Linking the Profit and Loss to the Balance Sheet
There is a column under the Chart of Accounts (Profit and Loss) called "BS Account" which is where you link the Profit and Loss account to a Balance Sheet Account. Every active account must be linked for the projections to balance. Some examples are provided in the screenshot below with the far right column being the "BS Account" column;
Some comments in respect to the above;
- Depreciation; linked to the accumulated depreciation accounts. Note the Profit and Loss category is Other Expense which will show underneath the Operating Profit line. This is a user preference and can be changed.
- Electricity; linked to Trade Creditors as the invoice will be allocated to Creditors and paid at a later point in time.
- Filing Fees; linked to General Cheque Account as the amount will be debited from the bank account (ie not linked to Creditors)
- Income Tax Expense; linked to ATO Integrated Account, but could also be Income Tax Payable or similar. Note that the actual income tax payment would be added as a worksheet item against the balance sheet account.
- Insurance - Workers Comp; this is funded via loan so has been linked to the Loan. The payments would then be allocated as a worksheet item against the balance sheet account. Note that if you wanted to spread the insurance cost over the year, you would link the Insurance cost to a balance sheet account called Prepayments.
- Interest - HP; linked to the unexpired HP Liability account (ie monthly journal would be Dr Interest, Cr Unexpired Interest)
If a PL account has not been linked to a BS account it will default to the bank account.