Perfect Practice allows setup, of a multi-tiered chart of accounts structure, that can accommodate just about any accounting entity. Each separate entity that will be tracked in the general ledger is normally setup as a division. At least one Division must be set-up. Additional Divisions can be setup for different accounting entities, such as branch offices, unique professional associations within the firm, and even non-affiliated companies. Select System Setup/Utilities to access the division setup screen. Select setup then select division, dept./journal.
The Division setup option, allows the system administrator, to determine the use of Department and/or Sub accounting under a specified Division ID; and to designate certain GL accounts for reporting purposes and year-end closing procedures. Your system comes pre-loaded with division 001. The division ID can consist of 5 alphanumeric characters. These are typically numeric, as most accounting personnel prefer using the ten keypad, for data entry. Division 001 has been pre-set with the accounts from the standard chart of accounts that is delivered. Click on the ellipsis for division ID, to see the divisions in your system.
All current divisions will display in the dropdown.
Division 001 is also set up for a calendar year, ending on December 31st. Most firms are on a calendar year. If you are unsure of your current accounting method, check with your accountant. You may specify a fiscal year by changing the ending month. Click on the dropdown for the ending Month to select the month that ends your fiscal year.
Any changes to the division, once actual general ledger entries have been entered, must be done with care and planning. A dialogue box will appear for you to confirm that you really want to do this. You can choose the new ending month from the calendar.
Many firms may wish to track income and other financial performance data on a departmental level. Departmental accounting, simply offers another level of tracking income and expenses, without creating a separate division. To activate departmental accounting, click on the checkbox. You’ll need to create the Department IDs needed before setting up any accounts in GL Account, maintenance. Sub accounting, will allow you to track a detailed breakdown of expenses belonging to a specific category. Rather than setting up a different account number for each category, you can set up one master account, and then have sub-accounts under it. The master account is the only one that will print on the financial statements, but a supporting schedule can provide the breakdown, by category. Common examples of this are setting up one insurance master account, and then having sub-accounts to represent each specific type of insurance you are paying. Another example might be the tracking of each type of expense by the responsible attorney or area of law. To activate sub-accounting, click on the checkbox. The actual accounts will be setup in GL Account, maintenance.
Now we need to designate the actual accounts that correspond to the various accounts asked for, by the division screen. Click on the ellipsis for the account field to choose an account. A list of all available accounts will display. Highlight the correct account and click on OK.
Perfect Practice has the ability to present expenses as a percent of sales, when printing the income statement. The sales accounts must be identified so it will know which accounts to total for the comparison. Perfect Practice uses double entry accounting. As we all remember from accounting, total debits must equal total credits for things to balance. When closing the books at year-end, the difference between revenues and expenses is your firm’s total income or loss. This difference must be displayed on the balance sheet, even before the year is closed. The last account in the liabilities section of your chart of accounts must be a non-posting account used to display the current year to date income. The first account for the income statement is used to know how to calculate your income statement. The balance sheet account for net income post is the real account to which the net profit or loss will be posted at year-end. The EOY date stands for the date on which your last general ledger end of year occurred. You should click on the dropdown for the calendar to set this.
Choose the month and year, of your last general ledger, year-end close. If you need assistance, you can call the Perfect Practice support staff or contact your accountant.
When you’ve finished your entries, click on the check mark to save your changes. Click on the plus sign to add additional divisions. If you are not using the chart of accounts that was provided with your Perfect Practice system, you can only enter your divisions and the information you know at this time. Come back later to identify the correct accounts. When you’ve finished entering divisions, click on the close button.