Accounting Guide
This guide is aimed at accountants or users who may be responsible for setting up accounting information and managing accounting information for use with Acctivate. For an overview of information synchronized between Acctivate and QuickBooks, please review the synchronization documentation.
GL Accounts
During the Acctivate company creation process, Acctivate syncs your entire General Ledger Account List. A small number of GL accounts need to be mapped in Acctivate.
Warehouse GL Accounts
The following GL Accounts are configured per warehouse in Acctivate.
Inventory
Type: Other Current Asset
The value of inventory in an Acctivate warehouse will sync to the Inventory Asset account associated with the warehouse.
Purchases
Type: Other Current Liability
Acctivate will automatically create an account by the name of Accrued Purchase Receipts when first connected to QuickBooks Desktop (this account must be created in QuickBooks Online). This is an accrual account for Purchase Order receipts. The balance in this account will reflect purchase orders that have posted Inventory Receipts, but no matching Vendor Bill (Purchase Invoice) yet.
Adjustments
Type: Other Expense or Cost of Goods Sold
This offset account is used for Inventory Adjustments and Inventory Count transactions. These are adjustments in quantity to your inventory.
Gain/Loss
Type: Other Expense or Cost of Goods Sold
This offset account is used for Inventory Balance Adjustments and Gain/Loss transactions for Standard cost items (e.g., difference between purchase and standard costs). This account is also used for beginning inventory imports from QuickBooks.
Issue (not a required account)
Account Type: Expense
This is the default offset account for Inventory Issues. It's typically an Expense or Cost of Goods Sold account. Inventory Issues are often used to remove (issue out) inventory for certain purposes, such as for a sample or trade show.
Accrued Landed Cost
Type: Other Current Liability
This account is similar to the Purchases account, but it's the accrual account for the Landed Cost function. Landed Cost will debit the Inventory account for the Warehouse and credit this account. The Vendor Bill for a Landed Cost transaction will debit this account and credit the A/P account. Acctivate will automatically create this account in QuickBooks Desktop (this account must be created by a user in QuickBooks Online).
Note
If the QuickBooks Desktop preference "Use account numbers" (Edit → Preferences → Accounting) is enabled, Acctivate will not be able to automatically create the Accrued Purchase Receipts and Accrued Landed Cost account. Instead, you should create those accounts and assign the appropriate account number prior to starting the create company process.
In QuickBooks Online you must set the Accrued Purchase Receipts and Accrued Landed Cost accounts up, they are not created automatically.
Branch GL Accounts
Accounts Receivable
Type: Accounts Receivable
This account will be used for posting unpaid sales invoices. Each Branch in Acctivate must be linked to an Accounts Receivable account, though they can all be the same.
Note
In Acctivate companies integrated with QuickBooks Online, only the default accounts receivable account for the Branch's currency can be used. If more than one A/R account exists for a currency, the default A/R account will be determined as the oldest A/R account.
If creating an Acctivate company against a new QuickBooks Online company, you may need to create a "dummy" invoice so that the default A/R account gets created before you begin the Create Company process.
Invoice Discounts or Sales Discounts
Type: Income
The Invoice Discount GL account is used to give invoice header discounts. The Invoice Discount is linked to a Branch in Acctivate.
Other GL Accounts
Accounts Payable
Type: Accounts Payable
Purchase Invoices entered into Acctivate require at least one Accounts Payable account. If you have multiple Accounts Payable accounts, then you can define which one is the default in the Purchasing section of the Configuration Manager.
Note
In Acctivate companies integrated with QuickBooks Online, only the default accounts payable account for the vendor's currency can be used. If more than one A/P account exists for a currency, the default A/P account will be determined as the oldest A/P account.
If creating an Acctivate company against a new QuickBooks Online company, you may need to create a "dummy" vendor bill so that the default A/R account gets created before you begin the Create Company process.
Income
Type: Income
At least one income account, but up to as many as you'd like, must exist in QuickBooks. Income (and COGS) accounts can be configured to link to one of the following attributes:
- Product Class
- Branch
- Sales Category
- Salesperson
- Customer Type
Cost of Goods Sold
Type: Cost of Goods Sold
At least one COGS account, but up to as many as you'd like, must exist in QuickBooks. COGS (and income) accounts can be configured to link to one of the following attributes:
- Product Class
- Branch
- Sales Category
- Salesperson
- Customer Type
Standard Cost Offset Account (only required if using Standard cost method for products)
Type: Other Expense or Cost of Goods Sold (Typically)
Acctivate can track “standard” costs for non-inventoried items, including labor, other charges and shipping. A Standard Cost can be provided for each product, for each warehouse. This allows for cost variations for geographic regions. For example, the standard cost for labor in California is likely higher than Texas. The standard cost should be specified in stocking units, usually per-each piece. The offset account used for non-inventoried standard cost products is defined on the Non-inventoried tab of the Warehouse Configuration.
For example, a standard cost Labor product in Acctivate would have the follow Debits and Credits:
Transaction | Debit Account | Credit Account |
---|---|---|
Sales Invoice | Accounts Receivable (Branch) | Sales / Income (Product Class, etc.) |
Sales Invoice | Cost of Goods Sold (Product Class) | Labor Cost Offset (Warehouse) |
Inventory Assembly | Inventory Asset (Warehouse) | Labor Cost Offset (Warehouse) |
The standard cost offset account is cleared by the actual expense such as payroll or a vendor bill. The actual expense (e.g., payroll) may not match the standard cost. This discrepancy usually remains in the original expense account (e.g., payroll expense), but may be adjusted through a General Journal entry as well. Please consult with your accountant to decide how to account for standard cost variance.
QuickBooks Classes
Acctivate can be configured to use QuickBooks Class Tracking, which will allow users to track Sales and Cost of Goods Sold on Profit and Loss, by summarizing Sales and Cost of Goods sold by a number of different options.
Once Class Tracking has been enabled in QuickBooks, users can configure Acctivate to use these classes by going to File > Configuration Manager > Sales Orders > Sales / COGS. You will find the QuickBooks Class Tracking section, including the two dropdowns for Invoice and Invoice Detail lines respectively.
Journals
When a sync is performed, Acctivate will consolidate inventory transactions of the same type and date and sync them to QuickBooks as Journal Entries. The journal number assigned is based on the Journal number configuration and will use the GL Accounts you've configured in the Configuration Manager. Journals created by Acctivate will have the word "Acctivate" and the type of transaction in the journal's Memo field.
Research Journals
Journals created in QuickBooks by Acctivate are summary journals containing the total value of the transaction. The details of the journals can be found in Acctivate by using the Inventory Detail Journal report:
- In Acctivate, navigate to Reports → Inventory Management.
- Select the Inventory Detail Journal report (or alternatively the Inventory Detail Journal by Account).
- In the Report Selection Criteria window, change the Journal ID filter to Equal To.
- In the Value 1 field, enter the journal number from QuickBooks.
- If this report is run with this filter set to all, it will include transactions that are not batched into a journal yet as well as transactions in a journal.
- Preview the report.
The Inventory Detail Journal report will show all the transaction details that are included in the journal. If you need more information about a specific transaction included in the journal, you can use the Transaction List or the related transaction report to research the session number further.
For example, to research inventory receipt session 54:
- In Acctivate, navigate to Reports → Inventory Management.
- Select the Inventory Receipts report.
- In the Report Selection Criteria window, change the Session filter to Equal To.
- In the Value 1 field, enter the session number.
- Preview the report.
Accrued Purchase Receipts
The Accrued Purchase Receipts account is an accrual account created by Acctivate during the initial company creation. When you post an inventory receipt, Acctivate will debit the Inventory GL account and credit the Purchases GL account specified in the Warehouse section of the Configuration Manager.
Creating the purchase invoice will reconcile the balance in the purchases GL account by debiting the Accrued Purchase Receipts account and crediting Accounts Payable.
For example, when an Inventory Receipt (with or a purchase order) is posted for $750 of inventory the following accounting entry is made:
Account | Debit | Credit |
---|---|---|
Inventory Asset | $750 | |
Accrued Purchase Receipts | $750 |
When the Vendor Purchase Invoice is entered for the inventoried products, the following accounting entry is made:
Account | Debit | Credit |
---|---|---|
Accrued Purchase Receipts | $750 | |
Accounts Payable | $750 |
Acctivate will update previous receipts to match the purchase invoice amount so that the Accrued Purchase Receipts account is properly balanced with no discrepancy. Consider the following scenario:
Inventory is received on January 15th at $50 and sold on January 20th resulting in COGS being calculated at $50. Then, the purchase invoice arrives on January 22nd for $55.
If the purchase invoice is entered after an inventory receipt has been posted, the purchase invoice will update the inventory receipt to match the invoice amount. Subsequent inventory transactions will be updated as well. Using the example above, when the purchase invoice is entered in on January 22nd, Acctivate will update the receipt on January 15th to have a cost of $55, your true cost. The COGS for the sale on January 20th will also be corrected to be $55.
Updating the inventory receipt value to match the purchase invoice value ensures that there is no accounting discrepancy between the value added to the inventory asset account and the value added to accounts payable.
APR Reconciliation
The automatic updating of inventory receipt values to match purchase invoice values (mentioned above) ensures that the Accrued Purchase Receipts account stays balanced, however there are scenarios that can cause the Accrued Purchase Receipts account to be overstated. Some common causes of an overstated Accrued Purchase Receipts account are:
- Entered inventory receipts without a corresponding purchase invoice.
Inventory receipts that are created without a purchase order will debit the Inventory GL account and credit the Purchases GL account, however there will never be a purchase invoice to offset this receipt. Likewise, if an inventory receipt is created from a purchase order but no related purchase invoice is entered, you will have an overstated balance. - Purchase invoices entered before a receipt at a different cost.
When a receipt is posted, then a purchase invoice posted, the receipt is updated to match the invoice. However, if you create a purchase invoice then post an inventory receipt for a different amount the receipt will not update. In the event that a purchase invoice is entered first, the inventory receipt for the PO should be reviewed for the correct cost prior to posting.
Best practices – balancing Accrued Purchase Receipts frequently
The best practice for understanding the Accrued Purchase Receipts balance is reconcile it frequently, such as weekly or even daily. This can help you identify any causes of a potential discrepancy. There are Acctivate reports and processes that can be followed to make this manageable.
- As you post each receipt, print the Inventory Receipts report (Reports → Inventory Management → Transactions → Inventory Receipts) and put it into a folder.
- As you enter each Purchase Invoice pull the related Inventory Receipts report out of the folder and make sure the value matches your invoice for the inventoried products. (When creating a Purchase Invoice, if you receive a message about the receipt being updated to match, you will need to reprint the Inventory Receipts report for that session.)
- Remove the Inventory Receipt reports from the folder after the purchase invoice has been posted and synchronized to QuickBooks.
- Add all remaining Inventory Receipts reports together and the total should equal your Accrued Purchase Receipts ending account balance.
Discrepancies
If discrepancies exist, you may need to review each entry in the Accrued Purchase Receipts register in QuickBooks. Before starting, do the following:
- First, post any receipts that need to be posted and create any purchase invoices.
- Run a sync and ensure there are no sync errors or warnings. Do not proceed until sync errors have been resolved.
Next, a series of reports can be run to identify issues, starting with a broad review before a more detailed review. Not all the steps must be followed, but it can be more efficient.
Review journals
Acctivate syncs inventory transactions, such as inventory receipts, in summary journals to QuickBooks. The first step would be to verify the journals in Accrued Purchase Receipts match what Acctivate has for a period of time (such as a week):- In Acctivate, navigate to Reports → Inventory Management → Transactions.
- Select the Inventory Summary Journal report.
- Enter the Beginning Date and Ending Date for the period you want to evaluate.
- In the Report Selection Criteria window, change the Account filter to Equal To. In the Value 1 field lookup and select Accrued Purchase Receipts.
- Preview the report.
The Entry Number in this report represents the journal number in QuickBooks. Each of these journals should exist in the Accrued Purchase Receipts account for the same amount. If there are journals in the Accrued Purchase Receipts account not from Acctivate, those should be reviewed and use another account. If an amount is different, try deleting the journal from QuickBooks and running a sync, Acctivate will recreate the journal via the sync. If everything matches, you can proceed.
Review receipts without a PO
Inventory receipts that are not created for a purchase order will still post to Accrued Purchase Receipts, but they will not have a corresponding purchase invoice to offset the value. This leaves a balance in the Accrued Purchase Receipts account. To find these, do the following:- In Acctivate, navigate to Reports → Inventory Management → Transactions.
- Select the Inventory Receipts report.
- Change the Transaction Date filter to Between.
- In the Value 1 field enter the starting date and in the Value 2 field enter the ending date of the period you are reconciling.
- In the Report Selection Criteria window, change the PO Number filter to Equal To. Leave the Value 1 field blank so that it includes all receipts that aren't linked to a Purchase Order.
- Preview the report.
Any receipt that has Posted {date} by {user} in the upper right-hand corner has been posted and will affect the balance. Enter a journal in QuickBooks to remove this amount from the Accrued Purchase Receipts account and expense it to another account. For reconciliation purposes, enter the receipt session(s) in the journal memo.
Completed PO Analysis
The Completed Purchase Order Analysis report can be used to identify Purchase Orders that are completed and have a discrepancy between the received amount and invoiced amount. Before running, review any open Purchase Orders to see if they should be closed and if so, use the Mark as Completed action to complete them.- In Acctivate, navigate to Reports → PurchaseOrders.
- Select the Completed Purchase Orders Analysis report.
- In the Report Selection Criteria window, change the Completed Date filter to Between.
- In the Value 1 field enter the starting date and in the Value 2 field enter the ending date of the period you are reconciling.
- Preview the report.
This report will show all purchase orders completed during the period provided, however if there is a discrepancy between the receipt amount and invoice amount, it will show in the Discrepancy column. In this case a discrepancy is likely caused to a PO being marked as completed without entering the related receipts and invoices or receipts being entered at a different price then the invoice after the purchase invoice had been created.
Accounting Entries
Below is a list of accounting entries created by Acctivate.
Inventory Receipt
Inventory Receipt of goods, with or without a purchase order
Account | Debit | Credit |
---|---|---|
Inventory Asset | $750 | |
Accrued Purchase Receipts | $750 |
Purchase Invoice
Vendor Purchase Invoice (Vendor Bill) for Inventory and Other Amounts
Account | Debit | Credit |
---|---|---|
Accrued Purchase Receipts | $750 | |
Expense Account(s) for Other Amounts and COGS account for non-inventoried products | $50 | |
Accounts Payable | $800 |
Inventory Adjustment
Inventory Adjustment to remove inventory
Account | Debit | Credit |
---|---|---|
Inventory Adjustment | $50 | |
Inventory Asset | $50 |
Inventory Count
Inventory Count to adjust discrepancies in inventory. The example below corresponds to an inventory count that was lower than the on hand quantity in Acctivate (i.e., inventory removed).
Account | Debit | Credit |
---|---|---|
Inventory Adjustment | $50 | |
Inventory Asset | $50 |
Inventory Transfer
Inventory Transfer between warehouses
Account | Debit | Credit |
---|---|---|
Inventory Asset (TO warehouse) | $50 | |
Inventory Asset (FROM warehouse) | $50 |
Inventory Assemby
Inventory Assembly to build a finished good out of raw materials, including standard cost Labor
Account | Debit | Credit |
---|---|---|
Inventory Asset - Finished Good Warehouse | $50 | |
Inventory Asset - Raw Material Warehouse | $45 | |
Non-inventoried Cost Offset Account - Labor Warehouse | $5 |
Inventory Balance Adjustment
Gain or Loss on Inventory due to an Inventory Balance Adjustment
Account | Debit | Credit |
---|---|---|
Gain/Loss account | $250 | |
Inventory Asset | $250 |
Sales Invoice
Customer Sales Invoice for products and/or services
Account | Debit | Credit |
---|---|---|
Accounts Receivables | $150 | |
Sales - Widgets | $100 | |
Sales - Gadgets | $50 |
Cost of Goods Sold (COGS) from Sales Invoice
Account | Debit | Credit |
---|---|---|
Cost of Goods Sold - Widgets | $50 | |
Cost of Goods Sold - Gadgets | $25 | |
Inventory Asset | $75 |
Customer Payments
Customer Payments
Customer Payments debit the Undeposited Funds account, if enabled in QuickBooks, otherwise QuickBooks enters new payments into the bank account used for the last payment.
It is recommended that the Undeposited Funds account be used as it's easier to reconcile and direct the deposit of funds. The credit account is the customer's Accounts Receivable account. The A/R account is based on the branch associated with the sales invoice.
Account | Debit | Credit |
---|---|---|
Undeposited Funds (or last used deposit account) | $500 | |
Accounts Receivable | $500 |
Landed Cost
Landed Cost allocation for Inventory Receipts, Transfers, Assemblies, etc.
Account | Debit | Credit |
---|---|---|
Inventory Asset | $150 | |
Accrued Landed Cost | $150 |
Landed Cost Purchase Invoice (Vendor Bill)
Account | Debit | Credit |
---|---|---|
Accrued Landed Cost | $150 | |
Accounts Payable | $150 |
Drop Ship
Drop Ship transactions record the COGS when the Purchase Invoice is entered into the Drop Ship PO. The amount of the invoice line will immediately post to the product's cost of goods sold account (based on the COGS account assigned to the product's Product Class). Income is recorded when the sales invoice is created (see Sales Invoice above for more information).
Transaction | Account | Debit | Credit |
---|---|---|---|
Sales Invoice | Accounts Receivables | $150 | |
Sales Invoice | Sales - Widgets | $150 | |
Drop Ship PO Invoice | Cost of Goods Sold - Widgets | $95 | |
Drop Ship PO Invoice | Accounts Payable | $95 |
Cost Methods
Acctivate is a perpetual inventory system using a continuous calculation for the inventory valuation and cost of goods sold. The cost for each transaction is calculated using all transactions prior to and including the specific transaction date. Therefore, multiple transactions in a given accounting period may be calculated at different unit costs.
Multiple accounting methods are supported, and each cost method is defined for each product. For example, you may use Actual Cost (specific identity) for lot and serial numbered and Average Cost for standard items.
Warning
Changes to a different costing basis may have a material effect on your financial statements and your tax return. Changes may require prior approval by your tax authority. For example, the IRS requires notification for US businesses. It is strongly recommended that you consult your CPA or tax advisor when selecting or adjusting your cost accounting method(s).
Tip
The unit cost for transactions in an open accounting period may be adjusted when a backdated transaction is entered.
For example, a customer's sales invoice may be created before the corresponding Inventory Receipt is posted. Acctivate will use the current unit cost when the invoice is first created. The unit cost will be updated when the Inventory Receipt is posted.
We recommend that the transaction date for the inventory receipt be back-dated to reflect the physical receipt of goods to provide the most accurate inventory valuation and cost of goods sold.
Average
The average cost of all stock-on-hand per warehouse. As new stock is received, the total value of the received items is added to the value of the existing inventory. The resulting value is divided by the resulting quantity on hand to form a true cost.
Here's a set of example transactions that illustrates how Average Cost is calculated.
Transaction | Quantity | Unit Cost | Amount | Ending Qty | Ending Value | Avg Cost |
---|---|---|---|---|---|---|
Beginning Inventory | 0 | 0.00 | 0.00 | 0 | 0.00 | 0.00 |
Receipt | 200 | 3.00 | 600.00 | 200 | 600.00 | 3.00 |
Sale / COGS | -100 | 3.00 | (300.00) | 100 | 300.00 | 3.00 |
Receipt | 200 | 4.00 | 800.00 | 300 | 1,100.00 | 3.67 |
Sale / COGS | -100 | 3.67 | (367.00) | 200 | 733.00 | 3.67 |
Receipt | 200 | 3.00 | 600.00 | 400 | 1,300.00 | 3.33 |
Sale / COGS | -300 | 3.33 | (999.00) | 100 | 334.00 | 3.34 |
Sale / COGS | -100 | 3.34 | (334.00) | 0 | 0.00 | 0.00 |
Sale / COGS | -100 | 3.341 | (334.00) | -100 | (334.00) | 3.341 |
Note
1Acctivate supports negative inventory and the average cost from the last transaction will be used when the quantity on hand falls below zero. The unit cost will be updated when the inventory receipt or inventory adjustment is posted to correct the negative inventory. Negative inventory should be resolved before the accounting period is closed, otherwise inventory cost adjustments will be posted on the first transaction date after the closing date.
We realize that negative inventory is common in companies just starting with Acctivate. We hope that you will use the Restocking bar of the Inventory Manager to better manage your inventory.
Actual (Specific Identity)
When stock is serial-numbered, the option exists to cost each item sold at the actual cost for which it was purchased. When stock is lot-numbered, the actual cost is the weighted average of all purchases for that lot. Actual Cost is only available for lot and serial numbered products.
FIFO (First in First Out)
When stock is received a cost-layer is established which identifies the quantity, unit cost and total value of goods received in this transaction. As stock is sold, the layers are costed and depleted beginning with the oldest remaining layer. It is not advised to use FIFO with serial or lot control.
LIFO (Last In First Out)
When stock is received a cost-layer is established which identifies the quantity, unit cost and total value of goods received in this transaction. As stock is sold, the layers are costed and depleted beginning with the most recent layer. It is not advised to use LIFO with serial or lot control.
Standard
Typically, standard is used to value finished-goods inventory resulting from a manufacturing process. All stock-on-hand is valued at the standard cost established for the product. This means any inventory transaction posted at a cost other than the Standard will prompt a Balance Adjustment to be created and posted in Acctivate. Standard cost may be changed at any time by entering a balance adjustment transaction which utilize the Gain/Loss GL Account set per warehouse. This change is effective from time-of-entry and cannot be back-dated.
Transaction Process Sequence
It's not uncommon for a single product to be used in multiple transactions with the same transaction date. For example, on a single transaction date a product may be received, transferred, a portion of the quantity adjusted out of inventory due to damage, more quantity received at a different cost, transferred again, then the remaining quantity sold.
Multiple transactions entered with the same date are processed in a consistent sequence regardless of what time of day the transactions were actually entered.
Regardless of the cost method (i.e., FIFO or Average), the following sequence is used when evaluating inventory transactions for a single date:
Transactions are first sequenced by transaction type:
- Beginning Inventory from QuickBooks
- Receipts and Assemblies with positive quantities
- Inbound Transfers (the TO warehouse side of a transfer)
- Added Cost Receipts
- All Other Transactions
- Balance Adjustments
Transactions in one of the above categories are processed in the following sequence:
- Quantity
- Largest quantity first
- Smallest quantity last
- Amount
- Transactions with same quantity are sequenced by Amount/Value
- Largest amount first
- Smallest amount last
- Cost Layer (FIFO/LIFO only)
- Transactions with same quantity and amount are sequenced by FIFO/LIFO Cost Layer
- Entry Sequence
- Transactions for same quantity, amount (and layer) are sequenced by original entry sequence
Multicurrency
Acctivate supports multicurrency transaction when integrated with a QuickBooks company that has multicurrency enabled.
The steps to get started with multicurrency are generally the same for QuickBooks Desktop and QuickBooks Online:
- Enabled multicurrency in QuickBooks
- Define your home and foreign currencies
- Download the current exchange rates (QuickBooks Desktop)
- Setup A/R and A/P GL accounts for the currencies you sell and purchase in1
- Sync Acctivate and QuickBooks
Note
1QuickBooks Online creates the required A/R and A/P accounts when you first transact in a currency. This means that in QuickBooks Online you may need to create a "dummy" sale or purchase transaction for each currency that you have enabled if you haven't completed a transaction for that currency before.
Once you've created the transaction, the necessary GL accounts will be created. In Acctivate, perform a sync so that the new foreign currency GL accounts are available for use in Acctivate.
Home Currency
A single Home Currency is defined when multiple currency is first enabled in QuickBooks Preferences. The home currency is usually currency of your country (e.g., USD in the United States, CAD in Canada, etc.).
Inventory, Revenue and Cost of Goods Sold are always converted and posted in the Home Currency. This includes customer and/or vendor transactions that were entered in a foreign currency.
Currency Codes and Exchange Rates
The Currency Code list is managed by QuickBooks and synchronized to Acctivate. You can choose from over 150 standard currencies.
Exchange Rates can be updated in QuickBooks Desktop as often as you like (either by downloading the current exchange rate or defining your own exchange rate), while QuickBooks Online exchange rates are automatically updated every four hours, but you must sync to update the rates in Acctivate.
New transactions entered in Acctivate will use the current exchange rate, but you can manually override the rate for back-dated transactions.
Customers and Sales
A specific currency code must be selected for every customer. All transactions for that customer must be in that single currency. You cannot change the currency code when there are transactions for the customer.
Each Acctivate Branch will be assigned to a specific Currency. You can create multiple Branches for a single currency, but Acctivate requires a branch for every currency that is in use.
Prices and Amounts on Sales Quotes, Orders and Credits for the customer will be entered in the customer’s currency. However, you may toggle the sales order window to view prices and amounts in the home currency.
The current exchange rate will be captured when the sales order is first created. You can update it at anytime using the refresh button adjacent to the exchange rate. This exchange rate will be used when calculating revenue in the home currency.
The gain or loss on currency is created in QuickBooks when you process and deposit the customer’s payment(s). The exchange rate on the payment and deposit do not update the exchange rate on the sales invoice.
Product Prices
The primary list price for a product will be defined in the home currency. Acctivate also supports an additional list price for each currency.
Simply enter the additional prices on the Prices tab of the Edit Product window, selecting the appropriate currency code. Acctivate uses the price(s) for the customer’s currency, rather than re-calculating from the home price(s) based on exchange rate fluctuations.
Vendors and Purchasing
Similar to customers, all transactions for a vendor must be in the vendor’s single currency. Purchase Orders, Landed Cost and Inventory Receipts will be displayed in the vendor’s currency by default. You can also toggle these windows to display the prices and amounts in home currency.
The Prices on the Vendors tab of the Product Information will be entered or imported in the vendor’s currency. The exchange rate will convert their foreign prices to your home currency for inventory.
New purchase orders will default to the exchange rate at the time the PO is created. The first accounting transaction that converts to the home currency is the inventory receipt. The Inventory Receipt uses the current exchange rate at the time of the Inventory Receipt. This provides a more accurate inventory asset value rather than using the original exchange rate from the purchase order. The exchange rate from the purchase invoice (vendor bill) will finalize the inventory unit cost and asset value from the corresponding inventory receipt.
The gain or loss on currency is created in QuickBooks when you pay the vendor bill. The exchange rate on the funds for the vendor payment does not update the corresponding purchase invoice (bill).
General Ledger Accounts
Most of the General Ledger accounts referenced in Acctivate will be in the Home Currency. Acctivate only requires a separate Accounts Receivable and Accounts Payable account for each currency.
Close Accounting Period
Acctivate does not have a function for closing an accounting period or year. Instead, Acctivate leverages the closing date function in QuickBooks and blocks transactions from being posted with a date in a closed period. Before closing an accounting period in QuickBooks, the process outlined below should be performed in Acctivate. We also recommend that you check the QuickBooks Year-End Guide from the Help menu in QuickBooks Desktop or use the help button next to the "Close the books" option in QuickBooks Online.
One of the first steps in closing an accounting period is to ensure that all transactions have been posted in Acctivate and synchronized to QuickBooks. The following transactions are often overlooked during the closing process.
- Items received, but Inventory Receipts not yet entered and/or posted.
- Vendor Bills received, but Purchase Invoices not entered in Acctivate yet.
- Sales Orders have shipped but have not been invoiced yet.
- Inventory Count in progress, but not posted yet.
- Negative inventory due to a sales invoice created ahead of the corresponding Inventory Receipt
The following procedure guide should be followed when closing each accounting period.
- Verify that all inventory transactions that should be posted are posted in Acctivate. Delete any duplicated or mistake sessions.
- Review open sales orders, including Scheduled and Backordered. Ensure that invoices have been created for shipped quantities.
- Review open purchase orders, checking for any orders that were received and/or billed without being updated in Acctivate
- Correct any negative inventory mistakes (i.e., Qty on Hand below zero). Negative inventory usually indicates that a sales invoice has been processed for a product that was not (or has not been) received into inventory. Check to see if a receipt should be posted, otherwise use an inventory adjustment to correct the quantity.
- Sync with QuickBooks. Perform a full sync, do not use any of the sync options (QuickBooks Desktop). Confirm there are no warnings or exceptions in the sync. Only “Green checks” should appear for each sync task and the sync log should only have two "Info" lines ("Opening company..." and "Synchronization complete").
- Set Closing Date and Password in QuickBooks Preferences
- Sync with QuickBooks again. It’s important to immediately sync again to update the Closing Date in Acctivate. New Acctivate transactions prior to the closing date will be blocked. Posted transactions prior to closing date cannot be voided.
If Acctivate needs to update the cost of a transaction that is in a closed period, a "Prior Period Adjustment" will be created in the first day of the open period.
For example, let's assume inventory was received from a purchase order on December 31st at $100 and then then the accounting period was closed. On January 10th the purchase invoice arrives with a total cost of $125, which results in Acctivate attempting to update the receipt to match. Since the receipt is in a now closed period, a "Prior Period Adjustment" will be made in the first day (January 1st) of the open period for the difference, e.g., $25 in this example.