General Ledger Overview (continued)
Income and Expense Accounts
SedonaOffice tracks all your income and expenses in these account types. This is used to analyze the profitability of your business.
Income Accounts can be classified into two types of accounts, Income or Other Income. Ordinary income used to determine the operating profitability should be classified as an Income account type. Non-operating income such as interest, or a sale of equipment, should be classified as Other Income.
Expenses can also be classified as regular Expenses and Other Expenses. There is also a special account type called Cost of Goods Sold, which is used to recognize the expense of inventory materials, labor and sales commissions.
Accrual Based Accounting
SedonaOffice is an accrual based accounting application. Which means Income and Expenses are recorded at the time they are entered.
Accounting Periods
Accounting periods are used in SedonaOffice to track your Accounts within a specific period of time. By using Accounting Periods your company may generate reports based on consistent periods from both within a fiscal year and period vs. period for previous fiscal years. SedonaOffice supports a twelve (12) period fiscal year. When an accounting period is closed, it will “lock out” any changes to transactions made within that Accounting Period. Once an Accounting period has been set to Closed, it may be set to a status of Re-Opened to allow only Users with the appropriate permissions to enter transactions into a previously closed period. This is typically for the purpose of creating Journal Entries for the prior period.