Hey Pete,
Again, thanks for taking the time to reply. However, I think we're still at crossed purposes. My question isn't whether or not to have sub-accounts. In all of my companies, we alway have had, still do, and will continue to have an account hierarchy. The one I'm working on has three levels. That's all fine.
The question is, given that some accounts have subs, but some do not, should we make a rule that says, in effect, "No posting to accounts with subs"
Couple of practical examples.
In one of the companies I've run, I got involved well after the CofA had been established, and the accountants who'd set things up for them told them never to post to headers -- i.e. if an account had a sub, you weren't allowed to post to it. And in fact all header accounts had "(H)" at the end of their name, so as to remind people not to post there.
By contrast, in another firm, their approach was not only to allow header posting, but in fact they had a rule that said you should not have any catchall "Other" accounts. So in the following:
1 TRAVEL
1.1 Airfare
1.2 Accommodation
1.3 Ground Transport
1.4 Meals and Incidentals
1.5-8 (others, I forget)
1.9 Other travel
That 1.9 account was not allowed. But what that meant was that if you did have to book a travel expense that didn't fit into any of 1.1 to 1.8, you were supposed to post it directly to the header account, "1 Travel".
So one setup forbade posting to headers, while one effectively required it.
I mean, what do you yourself do? Do you allow posting to accounts that themselves have sub accounts? Or do you only ever post transactions to accounts with no subs?
thx.
I actually think we're in agreement and we both DISagree with the policy that says you're 1.9 Other Travel is not valid...
I (personally, no accounting precedent here...) believe that if you're going to have Subs for those categories that that make sense, then ALL entries go in a Sub, NOTHING should be put in the Primary/Header Acct. But again, some CPA class may tell you different.
But I just think it makes Logical sense to stick with a format. Travel, multiple Loans, Income from Credit Card, Income from Delivery Service, etc., etc. all make sense to isolate them in one under one Primary/Header Acct. This way the numbers all fall in the right place, but you can easily look at each track individually.
So I disagree that you should not have an Other Travel when you look at the report and the stuff you put in the Header is called Other anyway. But transaction that maybe should be in 1.1-8 might get lost in the "Other" if they're accidentally put in the Header.
So again, my Best Practice is that if you need or decide to have Subs for any reason, ALL transaction in that Acct should be in a Sub.
If your management believes otherwise... Well there is no hard fast rule, so don't buck the boss! If you think they really don't care then move it all into a Sub. The reports all show it in an Other section anyway. So just make things easier for you to catch errors. If there's a $ amount in the Header, you know there was an entry error.
