Standard Accounting

MRPeasy has a built-in standard accounting module. 

To use it, it should be enabled in Settings -> System settings -> Software settings -> Standard Accounting module: Yes.

It consists of:

  • chart of accounts,
  • general ledger,
  • balance sheet,
  • profit and loss statement.

All transactions, that are made in manufacturing, stock, procurement, and CRM, are automatically reflected in the accounting.

Demo video.

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Setting up accounting

To enable accounting, do the following:

  • Go to Settings -> System settings -> Software settings, and enable the Standard Accounting module.
  • Go to Accounting. The software will create default accounts.
  • After the chart of accounts is created, the software will ask you for the accounts start date.

If you do not see menu point Accounting, then check your user rights.

When accounts are created, and the start date is saved, the standard accounting is enabled.

If you want to enter initial account values, please go to Accounting -> Settings -> Accounts -> Manual Journals and create a new journal.

Trialing the standard accounting

We understand that you may want to test the accounting module for a while, and then to discard testing transactions.

There are two options on how to do that:

  1. If all your data (including orders and stock levels) is for testing, please delete it at Settings -> Database Maintenance -> Delete orders and stock only;
  2. If you are using MRPeasy already, and your data is valid, please go to Accounting -> Settings, and change the Accounts start date. All transactions that took place prior to that date, will be ignored.

Categories of accounts

# Category Type Credit- or Debit-positive On balance sheet? On profit and loss statement?
1 Bank Asset Debit Yes No
2 Current assets Asset Debit Yes No
3 Fixed assets Asset Debit Yes No
4 Current liability Liability Credit Yes No
5 Future liability Liability Credit Yes No
6 Equity Equity Credit Yes No
7 Sales Revenue Credit No Yes
8 Other income Revenue Credit No Yes
9 Direct expenses Expense Debit No Yes
10 Indirect expenses Expense Debit No Yes

Default chart of accounts

# Code Name Category Default account for
1 1010 Checking Bank payments (Bank)
2 1020 Cash Bank  
3 1100 Accounts receivable Current assets unpaid invoices (Accounts receivable)
4 1210 Purchases Current assets not received ordered items (Purchases)
5 1220 Materials on hand Current assets received parts
6 1230 Work in progress Current assets work in progress
7 1240 Finished goods Current assets finished goods
8 1260 Non-inventory items Current assets non-inventory items
9 1500 Property and equipment Fixed assets  
10 2000 Accounts payable Current liability
11 2310 Sales tax payable Current liability sales tax
12 2400 Manufacturing overheads Current liability direct manufacturing overheads
13 2500 Accrued payroll Current liability direct labour costs
14 2700 Transfer orders liability Current liability transport costs at transfer orders
15 3000 Equity Equity  
16 4000 Sales Sales sales
17 5000 Cost of goods sold Direct expenses shipped goods (Cost of goods sold)
18 5800 RMA service Direct expenses RMA service orders
19 5900 Inventory adjustments Direct expenses manual stock lots, manual write-offs
20 6000 Wages expense Indirect expenses  
21 6200 Income tax expense Indirect expenses  
22 6400 Utilities expense Indirect expenses  
23 6450 Office supplies Indirect expenses  
24 6600 Advertising expense Indirect expenses  
25 6700 Bank fees Indirect expenses  

Different inventory accounts per product group

It is possible to set different inventory accounts per product group at Stock -> Stock settings -> Product groups -> Product group details -> Inventory account.

Transactions

When some transaction happens in MRPeasy, it is reflected in the accounting.

# Transaction Source document Debit account Credit account
Purchasing
1 A purchase invoice for a Purchase Order is received and entered (the 'Invoice ID' is saved). Purchase Order or Purchase Invoice Purchases Accounts Payable
2 Purchase Invoice is paid Purchase Order or Purchase Invoice Accounts Payable Bank (e.g. Checking
3 Purchase Order is received Purchase Order or Purchase Invoice Materials on Hand Purchases
Manufacturing
4 Parts are consumed Manufacturing Order Work in Progress Materials on Hand
5 A manufacturing operation is finished at the workstation Manufacturing Order Work in Progress Manufacturing Overheads
6 A worker finishes a manufacturing operation Manufacturing Order Work in Progress Accrued payroll
7 MO is finished Manufacturing Order Finished Goods Work in Progress
Sales
8 An invoice is created and confirmed (type is ‘Invoice’ and status is changed from 'Dummy' to 'Unpaid') Invoice Accounts Receivable Sales
9 Invoice is paid Invoice Bank (e.g. Checking) Accounts Receivable
10 Goods are shipped Shipment Cost of Goods Sold Finished Goods
Inventory
11 A manual stock lot is created during the stock-taking Stock lot Materials on Hand / Finished Goods Inventory Adjustments
12 A manual write-off is created during the stock-taking Write-off Inventory Materials on Hand / Finished Goods
Subcontracting
13 Subcontracting PO is created and the invoice is received (the 'Invoice ID' is saved). Purchase Order or Purchase Invoice Purchases Accounts Payable
14 Subcontracting PO: parts are issued to the subcontractor Shipment Work in Progress Materials on Hand
15 Subcontracting PO, made for an operation in a Manufacturing Order, is received. Purchase Order or Purchase Invoice Work in Progress Purchases
Credit invoices
16 A credit-invoice is created and confirmed (type is ‘Credit-invoice’ and status is changed from 'Dummy' to 'Unpaid') Invoice Sales Accounts Payable
17 Credit-invoice is paid Invoice Accounts Payable Bank (e.g. Checking)
RMA
18 An item is received and returned into general stock (status of the stock lot is changed from 'RMA' to 'Received') Stock lot Materials on Hand / Finished Goods Inventory Adjustments
19 RMA service order: operation is finished at the workstation Manufacturing Order RMA service Manufacturing Overheads
20 RMA service order: a worker finishes an operation Manufacturing Order RMA service Accrued payroll
Other transactions
21 A transfer order is shipped and fees are applied Transfer Order Materials on Hand / Finished Goods Transfer orders liability
22 Procured non-inventory item is received Purchase Order Non-inventory items Purchases
23 Service order to repair the rejected stock lot: operation is finished at the workstation Manufacturing Order Work in Progress Manufacturing Overheads
24 Service order to repair the rejected stock lot: a worker finishes an operation Manufacturing Order Work in Progress Accrued payroll
25 When a source document is updated so that values change original transactions change, then these transactions are updated. Any document    
26 When a source document is deleted/canceled, then transactions are canceled. Any document    

Inventory tracking and financial transactions step-by-step

In MRPeasy, together with all automatic accounting transactions, the inventory tracking and financial transactions work as follows:

  1. All items in inventory are tracked using stock lot tracking within MRPeasy. I.e. each batch of physical items is accounted for separately.

    A stock lot is an internal business object in the MRPeasy software, used for providing FIFO method of using goods, and also for specific functionality, like expiry date, or batch traceability. Without such specifics, you do not need to operate with stock lots in your daily business (MRPeasy does it in the background).

  2. When a purchase order is ordered and a purchase invoice ID is entered, but items are not yet received, then the cost of items is posted on a purchases account:
    D Purchases (Current assets)
    C Accounts payable (Liabilities)

  3. When purchased items are received, then items are transferred from purchases to materials on hand:
    D Materials on hand (Current assets)
    C Purchases (Current assets)

  4. Additional expenses incurred with purchases (e.g. transport, customs) can be accounted into the cost of the procured items, by entering them as “Additional fees” on the Purchase Order (or Purchase Invoice).
    D Purchases (Current assets)
    C Accounts payable (Liabilities)

    Once the PO is received:
    D Materials on hand (Current assets)
    C Purchases (Current assets)

  5. When a manufacturing order is planned, then according to the bill of materials, the materials are reserved for this job.

  6. When materials are reported consumed in production, they are moved to work in progress (WIP):
    D Work in progress (Current assets)
    C Materials on hand (Current assets)

  7. When an operation is paused/finished, then the performed direct labour and the applied manufacturing overhead costs are posted to WIP according to recorded start-stop times:
    D Work in progress (Current assets)
    C Accrued payroll (Liabilities)
    D Work in progress (Current assets)
    C Manufacturing overhead (Liabilities)

  8. Once a manufacturing order is finished, WIP is cleared and posted to finished goods:
    D Finished Goods (Current assets)
    C Work in progress (Current assets)

  9. When additional fees are posted to transfer orders, these increase the cost of the transferred items:
    D Materials on hand / Finished goods (Current assets)
    C Transfer Orders liability (Liabilities)

  10. When products are shipped to the customer, then the cost of the products is posted to cost of goods sold account:
    D Cost of goods sold (Expenses)
    Finished Goods (Current assets)

  11. When a manual inventory adjustment is made:
    D Materials on hand / Finished goods (Current assets)
    C Inventory adjustments (Expense)

    or
    D Inventory adjustments (Expense)
    C Materials on hand / Finished goods (Current assets)

Locking historical financial records

To prevent modification of historical financial records, the books closing date should be set at Accounting -> Settings -> Books closing date.

The date is inclusive. Any action in the system, which would affect accounts on that day or earlier, will be blocked.

Payroll

Payroll report

This report shows the performance pay per employee during the period.

When the Professional function Piece Payment is enabled, then it is possible to choose how employees are paid:

  • Time-payment - Operation duration x Hourly rate
  • Piece-payment – Price per piece x Quantity
  • or both.

When the Piece Payment function is disabled, then only time-payment can be applied, when an hourly rate is set in employees’s details.

If you have a right to view users, it is possible to click on the user’s name and see the list of operations that were performed by the employee during the period.

Processing payroll

It is possible to process payroll with manual journal entries.

When you are making payroll, you should:

  1. Use manual journal entries to enter the payroll and payments at Accounting -> Manual journals.
  2. Use manual journal entries to zero the accrued payroll account periodically.

A simplified example with numbers:

  • The following automatic journals happen:
    1. When work is reported in a Manufacturing Order (MO) (Assumption: materials costs and overhead costs are 0.)
    D Work in progress (Current assets) 100
    C Accrued payroll (Current liability) 100

    2. When the MO is finished
    D Finished goods (Current assets) 100
    C Work in progress (Current assets)100

    3. When the product is shipped
    D Cost of goods sold (Expense) 100
    C Finished goods (Current assets) 100

  • When payroll is made, following manual journals could be made:
    4. When payroll is calculated:
    D Wages and salaries (Expense) 1000
    C Payroll (Current liability) 1000

    5. When payroll is paid:
    D Payroll (Current liability) 1000
    C Bank (Current assets) 1000

    6. Periodically accrued payroll account is zeroed:
    D Accrued payroll (Current liability) 100
    C Wages and salaries (Expense) 100 (This expense will be reported in the COGS account, in the same period when the product is sold.)

As the above is only a generic simplified example, please always consult your account and be sure to follow local laws and regulations.

Important!

Using planned goods

By default, the software allows using (consume, ship, transfer, write-off) goods, which are in "planned" status, i.e. goods that have not been received. 

See also: What are the stock lot statuses?

In such a case, when planned goods are used, then when goods finally are received (e.g. PO is received), financial transactions are done retrospectively.

If the software setting "Use planned goods" is disabled, it will not be possible to perform the consume, ship, and transfer actions with not received goods.

Additional fees on Purchase orders

When adding "Additional fees" to Purchase Orders, the cost of all items on that PO will be updated, incl. items that were received in the earlier periods.

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