Every document you save in SeroBooks writes a balanced journal to the general ledger at the moment it is saved. There is no separate "post" or "sync to accounting" step. This article lists, for each kind of transaction, which accounts are debited and credited, so you can read the General Ledger and the Trial Balance with confidence and explain any figure to your accountant.
Where the account names come from
SeroBooks does not hard-code a chart of accounts. Each kind of amount (what customers owe, sales, GST/HST collected, inventory, cost of goods sold and so on) is sent to the account you chose for it in Accounting Setup. This article uses the names of those roles. The second column below shows a typical account for each; yours may be named differently.
| Role in Accounting Setup | Typical account |
|---|---|
| Accounts Receivable — what customers owe | Accounts Receivable |
| Accounts Payable — what you owe suppliers | Accounts Payable |
| Sales revenue | Sales (or each item's own income account) |
| Sales returns | Sales Returns (defaults to sales revenue) |
| Delivery/shipping charged to customers | Shipping and Delivery Income |
| Discounts given | Discounts Given |
| GST/HST payable | GST/HST Payable |
| PST payable — BC, Saskatchewan, Manitoba | PST Payable (BC) |
| QST payable | QST Payable |
| GST/HST input tax credits on purchases | GST/HST Receivable (ITC) |
| QST input tax refunds on purchases | QST Receivable (ITR) |
| Sales tax filed and owing | GST/HST Filed Returns Payable |
| Inventory on hand | Inventory Asset |
| Cost of goods sold | Cost of Goods Sold |
| Damage / shrinkage write-offs | Inventory Adjustment (Shrinkage) |
| Freight and delivery paid on purchases | Your freight account (Cost of Goods Sold when none is set) |
| Discounts received from suppliers | Your purchase discounts account (Cost of Goods Sold when none is set) |
| Undeposited Funds | Undeposited Funds |
| Customer deposits / Supplier advances | Customer Deposits / Supplier Advances |
| Rounding adjustments | Rounding |
Items can carry their own income, cost of goods sold and inventory accounts (see Item accounts); when they do, their amounts go there instead of to the default.
Customers and sales
Invoice (a sale on account)
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | Invoice total | |
| Discounts given | Invoice discount | |
| Sales revenue (or each item's income account, split by class) | Lines before tax | |
| Shipping income | Shipping charged | |
| GST/HST payable, PST payable, QST payable | Tax, split by rate | |
| Rounding | Rounding (either side) | |
| Cost of goods sold (or each item's COGS account) | Cost of the stock sold | |
| Inventory asset | Cost of the stock sold |
A group tax rate such as "GST + PST 12%" is split into its parts, so each government's share lands in its own liability account. The cost of goods sold lines are written when both the inventory and COGS accounts are set.
Payment received
A payment is posted separately from the invoice, so an unpaid invoice stays in Accounts Receivable until it is paid.
| Account | Debit | Credit |
|---|---|---|
| The account the money went to (see below) | Amount received | |
| Accounts Receivable | Amount received |
Where the money goes, in this order:
- The Deposit To account chosen on the payment, when one is chosen.
- Otherwise the account set for that payment method in Accounting Setup (for example card and cheque to Undeposited Funds, cash to Cash in Drawer).
- Otherwise the cash or bank account.
A payment that has already been put on a deposit stays in Undeposited Funds, because the deposit moved it to the bank. See Undeposited Funds and the Deposit To account.
A sales receipt (a sale paid in full at once) is an invoice and its payment together: both journals above are written.
Applying a customer's available credit to an invoice moves no money, so it writes no payment journal: both documents have already posted.
Make Deposits
| Account | Debit | Credit |
|---|---|---|
| Bank account deposited to | Deposit total | |
| Undeposited Funds | Deposit total |
One deposit line in the books matches the one line on your bank statement. See Make Deposits.
Credit memo (a sales return)
| Account | Debit | Credit |
|---|---|---|
| Sales returns (or each returned item's income account) | Lines before tax | |
| GST/HST, PST, QST payable | Tax, split the same way the sale split it | |
| Accounts Receivable | Credit memo total | |
| Inventory asset | Cost of the returned stock | |
| Cost of goods sold | Cost of the returned stock |
Refund to a customer
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | Amount refunded | |
| The bank or cash account the refund came from | Amount refunded |
Documents that do not post
Estimates, sales orders and purchase orders are promises, not transactions: they write nothing to the ledger. A pending invoice or bill that has not been received posts nothing either.
Customer deposits (money received before the invoice)
A payment taken as an advance goes to Customer deposits (a liability) rather than to income. When it is applied to an invoice it moves from Customer deposits to Accounts Receivable.
Vendors and purchases
Bill, or Receive Items
A bill posts once it is received (a Receive Items document or a bill with its goods received).
| Account | Debit | Credit |
|---|---|---|
| Inventory asset | Stock lines, at cost | |
| The line's own account | Service and non-stock lines, and every line on the Expenses tab | |
| GST/HST Receivable (ITC), QST Receivable (ITR) | Recoverable tax | |
| Freight in | Freight on the bill | |
| Purchase discounts | Bill discount | |
| Accounts Payable | Bill total |
Tax on purchases. GST, HST and QST paid are input tax credits, so they go to the receivable (ITC) account. PST in British Columbia, Saskatchewan and Manitoba is not recoverable: it is added to the cost of what was bought (inventory or the expense), not to the ITC account. If no ITC account is set, all the tax is treated as part of the cost. For a company in the United States, sales tax paid on purchases is always part of the cost. See Tax on invoices, bills and expenses.
Landed costs added to a bill move the extra cost into inventory: debit Inventory, credit Freight in.
Pay Bills
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | Amount paid | |
| The Payment Account (bank, cash or credit card) | Amount paid |
A payment is never taken out of Undeposited Funds; money leaving goes from the bank.
Vendor credit (a purchase return)
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | Credit total | |
| Inventory asset | Goods returned, at cost | |
| GST/HST Receivable (ITC) | The input tax credit given back |
A refund the vendor pays you is money in: debit the bank, credit Accounts Payable.
Enter Expenses
| Account | Debit | Credit |
|---|---|---|
| The expense category's account (or the default expense account) | Amount before tax | |
| GST/HST Receivable (ITC) | Recoverable tax | |
| Accounts Payable | Total |
Its payment then clears the payable: debit Accounts Payable, credit the bank. An expense refund is the same entry reversed.
Write Cheques and Enter Credit Card Charges
- With a payee: the cheque or charge is a purchase paid at once. It posts like a bill (to the lines' accounts and Accounts Payable) with its payment (Accounts Payable to the bank or card account), so it appears in the vendor's ledger.
- With no payee: the lines' accounts are debited and the bank or credit card account is credited directly.
Supplier advances
Money paid to a vendor before the bill exists goes to Supplier advances (an asset) until it is applied to a bill.
Banking
| Transaction | Debit | Credit |
|---|---|---|
| Transfer Funds | Transfer Funds To account | Transfer Funds From account |
| Make Deposits | Bank | Undeposited Funds (and any other account on the deposit's lines) |
Inventory
| Transaction | Debit | Credit |
|---|---|---|
| Adjust Quantity/Value on Hand — stock lost or damaged | Shrinkage (less any amount recovered, which goes to cash or bank) | Inventory asset |
| Adjust Quantity/Value on Hand — stock found on a count | Inventory asset | Shrinkage |
| Build Assemblies — built worth more than its parts | Inventory asset | Cost of goods sold |
| Build Assemblies — built worth less than its parts | Cost of goods sold | Inventory asset |
| Transfer Inventory between locations | nothing | nothing |
A build whose value equals the parts used writes nothing: the value only moves from one shelf to another within the same inventory account. A transfer between your own locations changes where stock is, not what it is worth.
Sales tax
Filing a return (see Prepare and file a sales tax return):
| Account | Debit | Credit |
|---|---|---|
| GST/HST payable (tax collected) | Tax collected for the period | |
| GST/HST Receivable (ITC) | Input tax credits for the period | |
| Sales tax filed and owing | The net amount owing |
Filing a return does not close the period. A sale entered later in a filed period is not refused; its tax goes on the next return. Use Set Closing Date and Year-End to lock a period.
Use tax you self-assess on a purchase no supplier charged tax on: debit the expense account, credit Use tax payable.
Payroll
A pay run (see Pay Employees):
| Account | Debit | Credit |
|---|---|---|
| Wages and Salaries | Gross pay | |
| Employer Payroll Contributions | The employer's share (CPP, EI and others) | |
| Payroll Clearing (net pay owed to employees) | Net pay | |
| Payroll Remittances Payable (CRA) | Deductions and employer amounts owed federally | |
| Payroll Remittances Payable (Provincial) | Amounts owed to the province (Quebec) | |
| Each deduction's own account | Union dues, garnishments, RRSP and other deductions |
Paying the employees: debit Payroll Clearing, credit the bank.
Fixed assets
| Transaction | Debit | Credit |
|---|---|---|
| Depreciation for a year | Depreciation expense | Accumulated depreciation |
| Disposal of an asset | Accumulated depreciation (all of it), and the bank for anything received | Fixed assets, at cost (the original cost) |
The difference on a disposal goes to Gain or loss on disposal, on whichever side balances the entry. See Fixed Asset Manager and CCA.
General journal entries and opening balances
A general journal entry posts exactly the lines you type. Opening balances post one entry with the balances you enter; any difference goes to Opening Balance Equity.
Editing, voiding and deleting
- Editing a saved document replaces its journal with a new one worked out from the document as it now stands. The previous lines are kept in the history, so the Audit Trail can show what changed.
- Voiding or deleting a document takes its amounts back out of the books. See Edit, copy, void or delete an invoice.
- Closed periods. A change that would add, remove or alter a ledger line dated on or before the closing date is refused. A payment dated today against an invoice from a closed period is allowed: its line is dated today.