Multi-book Accounting Setup & Migration

Overview

Accrual Basis Accounting generally records income in the period that it is earned, and expenses in the period they are incurred, regardless of when payment is received or paid out. Cash Basis Accounting is used to post transactions to the General Ledger only when cash is received or paid out. Accounting Seed's multi-book feature lets you maintain both an Accrual Ledger and a Cash Ledger simultaneously using the "Accrual and Cash" accounting method, posting transactions to each at the appropriate time based on when cash is received/paid. This approach is useful if you need to report on both accrual and cash bases for tax, audit, or management purposes.

In this article:

Set up and Migrate your Org to Multi-book Accounting

• Prerequisite
• Step 1: Ledger and other page layout updates
• Step 2: Migrate to Multi-Book Accounting
• Step 3: Configure Default GL Accounts for Multi-Book
• Step 4: Update GL Account and Product records

Tax Configurations with Multi-book Accounting

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Set up and Migrate your org to Multi-book Accounting

Prerequisite

To enable Multi-book Accounting on an existing Ledger, you must first provision an additional ledger. To do this, email licensing@accountingseed.com. This prerequisite must be completed before attempting the remaining configuration. Once this ledger is provisioned, proceed with the configuration steps below.

Step 1: Ledger and other page layout updates

1. Add the Accounting Method field to the Ledger page layout:

1. Go to Setup > Object Manager > Ledgers
2. Click Page Layouts and select the page layout being used.
3. Check if the Accounting Method field has been added to your Ledger page layout, if not, drag it to the Information section and click Save.

2. Add the Accrual and/or Cash field to the Journal Entry page layout:

1. Go to Setup > Object Manager > Journal Entry
2. Click Page Layouts and select the page layout being used.
3. Check if the Accrual and/or Cash field has been added to your Journal Entry page layout, if not, drag and drop this field onto the page layout directly below the Type field. Click Save.

3. Add the Accrual and/or Cash field to the Amortization page layout:

1. Go to Setup > Object Manager > Amortization Entry
2. Click Page Layouts and select the page layout being used.
3. Check if the Accrual and/or Cash field has been added to your Amortization Entry page layout, if not, drag and drop this field onto the page layout directly below the Ledger field. Click Save.

4. Add the Ledger Field to the Transactions Related List:

1. Go to Setup > Object Manager > Billing
2. Click Page Layouts and select the page layout being used.
3. Click Related Lists.
4. Click the Wrench icon on the Transactions related list to open the Related List Properties dialog.
5. From the Available Fields column, select Ledger, then click the right arrow to move it to the Selected Fields column.
6. Use the up and down arrows to position the Ledger column where you want it to display.
7. Click OK, then click Save.
8. Next follow the same steps as above to add the Ledger field to the Transactions related list for:
   • Billings
   • Cash Receipts
   • Billing Cash Receipts
   • Payables
   • Cash Disbursements
   • AP Disbursements

When using Multi-book Accounting, this step allows you to clearly identify which Ledger the transactions were generated for (Accrual or Cash).

5. Add the Revenue and Expense Recognition GL Accounts to the GL Account page layout:

1. Go to Setup > Object Manager > General Ledger Account
2. Click Page Layouts and select the page layout being used, usually this is the Project GL Account Layout.
3. Drag and drop the Deferred GL Account checkbox onto the page layout directly below the Mileage Rate field.
4. Drag and drop the Recognition GL Account field directly below the Deferred GL Account field.
5. Click Save.

When posting Billings or Payables to Deferred Revenue or Deferred Expense GL Accounts on a Multi-book Ledger, you must configure which GL Accounts will recognize that revenue or expense on the Cash Ledger when cash is received or paid. This ensures that both ledgers record the transaction correctly according to their respective accounting bases.

6. If you use Products on Billings & Payables: Add the Revenue and Expense Recognition GL Accounts to the Product page layout

1. Go to Setup > Object Manager > Product
2. Click Page Layouts and select the page layout being used.
3. Drag and drop the Revenue Recognition GL Account field onto the page layout directly below the Revenue GL Account field.
4. Drag and drop the Expense Recognition GL Account field directly below the Expense GL Account field.
5. Click Save.

Step 2: Migrate to Multi-Book Accounting

Migrating to multi-book accounting depends on whether you have transactions posted to your current accrual ledger. Depending on your scenario, follow the steps outlined. Important: ensure your additional ledger has been provisioned and configuration steps have been completed before continuing.

Scenario 1: Your primary ledger has no posted transactions

If your primary Ledger has no posted transactions, migration to multi-book accounting is straightforward:

1. Navigate to your existing primary Ledger record by searching for 'Ledgers' in the App Launcher.
2. Click on your primary accrual ledger to view the record.
3. Click Edit and in the Accounting Method field, select Accrual and Cash.
4. Click Save.

When you save this change, the system automatically creates a related Cash Ledger with the name "[Primary Ledger Name] (Cash)". From this point forward, the system will post transactions to both Ledgers depending on the source document:

• Billings and Payables post transactions only to the primary accrual Ledger (since no cash has been received or paid yet).
• Cash Receipts and Cash Disbursements post to both Ledgers.

Scenario 2: Your primary ledger has posted transactions

If your primary Ledger already has posted transactions, the process is similar.

Best practice: do this migration at a clean month-end

1. Navigate to your existing primary Ledger record by searching for 'Ledgers' in the App Launcher.
2. Click on your primary accrual ledger to view the record.
3. Click Edit and in the Accounting Method field, select Accrual and Cash.
4. Click Save.
   • The system now automatically creates the related Cash Ledger.
5. Make sure to post and apply any unapplied/unposted Cash Receipts and Cash Disbursements.
6. Create opening balances on the Cash Ledger that reflect the current cash position of your business (based on cash already received or paid in prior periods). The best practice for this process is to create Opening Balance Journal Entries directly to your related Cash ledger.
   • Contact Support if you need assistance with this.

Step 3: Configure Default GL Accounts for Multi-Book

1. From Accounting Home click the Setup menu and under Configurations, click Default GL Accounts.
2. Select the primary "Accrual and Cash" ledger.
3. Locate the Cash Basis Accounting section.
4. Verify that the Unapplied Expense GL Account and Unapplied Revenue GL Account fields have the out-of-the-box GL Accounts 8000-Unapplied Expense and 4015-Unapplied Revenue respectively.
   • If you do not have these GL Accounts in your chart of accounts, create them first. Refer to Create a New GL Account for instructions. When creating the Unapplied Revenue GL Account, you may need to manually select the appropriate Sub Type 1 and Sub Type 2. Once the GL accounts are created, navigate to Default GL Accounts to select them in the Cash Basis Accounting section.

Step 4: Update GL Account and Product records

Once the fields are added to the GL Account and Product page layout in step 1:

1. Update your GL Account records:
   1. Navigate to each GL Account in your chart of accounts that is a deferred account.
   2. Check the Deferred GL Account checkbox.
   3. Select the appropriate Revenue or Expense Recognition GL Account (the account that will record revenue or expense on the Cash Ledger).
   4. Click Save.
2. If you use Products on Billings and Payables, update your Product records:
   1. Navigate to each Product where the Revenue or Expense GL Account is a deferred account.
   2. Select the appropriate Revenue Recognition GL Account or Expense Recognition GL Account.
   3. Click Save.

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Tax Configurations with Multi-book Accounting

If you use AvaTax, note that AvaTax can calculate sales tax only on Accrual Ledgers, it does not support Cash Basis Accounting. Therefore, your tax configuration must be:

• On the Accrual and Cash Ledger: Configure AvaTax in the Tax Settings record (AvaTax will calculate tax on Accrual transactions).
• On the Related Cash Ledger: Configure AS Native Tax in the Tax Settings record (AvaTax will not calculate tax; AS Native Tax will handle this).

Tax calculated on the Accrual and Cash Ledger by AvaTax will be recorded on the Cash Ledger when the Cash Receipt is applied (not when the Billing is posted).

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Related Articles

• Set up Consolidations
• Cash Basis Processes
• Multi-book Posting & Reporting Considerations
• Create a New GL Account
• Configure a Ledger
• Default GL Accounts
• Large Data Optimizer
• Post Settings

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