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Experienced bookkeepers and accountants need not review the material immediately following. Page down to the section beginning "Your Chart of Accounts". History ------- The German romantic poet Goethe said that double entry bookkeeping is beautiful and elegant. It is all of that and more, probably the most powerful, yet simplest, bit of lateral thinking ever conjured up by the human imagination. It allows a people with no formal concept of zero or negative numbers to indulge in the most complex of financial dealings -- piracy, trade and empire. Double entry bookkeeping as we know it probably appeared in the great Islamic civilization of the 10th or 11th Centuries. Conceivably, the Arabs introduced it into Europe through Spain, along with algebra, the zero, and modern clocks, at about the time of Ferdinand and Isabella, just prior to the Renaissance. But earlier... Did Omar Khayyam puzzle over double entry bookkeeping? He knew about closing an account in 1123 A.D., if we can trust Fitzgerald's translation of the Rubaiyat! And he wrote the first Arabic book on algebra. Did he or some other astronomer-mathematician INVENT algebra as a way to explain to the poobahs of the Persian court how double entry actually works? I don't know, but I'd like to think so. I think double entry bookkeeping came first, and suggested algebra to the quick-witted sometime later. But Omar Khayyam, vizier to the Caliphs of Persia, knew about it in the 12th Century. Modern accounting PRACTICE, on the other hand, dates only from about the 16th Century, or about the time of the Borgias. This leads us to a very brief tutorial -------------------------------------- Double entry bookkeeping is designed to show the ownership of assets. That's ALL it does. Once you've caught on to that, the rest is easy. Everything you have either belongs to you, or to your bank or other creditors. Everything you have is described in Asset accounts. Everything your bank or creditors has loaned to you is described in Liability accounts. Everything you can call your own is summarized in Equity accounts. The sum of what you OWN and what you OWE, therefore, equals the value of what you HAVE: What You Have = What You OWE plus What You OWN. Your books therefore BALANCE. Each side is equal. That is double-entry bookkeeping in a nutshell, and the rest is just practice and experience. The equation is called the Fundamental Equation of Accounting: Assets = Liabilities + Equity. For example, your Checking Account is an ASSET. You have money. But your bank owns the money it lends you. If you take out a loan, the TRANSACTION is a two-edged sword: You increase the value of your Checking Account, AND, you increase the level of your debt. The difference in either account is exactly the same. There is a CONVENTION that you DEBIT assets (record them in the left column) and CREDIT liabilities (right column), that is: Left = Right. Left + Amount Loaned = Right + Amount Owed. If you are familiar with algebra or computer programming, this might be a useful insight: A Ledger ACCOUNT is like a VARIABLE. It can contain a value or no value at all. The value it contains can be positive (LEFT column) or negative (RIGHT column). And the account can have a name, independent of the value in it. This parallel with algebra is very suggestive to historians and it has been used to teach accounting at least since Beau Brummel invented pants. But it gets in the way, too! The modern (post-Renaissance) convention further states that when you tote it all up, you get zip: Assets - Liabilities - Equity = 0. It required the invention of algebra to realize this fact. But buried in this simple-looking formula is the ultra-modern insight that computers can represent Credits as negative numbers and Debits as positive; thereafter, mere addition automates everything! That's great for programmers, bad for people. Assets + ( -Liabilities ) + ( -Equity ) = 0. Unfortunately, bad design in accounting software all too often forces people to think like computers. Instead of writing plain positive numbers in traditional left and right columns -- the method used for centuries -- bad human factors force you to think in and use negative numbers. And negative numbers are a pointless, unnecessary distraction. The algebraic interpretation is pervasive and correct. But it's also wrong. With GL version 1.12, you don't have to add or subtract anything. The reason you use this GL program (or any other) is so YOU DON'T HAVE TO THINK ABOUT THE ARITHMETIC, period. Just record your transactions, following the Debit (left column) and Credit (right column) rules by rote, and the rest truly is automatic! Visual Reminders of Rote Rules ------------------------------ The "rote rules", in GL version 1.12, are clearly indicated in your General Journal. Every account you use is marked by a "+|-" or "-|+" reminder, to indicate which columns you use to INCREASE or DECREASE an account's balance. Asset and Expense accounts are marked "+|-", meaning that you put money into your checking account (an Asset account) in the LEFT (debit) column, and you increase the level of your expenditures the same way. (But notice that increasing expenditures means decreasing income. Expense accounts are a special case of the pattern for Liability, Revenue and Equity.) Liability, Revenue and Equity accounts are marked "-|+", the exact opposite. You take out a loan (Liability) in the RIGHT (credit) column, you pay off your creditors in the LEFT (debit) column. You record dividend income (a Revenue account) the same way. You record your capital investment (an Equity account) in the RIGHT column, and you record your personal withdrawals from capital (also an Equity account) in the LEFT column. Double entry means that you DEBIT AND CREDIT every transaction, once to an account in the left column, and once to another account in the right column. If you receive dividend income, DEBIT your (Asset) Cash account and CREDIT your (Revenue) Dividends account. See the General Journal documentation for some other examples. The Check Register function of GL version 1.12 handles the special case of recording your checks and checking account deposits. The "+|-" reminders are not shown there, because you do not have to decide for yourself which columns you should use. Revenue & Expense Accounts are Equity Accounts ---------------------------------------------- It's not obvious where the notion of profit & loss fits into the fundamental equation of accounting. It's not obvious that profit is even relevant to some kinds of accounting, such as home bookkeeping, or non-profit corporations, or government agencies. A deficit or zero "profit" has special meaning in these cases, but it's still "profit" -- Revenues less Expenses -- although you may call it something else. In the case of home accounting, if your income exceeds your expenses, the difference contributes to your total Net Worth. Revenue and Expense accounts are the instrument you use to keep track. This is worth emphasizing: Revenue and Expense accounts are all a species of EQUITY account. That is, a credit to an EXPENSE account has exactly the same effect on your Balance Sheet as a credit (!) to a REVENUE account. Is that what you expected? If you understand that, you understand everything there really is to know about double entry bookkeeping. Discussion follows! The only difference between a Revenue and an Expense account is what you USE it for, the kind of information that gets stored there. This is why we can say that account numbers in the 600's, 700's, 800's and 900's are Expense accounts (like 500's). To look at it another way, all these "expense" accounts are just another sort of Revenue account (like 400's) -- "negative income". The way ALL of these EQUITY accounts are managed by the centuries- old double entry bookkeeping rules is exactly the same in every case. An expense account is only an expense account because we record Expenses there. If the customary usage is different, typically the account's customary name is also different -- e.g., "Revenue". The Muse of History is fickle. How does the USAGE vary, then? Why not just have ONE BIG Equity account called PROFIT (or NET LOSS, if you're a pessimist). Custom, the practice of the ages, has decreed that one shall not do that, because it's not very useful. Instead, bookkeepers block off a chunk of Equity accounts, and in these accounts all expenditures are recorded in the LEFT column (only). In another block of Equity accounts, all income is recorded in the RIGHT column (only). And this is all there is to it -- that alone creates the distinction between Revenue and Expense accounts. You COULD do it all in one account -- an account has two columns, after all -- but you would quickly lose your grip on what's happening if you did that. It's better to keep the details where they are, and summarize later. When you "close the books" at the end of a month (or other natural accounting period), the difference between your total revenues and expenses -- your profit, be it gain or loss or breakeven -- actually is posted to yet another Equity account. This special Equity account is usually called Retained Earnings. The Retained Earnings account is the "one big account" just mentioned. Ahhh... you CAN have everything! The Retained Earnings account is also privileged -- normal accounting practice prohibits any adjustment to Retained Earnings except by means of closing the books (a rule which GL enforces according to the strict interpretation). Closing the books means that an amount equal to every Revenue or Expense account's net balance is posted to the OPPOSITE COLUMN, to bring the balance to zero, AND SIMULTANEOUSLY, an opposing entry is posted to Retained Earnings. If an account has a LEFT column balance of $300.00, the account is CLOSED by writing $300.00 in the RIGHT column of that same account (bringing the balance to $0.00), AND BY writing $300.00 to the LEFT column of the Retained Earnings account. The effect is to move the $300.00 from where it was to a summary account, without affecting the balance of the books. The amount posted to Retained Earnings is a SUMMARY OF ALL the Revenue and Expense accounts, but an actual offsetting value is posted to each one of your Revenue or Expense accounts. The indirect method, which requires closing the books, is preferred to the naive approach, then, because it provides a powerful analytical tool: This method allows you to see IMMEDIATELY how you stand at the end of an accounting period, and how you did at the end of every OTHER accounting period. This is the origin of the phrase "the bottom line"...! You can SEE the result of closing the books, in GL version 1.12, by doing a Periodic Close, and then doing Query Accounts on the Retained Earnings account (399) and on any of your Revenue (400's) or Expense (500's and up) accounts. Typically, all Revenue & Expense accounts are closed at the same time. The prohibition in GL against direct access to the Retained Earnings account means that in THIS general ledger program, they MUST all be closed together. No OTHER account is ever "closed", by the way. In this sense of the word, the only accounts that are closed are your income and expense accounts, and the net balance of them all is posted to your Retained Earnings account. Nothing else is affected. Following the details of these accounts, especially as they are summarized on your Balance Sheet, Statement of Revenues and Expenses, Trial Balance and Detail General Ledger reports, is an illuminating exercise. It will quickly convince you that there is more to double entry bookkeeping than meets the eye, easy and obvious as it eventually seems. Very soon you will wonder what all the mystery was about. For that, thank Omar Khayyam, not me or any other programmer! All I've done here is automate, and try to explain what I've learned from the past. What Accounts Do I Need? ------------------------ Wisdom and hard knocks dictate the accounts you should create: You should have an Asset account for your checkbook. You should have an Expense account for each of Rent, Telephone, Medical Expenses, and so forth. You should have a Liability account for each of your major debts. You should have Revenue accounts for each of the major sources of your income. Notice that one of your goals is to clearly identify your INCOME. Your checkbook balance at year end will not usually indicate your actual income, especially if you are frequently reimbursed for expenses you incurr on someone else's behalf -- business lunches, mileage, etc. This money gets cycled through your checking account more than once, and inflates your sum of deposits. This is one example of why you need to keep a general ledger! YOU SHOULD ASK YOUR ACCOUNTANT for help, because everyone's case is different, and because the tax consequences and legal ramifications of your decisions can be IMPORTANT. In particular, depreciation on inventory and major assets can be a mind-boggling problem to record correctly, so you should seek professional advice. But ask someone who is familiar with your own unique circumstances. And be prepared to pay for the service. It's not trivial. If you don't have an accountant, READ BOOKS! ASK FRIENDS! READ TAX MANUALS! USE YOUR HEAD! GUESS! Remember, ANY system is better than NO system, especially if it records the details of your annual income and expenses. This is the end of a very brief tutorial. It is not a complete discussion of accounting by any means! However, it is far more than you usually get if you've never done any bookkeeping before. I've tried to be accurate in my description, and tried to suggest what you should think about. The rest of this document describes how GL version 1.12 actually maintains your Chart of Accounts. Your Chart of Accounts ---------------------- Entries in your Chart of Accounts have four identifying parts: The account NUMBER, the account NAME, the account TYPE, and the COLUMN on your Balance Sheet (left, middle, or right) which this account uses to print its balance in. The account types are: Header, Normal Posting Account, Control Account, Subaccount, Automatic Transaction Procedure, Reserved for P&L, and nine levels of Break Total. All are explained below. In addition, account entries may contain Balances and some other kinds of behind-the-scenes housekeeping information which are not accessible through Chart Maintenance. Adding an account: ------------------ When you give an account number in Chart Maintenance, if the account does not exist it will be added. If this is a mistake, simply give the same number again (by hitting Enter), and you will have the chance to delete the account. Chart Maintenance ----------------- Chart Maintenance enforces the following rules with an "out of sight is out of mind" philosophy. That is, if you may not do something, you never have the chance to be contrary -- the question is never asked. There is no magic word that will give you permission to, say, delete the P&L account. If you can't figure out "what key lets me do it" by looking at the help screen or reading this, it ain't there, and it ain't allowed. On the other hand, you won't get any nasty error messages either, because anything you CAN do is ok. (Even if it doesn't make sense -- but that's up to you!) The rules (gently enforced) are these: You may not delete any "active" account (defined just below), or change its type to non-posting. The only accounts which ever contain a balance are Normal Posting Accounts, the P&L account (called "Retained Earnings" only by default), and Subaccounts. In addition, you may edit the P&L account's name, but that's all -- you can't delete the P&L account or change its type, period. GL defines an "active" account as one which prints out detail lines on the Detail General Ledger report. In other words, it has a history of activity even if its current balance is zero. (The Year End routine clears out the previous detail for an account with a zero balance -- this makes it deletable once again.) Note that you can change an active Subaccount to Normal Posting, or vice versa, but you CAN'T change it to a non-posting type like Header, Control, etc. There is a trick you may wish to use concerning Subaccounts (see below), so bear this in mind. To select the account TYPE or the balance sheet COLUMN, press the SPACEBAR and you will cycle through all the options. Press Enter to accept the value. You may always change ANY account's name or balance sheet printout column. You may always delete a non-posting account (Header, Control, ATP, or Total Break) and you may always change the type of any account you can delete. If an account cannot be deleted, Chart Maintenance displays the account balances. Accounts which never have balances, i.e., the Header, Control, ATP and Break Total accounts, never display a balance (not even zero). Aside from the Blank Ledger (F9) option to set ALL account balances to zero, you have no direct access to balances. Any other change to an Account Balance must be accomplished by means of an entry in your General Journal. For example, you must enter starting balances from the General Journal. Which leads us to a brief but interesting digression... Audit Trails ------------ YOU MAY NOT EVER "adjust" an account balance without leaving an audit trail through the journal. This restriction has immense practical consequences. For one thing, the IRS is far more likely to believe your story when you back it up with a complete audit trail. The logic of that audit trail is self- evident, credible, consistent, and independent of this or any other GL program. Unless you save your printouts, you have no audit trail. Remember: Your audit trail exists ON PAPER, so this GL program is designed to print its tale whenever you choose. The audit trail IS your story, and without that hardcopy, the numbers on your Balance Sheet are just so much froufrou, fluff and nonsense. In other words, while your financial data may be stored on a 30mb hard disk, it is only there for the sake of convenience. What you should really be after is that complete, unaltered, PRINTED record of all your transactions. Types of Accounts ----------------- GL recognizes six different account types: Header, Normal Posting, Control, Subaccount, Automatic Transaction Procedure, and nine levels of Break Total. A "seventh type" of account is the Equity account reserved for P&L, account 399. Note that only the P&L account, Normal Posting Accounts and Subaccounts actually receive financial data. All the other "accounts" have special roles and functions. These are discussed below. Account Numbers --------------- Account numbers are broken into two three-digit fields. The left field is the customary 3-DIGIT ACCOUNT LABEL familiar to any bookkeeper. The right field is separated from the left by a space (e.g., "100 019"). The right field may be used however you wish, but GL itself just treats the right field as the lesser digits of a 6-digit account number. The right field is suppressed if it contains all zeroes, except when GL prompts you for an account number. Normally, you see three digits. The numbers you may select for your Chart are pre-defined. ASSET accounts are the 100's, LIABILITY accounts are the 200's, EQUITY accounts are the 300's (Retained Earnings is 399, leaving 100 slots for Break Totals between Retained Earnings and the Revenue section), REVENUE accounts are the 400's and EXPENSE accounts are the 500's. Any account number beginning with 600, 700, 800, or 900 will be treated the same as an expense account -- i.e., as a deduction from revenues (or, equivalently, as a DEBIT to Retained Earnings). The space which separates the two 3-digit fields is innocuous. It may be interpreted or ignored many different ways. It is also inviolate -- you can't type anything in the gap. GL does not reset the account number edit mask between entries; this is a great convenience because you need not retype trailing digits that are already correct. For example, a DEBIT to your Checking Account ("110") followed by a CREDIT to Consulting Fees ("410") requires only two keystrokes to enter the "410," namely "4" and ENTER. Normal Posting Accounts ----------------------- These are the regular accounts which accumulate financial data. Their use depends on whether they are Asset, Liability, Owner Equity, or Revenue & Expense accounts. You should consult your own professional accountant for specific advice on how to use the regular posting accounts. An account is an Asset account if and only if its account number begins with 100, and so on as detailed above. An account beginning with 200 CANNOT be anything other than a Liability account. The numbering scheme is fixed, a constant in a sad, inconstant world. Control Accounts & Subaccounts ------------------------------ Control Accounts may not be directly posted to. These accounts provide a summary of activity in the Subaccounts which they "control". If you use Control Accounts, the Control Account prints on your Balance Sheet, Statement of Income, etc., BUT THE SUBACCOUNTS DO NOT. Control Accounts print on your "presentation" documents -- the ones you'd show a banker. On the other hand, Subaccounts print on your Detail General Ledger, but the control accounts do not (at most, they print out only as headers in your Detail GL, and don't appear at all on Trial Balance). Subaccounts print on your "internal" documents -- the ones you'd show the Internal Revenue Service. The method is simply a way to edit out unnecessary detail from a presentation. If you are audited, you have the complete audit trail provided by your Detail General Ledger (with Subaccounts). If you're just looking for a loan, you have the summary information provided on your Balance Sheet (with Control Accounts). If you prefer NOT to use this method, simply define all your accounts as normal posting accounts, and we won't mention it again. A Subaccount must either follow a Control Account in your Chart (in numerical order), or else follow another Subaccount. If there is no Control Account at the head of a list of Subaccounts, the Subaccounts in the list are treated the same as normal posting accounts. Because no financial data is ever posted to a Control Account (it gets its value from the information in the Subaccounts), you can add or delete Control Accounts at any time. You can always INSERT a Control Account into your Chart, and DELETE it later, whenever you would prefer to show a summary instead of detail in your Balance Sheet. And, you can always convert a Normal Posting Account to a Subaccount, or vice-versa. Think about it! Reserved for P&L ---------------- Account 399 000 is Retained Earnings. This Equity account accumulates the net of Revenues less Expenses when your books are closed. There is only one such account. It cannot be deleted. The Reserved for P&L account type cannot be assigned to any other account. Header Accounts --------------- Header Accounts are informational. The names of Header Accounts print out on your Balance Sheet, but there is no financial data in them. They are just PART OF THE TEXT on your Balance Sheet. The typical use for Header Accounts is to block off the major divisions in your Chart of Accounts. I.e., Assets, Liabilities, etc. There are just there to improve readability, and can be deleted from your Chart without harm to your arithmetic. If you DO delete them, your Balance Sheet might have a "less professional" appearance, by some standards. Header accounts also provide convenient stopping points when you PgUp and PgDn through the Chart list. Break Total Accounts -------------------- The nine levels of Break Total account are used on your Balance Sheet. You cannot post to them as accounts. They are informational. Break Total accounts cause totals to be printed on your Balance Sheet. They also contain instructions about which COLUMN to print the total in -- left, middle, or right. This is the same as for other accounts, except that here you might more commonly choose the middle and right columns. Break Totals maintain a running total of all the accounts which precede them in your Chart, during printouts. Whenever a Break Total is found in your Chart while printing out the Balance Sheet, the total so far is printed out and the Break Total value is reset to zero. The total then begins accumulating again, until the next time a Break Total WITH THE SAME OR HIGHER LEVEL NUMBER is encountered. There are nine Break Total levels, but you may have any number of Break Total accounts in your Chart. Break Total 1 is the "lowest level", Break Total 9 is the "highest level." In effect, as you read your Chart from the top down, the balance of each account is added up simultaneously on each of nine adding machines, numbered 1 to 9. Whenever a Break Total N account comes up in your Chart, this is an instruction to the Nth adding machine to print out its value. Simultaneously, the instruction tells N, AND ALL THE ADDING MACHINES LESS THAN N, to clear their registers to zero and prepare to add up the remaining accounts. The adding machines from N + 1 TO 9 ARE NOT AFFECTED, and they continue to maintain the running total until instructed to print & clear. The "adding machines" know the difference between debits and credits, naturally, and compute their totals accordingly. The NAME of the Break Total account is printed before its total, so the name is therefore PART OF THE TEXT OF YOUR BALANCE SHEET. A typical Break Total account name might be "Sum of Equity Less Withdrawals". One way to compute the "Sum of Equity Less Withdrawals" is by using two Total Break accounts. Break Total 3 (for example) would accumulate "Sum of Equity", then print before it hit Withdrawals, whilst Break Total 4 would print AFTER the Withdrawals account. Obviously, Break Total 3 and Break Total 4 must BOTH be clear when they hit the Equities section of your Chart. You can ensure this by using Break Totals greater than 4 above the Equity accounts, since whenever you print (and clear) 4, you also clear 3, 2 and 1 implicitly, and so on down the line. As it might appear in your chart, LIABILITIES <- header account . . . Sum of Liabilities <- Break Total 9 (print 9, clear all!) EQUITY <- header account R.B. Doe, Capital <- normal posting account J.Q. Doe, Capital <- normal posting account Sum of Equity <- Break Total 3 (print 3, clear 3,2,1) J.Q. Doe, Withdrawals <- normal posting account Sum of Equity LESS Withdrawals <- Break Total 4 (print 4, clear 4,3,2,1) . . . Note, in the example, that since amounts are normally DEBITED to withdrawals, but CREDITED to Capital, the meaning of the TOTAL in Break Total 4 is indeed "the sum of equity less withdrawals". Note, also, that you can accumulate a total of Subaccounts in a Control Account. The difference is that the value is not printed as a "Total", and the Subaccount detail does not print at all. The "balance" of the Control Account prints as though the Control Account were a normal posting account. Automatic Transaction Procedures -------------------------------- NOTICE: ATP's are NOT implemented in Version 1.12! An "Automatic Transaction Procedure" is a description of an ordinary transaction. The ATP description is stored on disk, and recalled as needed. The way to describe the transaction itself is outlined below, under "Defining Automatic Transaction Procedures." An ATP is used in your Journal, up to a point, as though it were any other account. As soon as you enter an amount in your journal worksheet, though, the ATP takes the amount you entered and automatically distributes it into a "boilerplate" journal entry, which may be as lengthy and complex as you like. For example, suppose you are a small, regional community corrections agency, and you receive the monthly phone bill for your office in Poweshiek County. State law requires you to distribute telephone expenses among the areas in which your department is organized: 40% to probation services expense, 40% to residential facility expense, 20% to administrative expense. Rather than enter this transaction every month, with all the mental arithmetic to distribute three debits to departmental expenses and one credit to accounts payable, you simply define an ATP account (in Chart Maintenance), e.g., "590". Now, when you enter "590" on your General Journal worksheet, the transaction is NOT posted to "account 590." Instead, the Journal program retrieves ATP# 590 from disk, and following the instructions found there, your transaction is AUTOMATICALLY credited to (for example) "210 - Northwestern Bell", and AUTOMATICALLY pro-rated and debited to (say) "510 001 - Probation Expense", "510 002 - Residential Expense", and "510 003 - Administrative Expense". Any odd cents get distributed in round robin fashion among all the accounts in the same column. The AMOUNT of the bill is automatically distributed among the various debits and/or credits according to your formula, and the item memo says "Poweshiek Co. Phone Bill" with a normal date and journal entry number. As with manual journal entries, you have the opportunity to reject the entry before it goes into your Journal. The end result of an ATP journal entry is exactly the same as a manual journal entry -- they are indistinguishable. Even with a disk access, the computer fills in the transaction quicker and more accurately than a good keypunch operator can do it. (Especially at 4 p.m. on Friday!) Obviously, you can restrict automatic accounts to be simple 2-entry ATP's if you wish. These simple cases can be used for Fixed, or Recurring, transactions. As noted elsewhere, there is NO PRACTICAL LIMIT on the number of reversing entries you may have in a transaction: There IS a system limit somewhere in excess of 500 unbalanced entries. The same almost non-existent "restriction" applies whether you are doing manual or automatic transactions. Defining Automatic Transaction Procedures ----------------------------------------- Add an account in Chart Maintenance, and specify "Automatic Transaction Procedure" as its type. YOU DO NOT NEED TO DEFINE THE ACTUAL PROCEDURE UNTIL THE FIRST TIME YOU USE THE ATP IN YOUR JOURNAL. Then, as prompted, SIMPLY ENTER A COMPLETE, ACTUAL TRANSACTION, using real data. The percentages are calculated for you, and the whole procedure is stored away on disk for next time. Again, the first time you use an ATP which has not been defined yet, the demon "wakes up" and tells you to do it the long, regular way. The ATP will pay attention. The next time you use the ATP, nothing happens until you enter the date, item memo and amount. Then the ATP takes over and automatically "plays back" your RECORDED transaction procedure, plugging in distributions as it goes. The next thing you see is your Journal Worksheet summary, and the question whether everything is ok. In other words, the ATP learns from you, by the example you provide. Cautions about ATPs ------------------- An ATP accont may not contain any reference to another ATP account. Automatic Transaction Procedures cannot distribute monies to other Automatic Transaction Procedures. However, the procedures you define can debit or credit ANY normal posting account or Subaccount whatsoever -- there is NO validation and NO rule checking, except for the rule against referring to another ATP. *** WARNING *** An ATP transaction will be entered EXACTLY as you defined it. Such transactions could be bizarre and difficult to correct later, requiring you to create special "reversing ATP's", with several hours of tedious backtracking. An ATP is essentially a (very small) computer program which you write yourself. An ATP is therefore considered to be a rule which YOU create. IT IS YOUR RESPONSIBILITY to ensure that the ATP is correct and conforms to Generally Accepted Accounting Practice. You may delete ATP accounts the same way you delete any other account. Size Limits ----------- There is no PRACTICAL limit on the size of your Chart of Accounts -- it is bounded by the absolute total free memory available on your PC, up to 640k. On a 512k system, you could presumably have something like three or four THOUSAND accounts in your Chart. I have not tested the upper limits, which are in any case far greater than those required by most individuals or small going concerns. The General Journal will exhibit a noticeable "catch" or momentary pause when searching for an account name, if your Chart contains more than a few hundred entries. (The purely theoretical maximum is 900,000 accounts, and I would love to meet the chrome-derriered secretary who finally achieves it. Probably next century; in some regards, this program is a Time Capsule for a generation of intelligent machines who will probably collect antique software like this. Salutations, sweetheart! But back to business...) Conclusion ---------- The numbering scheme is perhaps too rigid for your taste. However, it does the "garden variety" Chart of Accounts very nicely, and many bookkeepers are already familiar with something like it. Whilst you may not change the MEANING of the account numbers, you MAY change any of the account names to suit your own taste and purpose. "Retained Earnings" may be revised, for example, to "Net Worth". The Retained Earnings account number, 399 000, is sacrosanct in this system; it is, however, the only account number which is defined to all six places. Also, contrary to the naive view, most bookkeepers DO think in numbers, especially when using the short, three-digit form of account labels, so this system does NOT implement so-called "mnemonic account names." Use your numbering system, and remember it well. (In the Journal, you can always review your Chart of Accounts by pressing the F3 function key.)