like

No offense taken whatsoever. Novices at accounting often struggle with concepts, many of which are far from intuitive. Unfortunately, though, accounting is an unforgiving task. And it is hard to foresee the long-term effects of seemingly simple actions. So I’ve tried to offer the benefit of some of my experience. Please believe it is willingly given.

Trying to help people with their struggles at long distance, without access to the underlying data, can be difficult. That places premiums on precision of language and accurate descriptions of scenarios. When forum members poke and prod, it’s only to get information necessary for understanding so we can help. I know we can seem quite pedantic, but please don’t take anything personally.

On the contrary, it is expressly meant for users like you. Understand, though, that learning how to use Manager and learning accounting at the same time can be frustrating. The program will do almost anything you want it to, but you first have to know what you want. And knowing what you want often means understanding how accounting programs (not just Manager) work. Part of that knowledge sometimes includes knowing when a full-up, double-entry system is not what you need, even if it can be made to work.

Thank you. My frustration is that I am trying to follow the instructions re setting up the account in the user guide as signposted. Clearly there is something regarding the opening balances that i do not understand or am not interpreting correctly. I would like to get it right so that we can use the software. The opening balances used were the closing balance from our two accounts (Bank and Investment) taken from our last year’s balance sheet. They total 5504.75 which was the original opening balance. I did not enter the starting balance equity, the system did that from I believe the cash at bank opening balances which I did enter. Subsequently as I entered income and expenses the latest figures show a profit of £20.99 which the system itself entered as retained earnings. So it would help to know what I have done wrong in terms please.

All I am trying to achieve is a simple income and expenditure account which can be balanced at the end of our financial year. I have already saved the skeleton Chart of Accounts for future years and I’m quite happy to repopulate annually. If anyone has the patience to help me get this right I would be most grateful. Thank you.

Start by reading this Guide: It explains the fundamental concept of balancing debits and credits in accounting records.

Your two bank accounts are both assets. So their positive balances on the date you started using Manager are debits totaling 5504.75. To be in balance, the sum of liabilities and equity on that date must also equal 5504.75.

Since you had no liabilities, the entire 5504.75 must appear somewhere in equity. Normally, an accounting entity has some form of capital or owner’s equity accounting structure where equity is lodged. But you have not set anything like that up. Retained earnings is the net of all inflows and outflows since inception, but in practice acts to record only the net of those recent transactions that hasn’t yet been transferred to the established equity accounts. Had you initially set a starting balance in Retained earnings of 5504.75, everything would have balanced and the Starting balance equity account would never have appeared. The accounting approach of having all equity in Retained earnings would have been unusual, but balanced.

Now that you’ve begun entering other transactions, they are reflected in Retained earnings. (Notice how the Retained earnings balance is 20.99, matching your net profit?) If you had set a starting balance of 5504.75 in Retained earnings, all would still be in balance and the pesky Starting balance equity would vanish. Your Cash at bank asset balance has gone up because of later transactions. It would match the corrected equity balance.

As for how you should set up your equity accounts, that depends on the legal structure of your organization. If you are not a corporate entity or partnership, leaving everything in Retained earnings could be acceptable. Presumably, the original 5504.75 is the amount retained from previous operations and isn’t actually owed to anyone who made an investment in the organization. If that is the case, you could rename the Retained earnings account something like Society equity for clarity.

The question arises, however, whether your account structure is legal. Apparently, you are selling meals, drinks, and regalia. Those might be taxable transactions in your jurisdiction, requiring registration and filings. You should check with an accountant. The difference between a group of friends sharing the cost of a meal and a business selling food, drink, and other items can be small.

Thank you for this explanation. I will relook at these areas tomorrow. I did look at the link previously but obviously didn’t absorb it correctly. Hopefully I will be able to get it right this time. I think you may misunderstand our organisation in terms of our legal status. We dont sell meals in the business sense. Our members attend our functions and pay the cost of the meal charged to us by the hotel providing it. Insofar as we make any profit it gors towards our running costs. We are satusfued that in the UK what we do us quite legal. We are no eligible for tax. I’ll post a screen shot tomorrow once I’ve tried to action your advice.

With thanks to Davide, I would like to try to implement Tut’s advice. Thank you for now for your offer.

1 Like

@ObeOne, to cut through the unnecessary lecturing verbiage your Starting Balances should look like this

There is an easy better way to do this, rather then putting them into the P&L Income accounts.

  1. Activate the 0%20Spec%20Acct%20tab tab under Customise.

  2. In the Chart of Accounts create a BS Liability account called “Subscriptions Prepaid” as a control account

  3. Under the Special Accounts tab create the different financial years

  4. Now by looking at the Special Accounts tab you can see a list of prepaid years

  5. Enter the Member’s Receive Money per financial year

  6. When it comes to the next Financial Year, use a Journal Entry to transfer the prepayment from the Special Account to the P&L Income

1 Like

@ObeOne, if the only reason you set up accounts for future years was to be ready when they arrive, you can ignore everything @Brucanna wrote in the last post except the example of Starting Balances. You never mentioned anything about prepayments; in fact, you specifically said you do not operate that way. So there was no reason for @Brucanna to burden you with the elaborate discussion of special accounts and prepayments. You’ve made it quite clear that you are operating on a cash basis.

1 Like

Now sorted! Many thanks to everyone for their help and patience.