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Step 3: Associating Accounting codes with Transaction Types

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Step 3: Associating Accounting codes with Transaction Types

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This section explains Step 3: Default Accounting Code Association to Transaction Types in the Chart of Accounts setup. In this step, you link accounting codes (created in Step 2) to specific transaction types, for example, invoices, debit memos, and tax codes. These associations ensure accurate financial reporting by defining which accounting codes are used for debits and credits when transactions are posted.

Refer to Configure Accounting Codes for additional information.

Overview of default Accounting Code Association

The Accounting Code Association step allows you to associate default accounting codes to transaction types for both debits and credits. These mappings are essential for generating journal entries that feed into your General Ledger (GL).

Key features

  • Associate accounting codes with specific transaction types, such as invoices, debit memos, tax codes, and more.

  • Define Debit and Credit accounts for each transaction type.

  • Use a dropdown filter to view accounting code associations for specific transaction categories, for example, Tax and Revenue.

Understanding the interface

The following are the main components:

  1. Dropdown Filter:

    • Allows you to filter transaction types by category, such as Tax, Revenue, etc.

    • For example, selecting "Tax" displays all accounting code associations related to tax codes.

  2. Transaction Types: Transactions are grouped into events, such as:

  • Invoice Posted: Associations for transactions related to invoices.

  • Debit Memo Posted: Associations for transactions related to debit memos.

  1. Accounting Code Details:

  • Columns include:

    • Active: Indicates whether the association is active.

    • Transaction Type: Displays the specific transaction type, for example, Country Tax Code, and CSI Tax Code.

    • Accounting Codes: Lists the associated accounting codes for the transaction.

    • Debit: Specifies the debit account.

    • Credit: Specifies the credit account.

  1. Edit Button: Used to update accounting code associations for a selected transaction type.

Steps to associating Accounting Codes

View existing associations

  1. Navigate to the Accounting Code Association section in the Chart of Accounts setup.

  2. Use the Dropdown Filter at the top of the page to select the transaction category, for example, Tax and Revenue.

  3. Review the table of existing associations to see which accounting codes are mapped to transaction types.

Editing an Accounting Code Association

  1. Click the Edit button in the upper-right corner of the screen.

  2. Select the transaction type you want to update from the list.

  3. Update the following fields as needed:

    • Debit: Select the accounting code that will be debited for the transaction.

    • Credit: Select the accounting code that will be credited for the transaction.

  4. Save your changes to apply the updated associations.

Associating Accounting Codes

  1. Maintain Consistency:

    • Ensure accounting codes are consistently applied across transaction types to maintain accurate and reliable financial reporting.

  2. Activate Relevant Associations Only:

    • Disable any inactive or unused associations to prevent errors during transaction posting.

  3. Review Regularly:

    • Periodically review your mappings to ensure they align with your current financial processes and GL structure.

  4. Use Filters for Efficiency:

    • Use the dropdown filter to focus on specific transaction types and simplify your review process.

Next, go to Step 4: Publish Chart of Accounts.