Standard Accounting

MRPeasy has a built-in standard accounting module. 

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.
    1. Principles.
    2. Categories of accounts.
    3. Default chart of accounts.
    4. Configuring accounts.
    5. Custom inventory accounts per product group.
  4. Transactions.
    1. Automatic transactions.
    2. Inventory tracking principles in MRPeasy.
    3. Inventory tracking transactions step-by-step.
    4. Manual journal entries.
  5. Locking previous financial periods.
  6. Payroll.
    1. Payroll report.
    2. Processing payroll.
  7. 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.

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 already using MRPeasy 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

Principles

General 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. Transactions are automatically generated when specific actions occur.

Categories of accounts

# Category Type Credit- or Debit-positive On balance sheet On the 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

In the default chart of accounts, automatic transaction types (configured with the Default account for setting) are pre-assigned for certain accounts.

The 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 12101 Purchase credits Current assets credits from vendors for returned or refunded items
6 1220 Materials on hand Current assets received parts
7 1230 Work in progress Current assets work in progress
8 1240 Finished goods Current assets finished goods
9 1260 Non-inventory items Current assets non-inventory items
10 1500 Property and equipment Fixed assets  
11 2000 Accounts payable Current liability
12 2310 Sales tax payable Current liability sales tax
13 2350 Customer prepayments Current liability customer prepayments
14 2400 Applied manufacturing overhead Current liability applied manufacturing overhead costs
15 2500 Accrued payroll Current liability direct labor costs
16 2700 Transfer orders liability Current liability transport costs at transfer orders
17 3000 Equity Equity  
18 4000 Sales Sales sales
19 5000 Cost of goods sold Direct expenses shipped goods (Cost of goods sold)
20 5800 RMA service Direct expenses RMA service orders
21 5900 Inventory adjustments Direct expenses manual stock lots, manual write-offs
22 6000 Wages expense Indirect expenses  
23 6200 Income tax expense Indirect expenses  
24 6400 Utilities expense Indirect expenses  
25 6450 Office supplies Indirect expenses  
26 6600 Advertising expense Indirect expenses  
27 6700 Bank fees Indirect expenses  

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, and 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 in the previous account will still be reflected in 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

Automatic transactions

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

# Source document Event Posting date Debit account Credit account
Purchasing
1 Purchase Order Purchase Order is created No transaction
1.1A Purchase Order "Invoice ID" is saved.
(Setting "Several invoices per PO = No")		 "Invoice date" if defined, else “Created” date of Purchase Order. Purchases,
Sales Tax Payable		 Accounts Payable
1.1B Purchase Invoice "Invoice ID" is saved.
(Setting "Several invoices per PO = Yes")		 "Invoice date" if defined, else “Created” date of Purchase Invoice.
1.2A Purchase Order Payment is saved
(Setting "Several invoices per PO = No")		 "Date" of payment. Accounts Payable Bank (e.g. Checking)
1.2B Purchase Invoice Payment is saved
(Setting "Several invoices per PO = Yes")		 "Date" of payment. Accounts Payable Bank (e.g. Checking)
1.3 Purchase Invoice Prepayment is applied. No transaction
1.4A Purchase Order Goods are received
(Workflow A)		 "Arrival date" of Purchase Order, or the current date when saving the document, whichever is earlier.
*Transaction date is fixed after it is created.		 Materials on Hand Purchases
1.4B Purchase Invoice Goods are received
(Workflow B)		 "Created" date of Purchase Invoice, or the current date when saving the document, whichever is earlier.
*Transaction date is fixed after it is created.		 Materials on Hand Purchases
1.4C Delivery Goods are received
(Workflow C)		 "Created" date of Delivery, or the current date when saving the document, whichever is earlier.
*Transaction date is fixed after it is created.		 Materials on Hand Purchases
1.5 Purchase Order, Purchase Invoice, or Delivery Non-inventory items are received According to 1.4 Non-Inventory Items Purchases
1.6 Vendor Credit Invoice "Invoice ID" is saved. "Invoice date" if defined, else "Created" date of Purchase Invoice. Accounts Payable

Purchase credits,
Sales Tax Payable
1.7 Vendor Credit Invoice Prepayment is applied (for a refund). No transaction   
1.8 Vendor Credit Invoice Payment is saved. "Date" of payment. Bank (e.g. Checking) Accounts Payable
1.9 Vendor Prepayment Invoice "Invoice ID is saved. "Invoice date" if defined, else "Created" date of Purchase Invoice. Purchases,
Sales Tax Payable		 Accounts Payable 
1.10 Vendor Prepayment Invoice Payment is saved. "Date" of payment. Accounts Payable  Bank (e.g. Checking)
Manufacturing
2 Manufacturing Order Manufacturing Order is created No transaction
2.1 Manufacturing Order Parts are consumed The date, when the materials are reported consumed from stock:
- Date when the materials consumption is reported in My production plan or Internet-kiosk.

- Or, if the "Finish production as planned" button is pressed:
a) If operations were not reported, the MO "Start" date. (Note that if the MO is planned in the future, the initial planned "Start" date will be recalculated, so it wouldn't be in the future.)
b) If the operations were reported, the button press date.

- Or, if the MO was already finished, the date when extra materials are added to the MO manually.		 Work in Progress Materials on Hand
2.2 Manufacturing Order A worker finishes a manufacturing operation at a workstation - An operation's "Actual finish" date.
- Note that if the "Finish production as planned" button is used and the MO is planned in the future, the initial operation planned dates will be recalculated, so these wouldn't be in the future.		 Work in Progress Accrued Payroll
Work in Progress Applied Manufacturing Overhead
2.3 Manufacturing Order Manufacturing Order is finished - MO "Finish" date.
- Note that if the "Finish production as planned" button is used and the MO is planned in the future, the initial planned "Finish" date will be recalculated, so it wouldn't be in the future.		 Finished Goods Work in Progress
3 Manufacturing Order A service order is created to repair a rejected stock lot No transaction
3.1 Manufacturing Order Parts (incl. the original stock lot) are consumed Date when the "consume" button is pressed Work in Progress Materials on Hand
3.2 Manufacturing Order A worker finishes an operation at a workstation Operation's "Actual finish" date Work in Progress Accrued Payroll
Work in Progress Applied Manufacturing Overhead
3.3 Manufacturing Order The service order is finished MO "Finish" date, or the date when "Finish production as planned" is pressed (whichever is earlier) Materials on Hand / Finished Goods Work in Progress
Sales
4 Customer Order Customer Order is created No transaction
5 Shipment Shipment is created (planned) No transaction
5.1 Shipment Goods are picked from stock Date when the "pick" button is pressed Cost of Goods Sold Finished Goods
6.1 Invoice An invoice is created and confirmed (type is ‘Invoice’ and status is changed from 'Dummy' to 'Unpaid') "Created" date of invoice Accounts Receivable Sales,
Sales Tax Payable
6.2 Invoice Payment is saved "Date" of payment Bank (e.g. Checking) Accounts Receivable
7.1 Credit-Invoice A credit-invoice is created and confirmed (type is ‘Credit-invoice’ and status is changed from 'Dummy' to 'Unpaid') "Created" date of credit-invoice Sales,
Sales Tax Payable		 Accounts Receivable
7.2 Credit-Invoice Payment is saved "Date" of payment Accounts Receivable Bank (e.g. Checking)
8.1 Prepayment invoice A prepayment invoice is created and confirmed (type is ‘Prepayment invoice’ and status is changed from 'Dummy' to 'Unpaid') "Created" date of prepayment invoice Accounts Receivable Customer Prepayments,
Sales Tax Payable
8.2 Prepayment invoice Payment is saved "Date" of payment Bank (e.g. Checking) Accounts Receivable
8.3 Invoice Prepayment is allocated to an invoice (type is ‘Invoice’ and status is changed from 'Dummy' to 'Unpaid') "Created" date of invoice Customer Prepayments Sales
8.4 Credit-Invoice Prepayment is allocated to a credit-invoice (type is ‘Credit-invoice’ and status is changed from 'Dummy' to 'Unpaid') "Created" date of credit-invoice Customer Prepayments Accounts Receivable
Inventory
9.1 Stock lot A manual stock lot is created during the stock-taking "Available" date of the stock lot when its status is saved as "On hold" or "Received".
Or date when it was added with the Stock -> Inventory function.
*Transaction date is fixed after it is created.		 Materials on Hand / Finished Goods Inventory Adjustments
9.2 Write-off A manual write-off is created during the stock-taking "Created date" of the write-off Inventory Materials on Hand / Finished Goods
Subcontracting
10 Purchase Order Subcontracting PO is created. No transaction
10.1 Purchase Order or Purchase Invoice Invoice is received and entered (the 'Invoice ID' is saved). "Invoice date" of PO,
or "Created" date of PI		 Purchases Accounts Payable
10.2 Shipment for PO Parts are picked from stock, and issued to the subcontractor. Date when the "pick" button is pressed Work in Progress Materials on Hand
10.3 Purchase Order or Purchase Invoice Subcontracting PO (not for an operation in a MO) is received "Arrival date" of PO,
or
"Created" date of PI.
*Transaction date is fixed after it is created.		 Finished Goods Work in Progress,
Purchases
10.4 Purchase Order or Purchase Invoice Subcontracting PO, made for an operation in a Manufacturing Order, is received. "Arrival date" of PO,
or
"Created" date of PI.
*Transaction date is fixed after it is created.		 Work in Progress Purchases
RMA
11 RMA order RMA order is created and received No transaction
11.1 Stock lot The received item is returned into general stock (status of the stock lot is changed from 'RMA returned' to 'Received', the cost is manually assigned) "Available" date of the stock lot when its status is saved as "On hold" or "Received".
*Transaction date is fixed after it is created.		 Materials on Hand / Finished Goods Inventory Adjustments
11.2 Manufacturing Order RMA service order: Parts are consumed Date when the "consume" button is pressed RMA service Materials on Hand
11.3 Manufacturing Order RMA service order: a worker finishes an operation at a workstation Operation "Actual finish" date RMA service Accrued payroll
RMA service Applied manufacturing overhead
Other transactions
12 Transfer Order A transfer order is shipped and fees are applied "Shipment date" of transfer order Materials on Hand / Finished Goods Transfer orders liability
13 Any document When a source document is updated so that values change original transactions, then these transactions are updated. The date of the original transaction. The original transaction is changed.
14 Any document When a source document is deleted/canceled, then transactions are canceled. The date of the original transaction. The original transaction is canceled.

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 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 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. 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 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 the 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, that would affect accounts on that day or earlier, will be blocked, excluding actions that get logged in the "Adjustments to books closed period" report.

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.
  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.

Adjustments to books closed period

To avoid disrupting a normal business process, the software allows some actions in the closed financial period which it additionaly logs in the report Accounting -> Reports -> Report: Adjustments to Books Closed Period:

  1. When the Software setting MO partial completion is enabled, in progress (not finished) MOs that were started before the Books closing date can be updated freely without any restriction.
    • All actions with such MOs are allowed. Once the MO is finished, all further actions that affect the closed period will get blocked.
    • All financial adjustments in the closed period get logged: showing the reason for this adjustment, the old lot cost, and the new cost.
    • All existing financial transactions (relating to the MO) in the closed period can be updated, meaning that related inventory, work in progress, applied manufacturing overhead, and accrued payroll, COGS, etc. balances can all change. For example:
      • If the MO was partially completed in a now-closed period, the cost of the earlier completed products can be updated, when further actions are performed with the MO.
      • If any input (materials, overhead, or labor) or output (final quantity of products, additional products) changes, then the product cost will change, because manufacturing costs in the MO are divided equally among all produced items (the unit cost is the same in all target lots).
      • If an operation was finished in the now-closed period, it can be updated.
      • Materials that were consumed in the now-closed period can be returned to stock.
      • Etc.

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 the number of decimal places defined by the software setting “Decimal places: Subtotal”.
  3. The rounded tax amounts of each line are added up.

Example:

Product Subtotal Tax %   Tax
Item A 95 6.75% 95 x 6.75% = 6.4125 -> 6.41
Item B 95 6.75% 95 x 6.75% = 6.4125 -> 6.41
 
    Subtotal: 95 + 95 = 190
    Tax: 6.41 + 6.41 =
 12.82
    Total: 190 + 12.82 = 202.82
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