The accounting software allows you to activate cost accounting. This allows you to optimize your budget monitoring by clearly identifying your main cost items.
The cost accounting module does not currently allow you to create a forecasted budget. Do not hesitate to let us know your needs on this subject via our suggestion box.
This article covers all the points related to the use of budgets in the Accounting application:
- What is cost accounting?
- How does cost accounting work?
- Activate cost accounting
- Create and manage budgets and sub-budgets
- Breakdown entries in a budget
- Cancel or modify allocation of entries
What is cost accounting?
Cost accounting aims to explain the financial results of an organization:
General accounting gives an overall view of the organization's accounts;
Cost accounting provides a detailed view by budget, project or expense item.
By creating specific budgets, you can easily identify the distribution of income and revenue. This results in an analytical result (loss or profit) for each item.
Cost accounting aims to analyze expenses and revenues by budget:
It does not analyze the result according to accounts.
Only the entries for expenses (class 6) and income (class 7) can be allocated.
How does cost accounting work?
In order to allocate your income and expense entries, you can create budgets and sub-budgets from the Accounting > Settings > Budgets page.
Each entry can be broken down into one or more budgets, for example:
An operating budget (expense in training, administrative management, etc.),
A product sales budget (clothing, goodies, etc.).
For example, you can break down an order of T-shirts as follows:
An amount of $X in the "clothing" sub-budget of the product sales budget,
An amount of $Y in the sub-budget "shipping costs" of the operating budget.
Once the entry has been broken down, it will automatically feed the budgets that you will be able to find in your Expenditure-Revenue document or your Profit and Loss Statement.
Activate cost accounting
To activate the functionality, go to the Accounting > Settings page
You can then activate the Shaolin level that automatically proposes cost accounting. To do so, click on Change next to the current level of your accounting.
If you do not want to change the accounting level, you can also activate cost accounting from the Refine Settings section.
An Allocation section will now be available from the Accounting > Book Entry page. It is from here that you will be able to assign your expense and revenue entries to your different budgets.
You will also be offered the option of breaking down the entry when you enter it. To deactivate this option, uncheck the Direct Allocation feature from the Refine your parameters section.
Create budgets and budget items
Once cost accounting is activated, you can access the budget management page from the Accounting > Settings > Budgets page.
To create a new budget, click on Add a new budget category and enter the name of the budget. Then click on Save.
For a more detailed analysis, you can also add a budget item for each budget. You can create as many budgets and budget items as you need.
Delete budgets and budget items
The deletion of a budget is final, it will not be possible to restore it. The entries attached to the budgets/budget items will be untied and must be broken down again.
To delete a budget or a budget item, click on the 3 small dots of the budget concerned.
Then click on Delete to delete the budget and the associated budget items or on the small cross in front of the budget item to delete an individual budget item. Then click on remove
It is not necessary to delete a budget at the end of the year because the accounting documents allow you to display the entries broken down by year.
Breakdown entries in a budget
Once you have set up your budgets, you can start allocating your expense and revenue entries from the Accounting > Book Entry> Allocation page.
One row is displayed per category of class 6/7 present in the group of entries.
This allows you to allocate the entries separately to different budgets according to the category. The entries listed are all those that have not been allocated: the entries belonging to a closed fiscal year can still be broken down once the accounting closing has been carried out.
To perform the breakdown :
- Select your entry(s)
- Then click on Allocate X result(s)
You can then distribute them to the desired budgets by entering the amounts to be allocated. You can distribute the amounts by value or by percentage.
The Gap section allows you to check if all the entries have been allocated. Then click on Save to distribute your entries.
Once the entry has been broken down into a budget, you will find the allocation in your various accounting documents (List of expenses and revenues, Income Statement).
There are restrictions in order to guarantee the consistency of your accounting. For example, an allocation cannot be validated if it exceeds the amount of the entries to be broken down. It is also recommended to limit the amounts or percentages of allocation to one digit after the decimal point.
Cancel or modify the allocation of entries
To view the split entries or un-split an entry, click on Budget History from the Allocation page. This will open the Breakdown History page where the already broken down entries are listed.
From the breakdown history page, you will also be able to view, modify and cancel an allocation.
On the breakdown management page > Entries to breakdown, you have the possibility to filter your entries by Fiscal year, dates, amounts, group, and account. You can also search by the budget item on the breakdown history page.