Accounting

TrakIT can keep a company’s books: a chart of accounts, a journal of double-entry journal entries, financial years, and the trial balance, balance sheet and profit and loss built from that journal. Each company keeps its own books, in its own base currency.

A company keeps its books in TrakIT when its finance system is TrakIT and it has a chart of accounts. A system administrator chooses the finance system on the company’s Finance System tab (Admin > Masters > Companies). For a company with another finance system, or with no chart of accounts, nothing is posted to the TrakIT books.

To start, see Setting up accounting.

How the books work

Everything in the books is a journal entry: two or more lines on ledger accounts, where the total of the debits equals the total of the credits. The amounts are in the company’s base currency; entries in another currency keep the amounts in that currency too.

Entries reach the journal in two ways:

• Automatically, when you finalize an invoice, bill, receipt or payment, approve an internal posting, or write off an invoice. See Automatic posting.
• By hand, on the Journal Entries page, for accruals, corrections, transfers between accounts and so on.

Every entry belongs to a financial year and is dated inside it. A year must be open to take entries. Closing a year moves its profit or loss to retained earnings and locks it for good.

The Trial Balance, Balance Sheet and Profit & Loss read only the journal. Job and finance-job figures that have not been invoiced, billed or posted do not appear in them.

How operations finance reaches the books

A job’s finance goes through several steps. Only some of them post to the books:

Step	Reaches the books
Quotations	Never.
Estimates on a finance job	Never.
Actuals on a finance job	Only through the invoices, bills and internal postings they are on.
Invoices and credit notes	When you finalize them. Approving an invoice does not post it.
Bills	When you finalize them. Validating a bill does not post it.
Internal postings	When you approve them.
Receipts and payments	When you finalize them. Approving them does not post them.
Write-off of an invoice	When you write the invoice off.
Mark as Paid on an invoice	Never. Only a receipt reduces what the customer owes in the books.

In short: an invoice debits accounts receivable and credits revenue and sales tax. A bill debits expenses and purchase tax and credits accounts payable. A receipt moves the money from accounts receivable to a bank or cash account, and a payment from a bank or cash account to accounts payable. Which ledger accounts take each amount is set up once for the company: see Setting up accounting.

Entries are reversed, never changed

A posted journal entry cannot be edited or deleted. When a posted document is reset, or its posting has to change, TrakIT posts a reversal: the same lines on the opposite sides, which cancels the original. If the document is finalized again, TrakIT posts a new entry with the current figures. The original, its reversal and the new entry all stay in the journal, so you can always see what was posted, when and by whom.

A document is never in the books twice: while its entry is in force, posting it again changes nothing.

An entry in a closed financial year cannot be reversed. A document whose entry is in a closed year can no longer be reset; correct it with an entry in an open year instead.

Base currency and other currencies

The books of a company are kept in its base currency: the company’s Default Currency. Invoices, bills, receipts and payments in other currencies are converted when they post, and their amounts in the document currency are kept next to the base amounts. A ledger account can also be set up for one foreign currency, for example a bank account in US dollars. See Multi-currency accounting.

The pages of the module

Page	Where	Use it to
Chart of Accounts	System > Chart of Accounts	Set up the ledger accounts and choose the default accounts that automatic postings use. Select an account to see its balance and entries.
Opening balances	Opening Balances on the Chart of Accounts page	Enter the balances your accounts had when the company started keeping its books in TrakIT.
Journal entries	Finance > Journal Entries	See the journal, post entries by hand and revalue foreign-currency balances.
Financial years	Admin > Masters > Finance Masters, Financial Years tab	Create financial years and close them at year-end.
Trial balance	Finance > Trial Balance	Check the balance of every account on a date.
Balance sheet	Finance > Balance Sheet	See assets, liabilities and equity on a date.
Profit and loss	Finance > Profit & Loss	See revenue and expenses for a period.
Exchange rates	Finance > Exchange Rates	Keep the exchange rates that postings in other currencies use.

These pages explain how the module works:

• Setting up accounting: what to set up, in which order.
• Financial years: opening, posting into and closing years.
• Automatic posting: which entry each document posts, and when.
• Multi-currency accounting: base and document currencies, exchange rates and exchange differences.
• Accounting glossary and FAQ: terms and common questions.

Who can do what

Section	Permission	Allows you to
Chart of Accounts	Read	Open the chart of accounts and its accounts.
Chart of Accounts	Create	Initialize the chart of accounts and add accounts.
Chart of Accounts	Update	Change accounts, choose the default accounts, and open Opening Balances from the chart.
Chart of Accounts	Delete	Delete accounts.
Journal Entries	Read	See the journal, journal entries and opening balances.
Journal Entries	Create	Post entries by hand, post opening balances and run the FX revaluation.
Financial Reports	Read	Open the trial balance, balance sheet and profit and loss.
Finance Masters	Open/Close Financial Year	Create and close financial years.
Finance Masters	Update	Link account masters to ledger accounts.

Only system administrators can set a company’s default currency and finance system, and link payment methods to bank and cash accounts. Posting a document needs the permission to finalize or approve that document, not a permission on the books.