Departmental accounting

Departmental accounting allows the accountant to dissect business profitability into manageable segments, catering to your needs. Instead of a broad view of the company's profit and loss, you can focus on specific areas. For example, you want to understand each department's expenses, from Admin to Production. A law firm might want a separate income statement for each partner, while a logistics company would be interested in the operating cost of each vehicle. 

Instead of dealing with a long list of accounts, departmental accounting simplifies the process using department codes to create sub-ledgers. For instance, you might have three departments: Sales, R&D, and Production, each with a unique department code-100 for Sales, 200 for R&D, and 300 for Production. The travel expenses (account number 6100) for the month are $12,000, broken down into:

100-Sales: $6000

200-R&D: $4000

300-Production: $2000

In addition to having a profit and loss for the month showing the total travel expense as $12,000, you can view the report with the department listed:

6100-100 Travel (Sales): $6000

6100-200 Travel (R&D): $4000

6100-300 Travel (Production): $2000

You could also create them as a separate report by clicking the "more option" expansion button on the Profit and Loss report wizard, followed by "breakdown by department."

The department code supports alphanumeric characters and up to five. Instead of numeric characters, you may use SA for sales, RD for R&D, and PN for Production. You get a Departmental Profit and Loss report as:

6100-SA Travel (Sales): $6000

6100-RD Travel (R&D): $4000

6100-PN Travel (Production): $2000

Under the show menu, the MoneyWorks Department's components are classifications, departments, and department groups. In the above example, Sales, R&D, and Production are departments, and you must add them to a department group before adding them to an account (select the department group from the Dept Group field). Department group code has to be unique; it supports alphanumeric and up to five characters. Once set up, MoneyWorks will prompt you to select a department when using the account in the transaction.

Assuming you have three factories with similar departments: Sales, R&D, and Production, you must create nine departments instead of three to differentiate an R&D expense from the first factory to the second or a production expense from factory two to three.

• Sales-factory1

• R&D-factory1

• Production-factory1

• Sales-factory2

• R&D-factory2

• Production-factory2

• Sales-factory3

• R&D-factory3

• Production-factory3

Classification is optional; it is a layer above the department to consolidate the department data. To have a profit and loss report by factory, you create a factory as a classification. Then, tag each department to its respective classification, such as Sales, R&D, and Product, for the first factory, which would link to the Factory 1 class.

With classification and department setup, you can print a profit and loss report by department or present the report by classification to analyse the total revenue and cost between factories.

Those who prefer to view a columnised department profit and loss report can find the report under the profit and loss folder of the report menu. Although the default shows ten columns, you can customise and duplicate them.