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.

Jump to:

Setting up accounting.
Automatic accounting transactions.
Inventory tracking.
Locking previous financial periods.
Payroll.

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:

If all your data (including orders and stock levels) is for testing, please delete it at Settings -> Database Maintenance -> Delete orders and stock only;
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.

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:

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

Use manual journal entries to enter the payroll and payments at Accounting -> Manual journals.
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.