Accounts - What changes when Cost Centers are enable?
The use of Cost Centers make significant changes to the way TOPS [ONE] operates. By turning Cost Centers on the user agrees with and understands the following changes:
Default Cost Center – When Cost Centers are activated a default cost center is created, (000 –
Cost Center 000). 000 is the default system cost center and cannot be changed. Only the name given to that cost center can be edited. All activity recorded prior to cost centers turned on are recorded to the 000 cost center.
Chart of Accounts – The structure of the Account number changes from a main account (1000) to a main account and cost center account structure (1000-000)
Account Name – The Account name is changed from the main account name to a compound name comprised of the account name dash cost center name (Example: Cash – Cost Center 000). After the creation of the new main – cost center account the name can be changed
Account Activity and Balance – The account activity and the account balance is moved to the account and default cost center. Example: $500 in 1010 – Cash is moved to 1010-000 – Cash – Cost Center 000
Funds – The Fund type designated for the main account is replicated to all main and sub-accounts. After the creation of the new main – sub account the Fund type can be changed
Budgets – The Budget amounts for the main account are copied to the account and default cost center, (First Time Only or Implantation). Budget Amounts can be edited at the main – cost center account level.
Charge Code Setup – All Charge Codes linked to main accounts are moved to the main – default cost center account. Please review all charge codes to make sure they are assigned to the correct General Ledger account.
Charge Code – Property Cost Center – (Optional Setup) All Charge Codes linked to main accounts and can be set to use a cost center defined at the Property level.
Property Cost Centers allows the AR system to classify a Property and Code combination, then process transactions to the correct General Ledger account and cost center. This is used in AR – Apply Charges so the income and receivable can be created for the correct section (accrual accounting). When using Property Cost Centers and creating receivables to cost centers user need to be aware that cash receipts will credit the respected cost center but the debit to cash will be to a single general ledger account. A single GL account is used because it is linked to a Bank Account. Activity for the Bank account needs to be paired with a single GL account for the purposes of reconciliation.
This is important to understand in relation to the Balance Sheet if printing for a single cost center is desired. If a deposit is recorded to receivables in cost center 100 and bank account cost center 000 it will create a Balance Sheet out of balance if run for the single cost center 100, unless the corresponding journal entry is made.
Accounting Setup – All required accounts linked to main accounts are moved to the main – default cost center account. Please review all required accounts to make sure they are assigned to the correct General Ledger account.
Reporting – The General Ledger reports will have the ability to print based on all or a specific cost center. It is possible to display a difference between debits and credits when printing only for a single cost center. This can occur when making a cross cost center transaction. Cross cost center transaction will be discussed later in this article.
When setting up cost centers it helps to plan ahead. In the end the whole purpose of cost centers is to report on financial information. Let’s take a closer look at how cost centers are manifested on the reporting. Cost Centers only appear in reporting options on the General Ledger reports. That includes:
- All Balance Sheets
- All Income Statements
- All Reserve Statements
- Trial Balance