There are three kinds of general ledger account records in aACE: detail, header, and root header.
Detail accounts accept transactions. An example of a detail account might be Checking Account 4563. Every detail account is assigned to a header account.
Header accounts summarize accounts. An example of a header account might be Total Cash. Total Cash may contain Checking Account 4563 as well as Undeposited Funds, among others. Every header account is assigned to either a header or root header account.
Root Header accounts are header accounts that occupy the root level of the chart of accounts. Accounts such as Total Assets and Total Liabilities are examples of root header accounts.
An example of a typical chart of accounts structure is:
Total Assets (Root Header)
Current Assets (Header)
Total Cash (Header)
Checking Account 4563 (Detail)
Undeposited Funds (Header)
Undeposited Funds - Cash/Checks (Detail)
Undeposited Funds - Visa/MC (Detail)
Note that header accounts can contain both header and detail accounts, allowing you to build your chart of accounts with as many levels as you need.
Setting up your root header accounts
aACE expects nine root header accounts like the following:
Account # Account Name
1000 Total Assets
2000 Total Liabilities
3000 Total Equity
4000 Total Revenue
5000 Total Cost of Revenue
6000 Total Expenses
7000 Total Overhead Expenses
8000 Total Other Income
9000 Total Other Expenses
aACE uses the first number in the account number to determine the natural balance of an account and its placement on various reports. For example, accounts beginning with a 1 have a debit natural balance whereas accounts beginning with a 2 have a credit natural balance. The natural balance determines whether a credit appears as a positive value or a negative value on reports such as the income statement. Similarly, accounts beginning with 1, 2, or 3 appear on the balance sheet and accounts beginning with 4 through 9 appear on the income statement.
You may choose a number range and account names that work for you as long as the first number for the Account # belongs to the logical equivalent. For example, your Account # for "Total Revenue" must begin with a 4, but having an Account # and Account Name combination of "400" and "Sales" is equivalent to "44100" and "Revenue" from aACE's perspective. We generally recommend using 4 or 5 digit account numbers. Segmenting your account numbers is not required in aACE and is not supported by aACE.
Setting up your detail and header accounts
Detail and header accounts follow the same rules as root header accounts with regards to numbering. For many reasons, the numbering should be logically coherent. You would not want to assign a "2000" series detail account to a "1000" series header account, for example, and grouping similar accounts into sequential ranges will make searching, reporting, and auditing easier. Fortunately, accounts can be renumbered at any time in aACE, so it is not critical that every account be perfectly numbered the first time.
A note about Account Type
The Account Type field used to add summaries to your income statement. By default, account records with an Account Type of "Revenue" or "Cost of Sales" will be grouped together as "Gross Profit (Loss)", for example. Speak with your aACE partner about how to customize your income statement using this field.