Overview 

Ledgers serve as a central repository for all financial data and are used to track the actual results of companies or legal entities. Creating a new Ledger should be a rare event for your organization.

The four types of Ledgers include the following:   

• Transactional - used to record actual results for an organization(s).
• Budget - used to record planned or forecasted results for comparison against Transactional Ledgers.
• Consolidations-Transactional - used to record the combination of actual results from two or more organizations. 
• Consolidations-Budget - used to record planned or forecasted results for comparison against Consolidations Ledgers.

Important: In Accounting Seed, each additional Transactional Ledger and each Consolidations-Transactional Ledger is counted towards the Ledger limit. However, Budget Ledgers and Consolidations-Budget Ledgers are not counted as additional Ledgers. Eliminations Ledgers are also not counted as additional Ledgers.

Accounting Method

Accounting Seed provides the ability to select from one of three different Accounting Methods:

Important: AvaTax can be configured to calculate sales tax, however only on Accrual Ledgers, as AvaTax does not support the calculation of tax with Cash Basis Accounting. If you configure a Ledger where the Accounting Method is “Cash,” then the related Tax Settings record must be configured with an AS Native Tax method. If the Accounting Method that is selected on the Ledger is “Accrual and Cash,” then you can configure AvaTax on the related Tax Settings record for the Accrual and Cash Ledger since this is equivalent to your Accrual Ledger. And then, configure AS Native Tax on the Tax Settings record for the Related Cash Ledger, although this will not have any impact on what is recorded. In this scenario, the tax calculated on the Accrual and Cash Ledger will be recorded on the Cash Ledger when the payment is received. 

• Accrual
  
  • • Posted (finalized) records automatically generate transactions, which are recorded in the General Ledger at the time of occurrence, regardless of when cash is exchanged.
    • Revenue is only recognized when it is earned, regardless of when the cash is received.
    • Expenses are recognized at the time of occurrence, regardless of when the cash is paid.
    • This method includes all transactions, and does not consider whether or not cash has changed hands.
    • This method is typically used by larger businesses.
    • If you currently have Accrual as the Accounting Method, and want to switch to Cash, the Accrual Ledger will be deactivated. However, the history information on the Ledger will still be available.
• Cash 
  • • Posted (finalized) records only generate transactions that are recorded in the General Ledger when cash is paid.
    • Revenue is recognized when cash is received.
    • Expenses are recognized when cash is paid.
    • This method is typically used by smaller businesses and/or businesses in the service industry.
      Best Practice: When initially starting to use Cash Basis, we recommend selecting the Accrual and Cash Accounting Method. 
• Accrual and Cash
  • • When Accrual and Cash (Multi-book Accounting) is selected, the primary Transactional Ledger will function using the Accrual Accounting Method. However, a Related Ledger will automatically be created, which will function using the Cash Accounting Method.
    • When Accrual and Cash is selected from the Accounting Method drop-down list, the Related Ledger field will automatically display.
      
      Note: Click here to view the above image in full screen. 
      
      Important: Accrual and Cash cannot be selected for a Consolidations-Transactional Ledger. An error message will display if you attempt to select Accrual and Cash on a Consolidations-Transactional Ledger or Consolidations-Budget Ledger. 
      
      
    • On source records such as, Billings, Payables, Cash Receipts, Cash Disbursements, Journal Entries, etc., you will only be able to select the primary Ledger. The Related Ledger cannot be selected on source documents.
    • On Journal Entries and Amortization Entries, the Accrual and/or Cash drop-down list will allow you to indicate if you want transactions generated on only the Accrual Ledger, only the Cash Ledger, or on both Ledgers.
      
      Note: If Accrual and Cash is selected from this drop-down list, Journal Entry and Amortization Entry records will only be created on the Accrual Ledger. However, after posting, transactions will be generated on both the Accrual Ledger and the Cash Ledgers.
      
      Note: If the Accrual and/or Cash drop-down list is left blank, it will default to the Accounting Method that is selected on the Ledger. And, an Accounting Method that is different from the one on the Ledger cannot be selected. On the Create Amortization Entries dialog box, this drop-down list is disabled on an Accrual Ledger and on a Cash Ledger. However, it will be enabled when Accrual and Cash is the selected Accounting Method.
      
      
    • If you select Accrual and Cash Ledger as the Accounting Method, an additional Ledger will need to be purchased. For more information, please send an email to licensing@accountingseed.com.

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Consolidations Ledger Considerations

When creating a Consolidations Ledger, keep the following points in mind:

• Consolidations-Transactional and Consolidations-Budget Ledgers are manually created and/or deleted.
• Eliminations Ledgers cannot be manually created and/or deleted. An Eliminations Ledger will automatically be created when a Consolidations-Transactional Ledger or Consolidations-Budget Ledger is created. For example, a Consolidations-Transactional Ledger with the Ledger Name of “West Coast” was created. The Eliminations Ledger of “West Coast - EL” will automatically be created.
• Only manual Financial Cubes can be created for an Eliminations Budget Ledger. 
• When a Consolidations-Transactional Ledger or Consolidations-Budget Ledger is deleted, the respective Eliminations Ledger will automatically be deleted. 
• A Consolidations Ledger cannot be deleted if it or the related Eliminations Ledger has associated records, or they are part of a Ledger Hierarchy in Set up Consolidations. 
• If you have Multi-currency, the currency for the new Consolidations-Transactional Ledger or Consolidations-Budget Ledger will need to be selected from the Currency drop-down list at the time of creation in the New Ledger dialog box. 
• Consolidations-Transactional Ledgers and Consolidations-Budget Ledgers can be cloned. The respective Eliminations Ledgers will automatically be created as part of the cloning process. Eliminations Ledgers cannot be cloned manually. 
• A Consolidations-Transactional Ledger and/or Consolidations-Budget Ledger cannot be selected as the Ledger lookup on source records. 
• The only source records that can be created for an Eliminations Transactional Ledger are Journal Entries and Recurring Journal Entries. 

Pre-Tax Discount

The Enable Pre-Tax Discount Calculation checkbox is available on the Ledger screen to allow discounts on Billings to be calculated on a pre-tax basis (subtotal instead of total amount) when this checkbox is selected. When this checkbox is de-selected (unchecked), discounts on Billings will be calculated on the total amount.

Discounts display on the Billing screen and the Receive Payment screen.

The Enable Pre-Tax Discount Calculation field is available for AS Native Tax and Avalara AvaTax when using Header Level Posting (HLP) or Line Level Posting (LLP).

Ledger GL Defaults

The Default GL Accounts screen can be accessed directly from a Ledger record by clicking the Ledger GL Defaults button. Additionally, you can set up different default GL Accounts for each Ledger. When you add a new Transactional Ledger, the “out of the box” default GL Accounts will automatically be set on the newly added Transactional Ledger. You will need to review them by going to the Default GL Accounts screen, and then selecting each Ledger.

Configure a Ledger

1. Navigate to Accounting Home and click the Setup tab. Then, under the Ledger menu, click Ledgers.
2. From the Ledgers list view, click New. The New Ledger dialog box displays.
3. Enter a Ledger Name.
4. Click the Type drop-down list to select one of the following:
   
   1. Transactional - used to record actual results for an organization(s).
   2. Budget - used to record planned or forecasted results for comparison against Transactional Ledgers.
   3. Consolidations-Transactional - used to record the combination of actual results from two or more organizations.
   4. Consolidations-Budget - used to record planned or forecasted results for comparison against Consolidations Ledgers.
5. Click the Currency drop-down list to select the appropriate currency for the new Ledger.
   Note: The Currency field is only available is Multi-currency is enabled.
6. Click the Accounting Method drop-down list to select the appropriate method for this new Ledger.
   
   1. Accrual
   2. Cash
   3. Accrual and Cash – when this option is selected, the Related Ledger field will automatically display below the Accounting Method field. The Related Ledger field will automatically be set as the Cash Ledger.
      

      Note: If you need assistance with selecting a method, refer to the Accounting Method section in this article.

7. If using Sola and/or Stripe as your Payment Processor, click the Lookup icon to select the Default Payment Processor.  
   
   This field determines the Payment Processor on a Billing. If the Account record that is related to the Billing has a Default Payment Processor, it will display on the Billing. However, if that field is blank on the Account record, the Default Payment Processor entered here on the Ledger will display on the Billing. If the Default Payment Processor on both the Account record and the Ledger are blank, the Global Default Payment Processor will display on the Billing.      
   
   Note: The Account object and the Ledger object include a Lookup filter on the Default Payment Processor field, which prevents AP Payment Processor types from displaying. This is a way to make sure that an AP Payment Processor is not being used when only an AR Payment Processor should be used. If the Default Payment Processor on any of the above fields is an AP Payment Processor, it will be ignored during the Billing creation process.  
      
8. From the Default Bank Account field, click the Lookup icon to search for and select the appropriate bank account for this Ledger.
   
   
9. From the Tax Settings field, click the Lookup icon to search for and select the appropriate Tax Setting. For more information, refer to the Tax Settings article.
   
   Note: If you have the Large Data Optimizer feature enabled, once the Ledger record is saved, the Tax Settings field cannot be changed when one or more source documents are saved to that Ledger with the Posting Status of “Posting in Progress or “Unposting in Progress.” These two statuses indicate that the Posting/Unposting job is processing asynchronously in the background.
   
   Important: Remember that AvaTax can be configured to calculate sales tax, however only on Accrual Ledgers, as AvaTax does not support the calculation of tax with Cash Basis Accounting. If you configure a Ledger where the Accounting Method is “Cash,” then the related Tax Settings record must be configured with an AS Native Tax method. If the Accounting Method that is selected on the Ledger is “Accrual and Cash,” then you can configure AvaTax on the related Tax Settings record for the Accrual and Cash Ledger since this is equivalent to your Accrual Ledger. And then, configure AS Native Tax on the Tax Settings record for the Related Cash Ledger, although this will not have any impact on what is recorded. In this scenario, the tax calculated on the Accrual and Cash Ledger will be recorded on the Cash Ledger when the payment is received.
   
   
10. Enter the Sales Tax Company Code from Avalara.
    
    Note: This would only be applicable if the Accounting Method was Accrual or Accrual and Cash, and an AvaTax Tax Method was selected on the Accrual or the Accrual and Cash Ledger in the Tax Settings field.
    
    
11. For each of the below PDF Formats, click the Lookup icon to select the desired PDF format. For more information, refer to the Configure Standard PDF Formats article and/or the Create a Custom PDF Format article.
    
    1. Default Billing Format
    2. Billing Activity Statement Format
    3. Billing Outstanding Statement Format
    4. Default Packing Slip Format (only appliable if the Orders & Inventory package is installed)
    5. Default Purchase Order Format (only appliable if the Orders & Inventory package is installed)
12. Select the Enable Pre-Tax Discount Calculation checkbox if you want to allow discounts on Billings to be calculated on a pre-tax basis (subtotal instead of total amount). If this checkbox is not selected, discounts on Billings will be calculated on the total amount. Discounts display on the Billing screen and the Receive Payment screen.
    
    The Enable Pre-Tax Discount Calculation field is available for AS Native Tax and Avalara AvaTax when using Header Level Posting (HLP) or Line Level Posting (LLP).
    
    
13. If you have the AP Automation feature, specific fields in the Payment Services section should be completed.
    
    Important: The Payment Services section will be completed as a part of the AP Automation Onboarding Process.
    
    
14. Click Save to save the new Ledger.

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Summer '24 Release

Release Notes and Schedule

This article was new with the Summer 24 release.