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.

Jump to:

1. Demo video: Standard Accounting module.
2. Setting up accounting.
3. Chart of accounts.
4. Automatic accounting transactions.
5. Inventory tracking.
6. Manual journal entries.
7. Locking previous financial periods.
8. Payroll.
9. Tax calculations, rounding of tax.

Setting up accounting

To enable accounting, do the following:

1. Go to Settings -> System settings -> Software settings, and enable the "Standard Accounting" module.
2. Go to the "Accounting" section of the software. The software will create default accounts. If you do not see the menu point "Accounting", then check your user rights.
3. After the chart of accounts is created, the software will ask you for the accounts start date.
4. When accounts are created, and the start date is saved, the Standard accounting module 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 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.

Chart of accounts

Core principles:

1. The accounts are divided into different categories.
2. An account can be a sub-account to a parent account.
3. Initially, a default chart of accounts is loaded.
4. For every account, it is possible to choose which kind of automatic journal entries are posted to it.
5. Journals are automatically generated when specific transactions occur.

Jump to:

1. Categories of accounts.
2. Default chart of accounts.
3. Custom accounts per product group.

Categories of accounts

Default chart of accounts

In the default chart of accounts:

1. the automatic transaction types are pre-configured for certain accounts.
2. Accounts do not have parent accounts.

The default chart of accounts:

Configuring an account

Accounts can be created and managed at Accounting -> Chart of accounts.

For creating a new account:

1. Go to Accounting -> Chart of accounts.
2. Click '+' to add a new account.
3. Choose the Category, enter the Number, and the Name.
4. Optionally, choose the Parent account.
5. Optionally, under Default account for, select transaction types for which this account is used when journal entries are automatically made.

For configuring an existing account:

1. Go to Accounting -> Chart of accounts.
2. Click on the account to open its details for viewing and editing.

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.

Changing the account of a product group when items are in stock

The change of the product group mapping to a general ledger account has no back-value effect. That is, parts accounted for on the previous account will still be reflected on that account after the configuration change.

If you need the product group inventory value reflected fully on the new account, you must calculate the inventory value of it on the old account for the date, when the setting was changed, and make a manual journal entry to transfer the amount from the old account to the new account.

Transactions

When some transaction happens in MRPeasy, a journal entry is automatically made.

Inventory tracking in MRPeasy

In MRPeasy, the principles of inventory tracking are the following:

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 the 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. By default, MRPeasy uses FIFO (FEFO, when Expiry dates are used) principle when booking goods for consuming or shipping goods from inventory.
   
   It is possible to manually manage and override the bookings and consumption of inventory, e.g. for actual costing and/or for very detailed tracking and traceability.
   
   
3. Financial transactions are automatically made when specific events happen with the inventory.

Inventory tracking 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 labor 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 Applied 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)
    C 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)
    

Manual journal entries

To make a manual journal entry:

1. Go to Accounting -> Settings -> Accounts -> Manual Journals.
2. Click "+" to create a new manual journal entry.

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.

How can previous financial records change, when books are not closed

1. Primarily, stock history and the cost of items can change if old documents are changed.
   • E.g. a modification or deletion of a Purchase Order will have cascading effects through the system, as the cost of materials changes.
2. If planned goods are used, initially the cost of all used goods is considered as 0.
   • By default, the software allows using (consume, ship, transfer) goods that are not received, i.e. goods that are planned.
   • Read more: software setting "Use planned goods".
3. 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.
4. When using the function "Finish production as planned" to finish Manufacturing Orders.

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’ 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 applied manufacturing 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, the 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 accountant and be sure to follow local laws and regulations.

Tax calculations, rounding of tax

MRPeasy calculates tax on documents as follows:

1. The tax amount is calculated for each line separately.
2. The line's tax amount is rounded to two decimal places.
3. The rounded tax amounts of each line are added up.

Example: