Contents - Index


Ledger Account Structure


Setting up the ledger account structure is crucial to getting the best out of the financial functions of Retail Business.  In the simplest form the ledger can consist of two accounts - Expense and Income.  However this is of little use in tracking important components of your business.

Spend some time thinking over how you want to report things.  Is it important to know how one part of your business is doing, as well as the whole business?  Are you running a home office? Do you want to divide certain sales from others?  Do you wish to track the cost involved in selling certain items?

Do you wish to track the performance of certain sales and expenses? If yes, create ledger codes (at least one each of income and expenditure) for each one you wish to track.
 
See how the ledger accounts affect the balance sheet and trial balance.

An example cash account structure is as follows:  

Note - each account must have a unique code

It is a good idea to decide whether to use numeric of alphabetic codes.  If numeric codes it is a good idea to group them.  For example income account codes could be in the range 100 to 199, expense (not overhead) in the range 200 to 299, and overhead expenses in the range 300 to 399.  If you think that you will need more than 100 accounts for any group then you can start at 1000 to 1999, etc.  It may be a good idea to use your accountant's coding system.  Professionals Retail Business does not display expenses as '-100.00', so you need to use the code, or its description, to know, at a glance, if an account is expense or income.

The following example is for a sole proprietor, working from home.

Company A, (G.S.T. enabled) Department (Business) 1 (G.S.T. enabled)

Income:

101 Sales - miscellaneous (G.S.T. - taxable)   
102 Sales - product X (G.S.T. - taxable) 
103 Sales - product Y (G.S.T. - taxable) 
104 Sales - both product X and Y (G.S.T. - taxable) 
105 Sales - Cash (G.S.T. - taxable)  
120 Refunds - from suppliers. (G.S.T. - taxable)
130 G.S.T. Refunds (0% - not enabled - not taxable (Balance sheet item account))
140 Bank interest (0% - not enabled - taxable)

Expenditure:

200 Materials - miscellaneous (G.S.T. -  taxable)  
201 Materials - Product X (G.S.T. - taxable)   
202 Materials - Product Y (G.S.T. - taxable)   
230 Rates on shop - Local Council (G.S.T. -  taxable)   
240 Vehicle - delivery van (G.S.T. - Dept 2 - taxable)   
250 Insurance - company X (G.S.T. - Dept 2 - taxable)  
203 Sundry expenditure (G.S.T. - taxable)     
260 Drawings - Dept B (G.S.T. not enabled - not taxable ) 
270 Credit cheques (G.S.T. -  taxable)  
280 Refunds - to customers (G.S.T -  taxable)  
300 Capital items (G.S.T. - not taxable)
400 Salaries (G.S.T. not enabled - taxable)
500 Tax to pay (G.S.T.not enabled - not taxable)

Taxable accounts are included on the Profit and loss report.  If you select the income statement option.