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\maketitle

Permission is granted to copy, distribute and/or modify this document

under the terms of the GNU Free Documentation License, Version 1.2

or any later version published by the Free Software Foundation;

with no Invariant Sections, no Front-Cover Texts, and no Back-Cover Texts.

A copy of the license is included in the section entitled "GNU

    Free Documentation License" (Appendix \ref{fdl}). 

\tableofcontents

\listoffigures

\clearpage

\part{Ledger-SMB and Business Processes}

\section{Introduction to Ledger-SMB}

\subsection{Why Ledger-SMB}

\subsubsection{Advantages of Ledger-SMB}

\begin{itemize}

\item Flexibility and Central Management

\item Accessibility over the Internet (for some users)

\item Data is in a relatively open format

\item Integration with other tools

\item One of the best accounting options for Linux users.

\item Open Source

\item A flexible, open framework that can be extended or modified to fit your

business.

\item Security-conscious development community.

\end{itemize}

\subsubsection{Key Features}

\begin{itemize}

\item Accounts Receivable

  \begin{itemize}

\item Track sales by customer

\item Issue Invoices, Statements, Receipts, and more

\item Job costing and time entry for customer projects.

\item Manage sales orders and quotations

\item Ship items from sales orders

  \end{itemize}

\item Accounts Payable

  \begin{itemize}

\item Track purchases and debts by vendor.

\item Issue RFQ's Purchase Orders, etc.

\item Track items received from purchase orders.

  \end{itemize}

\item Budgeting

  \begin{itemize}

\item Track expenditures and income across multiple departments.

\item Track all transactions across departments.

  \end{itemize}

\item Check Printing

  \begin{itemize}

\item Can customize template for any check form

  \end{itemize}

\item General Ledger

\item Inventory Management

  \begin{itemize}

\item Track sales and orders of parts

\item Track cost of goods sold using First In/First Out method

\item List all parts below reorder point.

\item Track ordering requirements.

\item Track, ship, receive, and transfer parts to and from multiple

warehouses.

  \end{itemize}

\item Localization

  \begin{itemize}

\item Provide Localized Translations for Part Descriptions

\item Provide Localized Templates for Invoices, Orders, Checks, and more.

\item Select language per customer, invoice, order, etc.

  \end{itemize}

\item Manufacturing

  \begin{itemize}

\item Track cost of goods sold for manufactured goods (assemblies)

\item Create assemblies and stock assemblies, tracking materials on hand.

  \end{itemize}

\item Multi-company/Multiuser

  \begin{itemize}

\item One isolated database per company

\item Users can have localized systems independent of company data set.

  \end{itemize}

\item Point of Sale

  \begin{itemize}

\item Run multiple cash registers against main Ledger-SMB installation.

\item Suitable for retail stores and more.

\item Supports some POS hardware out of the box.

\item Third party add-ons available for more functionality.

  \end{itemize}

\item Price Matrix

  \begin{itemize}

\item Track different prices for vendors and customers across the board.

\item Provide discounts to groups of customers per item or across the board.

\item Store vendors' prices independent of the other last cost in the

parts record.

  \end{itemize}

\item Reporting

  \begin{itemize}

\item All basic financial statements supported.

\item Customer history, sales data, and additional information can be easily

displayed.

\item Open framework allows for ODBC connections to be used to generate

reports using third party reporting tools.

  \end{itemize}

\item Tax

  \begin{itemize}

\item Supports Retail Sales Tax and Value Added Tax type systems

\item Flexible framework allows one to customize reports to change the tax

reporting framework to meet any local requirement.

  \end{itemize}

\end{itemize}

\subsection{Limitations of Ledger-SMB}

\begin{itemize}

\item No payroll module (Payroll must be done manually)

\item Some integration limitations

\item Further development/maintenance requires a knowledge of a relatively

broad range of technologies.

\end{itemize}

\subsection{System Requirements of Ledger-SMB}

\begin{itemize}

\item PostgreSQL

\item A CGI-enabled Web Server (for example, Apache)

\item Perl with the DBI and DBD::Pg modules

\item An operating system which supports the above software (usually Linux,

though Windows, MacOS X, etc. do work).

\item \LaTeX\ (optional) is required to create PDF or Postscript invoices.

\end{itemize}

\section{User Account and Database Administration Basics}

These functions are accessed by going to the admin.pl script in the installed

directory of Ledger-SMB.

\subsection{Companies and Datasets}

Ledger-SMB stores its information in locale-specific data sets. When a dataset

is created, it sets various defaults such as currency, a basic chart of accounts

setup, and so forth. Note that the default setup is for Canada, where the

author of the software resides.

Datasets are generally tracked as PostgreSQL databases. The application is

designed with the idea that each dataset will represent exactly one company. If

a customer is working with multiple companies, he/she must create a dataset to

for each.

\subsection{How to Create a User}

Users are created by going to the admin.pl page and clicking on "Add User." One

then fills out the form and when it is saved, the user is created.

\subsection{Permissions}

The permissions system is not rigorously enforced within Ledger-SMB, in the

sense that the permissions API is generally not used in the application itself.

Instead permissions are used to enable/disable menu options. Setting an

enforcement of such permissions would require some custom programming at the

present time. Most organizations, however, find that the current system is

adequate.

The checkboxes which are marked enable menu entries. Those that are unchecked

disable those entries on the menu.

\subsection{User Account Types}

\begin{itemize}

\item User is a general user of the system

\item Managers often are able to see a larger amount of data

\item Administrators have full access to the system

\end{itemize}

\subsection{Other Features}

\begin{itemize}

\item Lock System allows one to lock users out of the system while maintenance

is performed. This is only necessary during upgrades or maintenance which

results in the RDBMS being offline.

\item Change Admin Password.

\item Logout terminates the admin session.

\end{itemize}

\section{Chart of Accounts}

The Chart of Accounts provides a basic overview of the logical structure of the

accounting program. One can customize this chart to allow for tracking of

different sorts of information.

\subsection{Introduction to Double Entry Bookkeeping}

Ledger-SMB is a double entry system, meaning that every transaction consists of

an equal sum of credits and debits (see below). A transaction is said to be

balanced when the debits and credits are equal. This is an oversimplification

and doesn't cover more complex processes involving closing books properly. In

general customers should be referred to their accountants for information beyond

the capabilities of the software. This module is just designed to provide

enough familiarity with the concepts to be able to have an intelligent

conversation with a bookkeeper or accountant who has specific requirements in

this regard.

\subsubsection{Account Types}

\begin{itemize}

\item Assets represent tangible or intangible property or money

retained by the company. This includes money owed to the company.

\item Liabilities are money that the company owes others.

\item Equity is the valuation of the company as a whole. Includes investment

capital, and money paid out to owners either as dividends or as withdrawals (for

sole proprietorships). Normally one will have at least three equity accounts:

One for tracking investment in the business, one for tracking withdrawals or

dividends, and one for tracking retained earnings.

\item Income accounts track the category of money as it is earned by the

business.

\item Expense accounts track the category of money flowing out as expenses are

accrued.

\end{itemize}

\subsubsection{Debits and Credits}

Debits and credits are the basic unit of double-entry bookkeeping. When money

is removed from the business by the owners (as an equity payment) that is a

debit, while when money is invested in the business, that is a credit. Every

other transaction is set to balance these concepts. Therefore asset accounts

normally have a debit balance because this allows for the equity account to be

debited, while expense accounts normally have a credit balance.

If the total debits is not equal to the total credits in the chart of accounts,

something is very wrong, and the customer should get technical support

immediately.

\subsubsection{A few Examples}

One might have a business that rents an office space. When

rent is due, the accounts payable account would be credited, while the rent

expense account would be debited. When this is paid, the accounts payable

account would be debited while the asset account would be credited. This may

seem backwards, but the result is to reduce by the amount owed for rent the

amount that the owners can withdraw from the business as a debit. Let's say the

office rent is \$300.

\begin{itemize}

\item Rent expense account is debited \$300

\item Accounts Payable is credited \$300

\item When this is paid, the checking account is credited \$300

\item And the Accounts Payable is debited \$300

\end{itemize}

Let us say one performs a small consulting project for \$600. At the completion

of this project, the following transaction would be made:

\begin{itemize}

\item Accounts Receivable is debited \$600

\item Income (Consulting) is credited \$600.

\end{itemize}

Then the customer pays the \$600, the following transaction is entered.

\begin{itemize}

\item Accounts Receivable is credited \$600

\item Payments Received is debited \$600.

\end{itemize}

\subsection{General Guidelines on Numbering Accounts}

In general, most drop-down boxes in Ledger-SMB order the accounts by account

number. Therefore by setting appropriate account numbers, one can affect the

default values.

A second consideration is to try to keep things under each heading appropriate

tot hat heading. Thus setting an account number for a bank loan account in the

assets category is not generally advisable.

\subsection{Adding/Modifying Accounts}

These features are listed under System-\textgreater Chart of Accounts.

One can list the accounts and click on the account number to modify them or

click on the "add account" option to create new accounts.

\begin{itemize}

\item Headings are just broad categories and do not store values themselves,

while accounts are used to store the transactional information.

\item One cannot have an account that is both a summary account (like AR) but

also has another function.

\item GIFI is mostly of interest to Canadian customers but it can be used to

create reports of account hierarchies.

\end{itemize}

\subsection{Listing Account Balances and Transactions}

One can list the account balances via the Reports-\textgreater Chart of Accounts report.

Clicking on the account number will provide a ledger for that account.

\section{Administration}

This section will cover other (non-Chart of Accounts) aspects to the setup of

the Ledger-SMB accounting package. These are generally accessed in the System

submenu.

\subsection{Taxes, Defaults, and Preferences}

\subsubsection{Adding A Sales Tax Account}

Sales Tax is collected on behalf of a state of national government by the

individual store. Thus a sales tax account is a liability-- it represents money

*owed* by the business to the government.

To add a sales tax account, one would create an account in the COA as a

liability account, check all of the "tax" checkboxes, and answer the following

question as "yes:"

"Include this account on the customer/vendor forms to flag customer/vendor as

taxable?"

Once this account is created, one can set the tax amount.

\subsubsection{Setting a Sales Tax Amount}

Go to System-\textgreater Defaults and the tax account will be listed near the bottom of the

page. The rate can be set there.

\subsubsection{Default Account Setup}

These accounts are the default accounts for part creation and foreign exchange

tracking.

\subsubsection{Currency Setup}

The US accounts list this as USD:CAD:EUR. One can add other currencies in here,

such as IDR (Indonesian Rupiah), etc. Currencies are separated by colons.

\subsubsection{Sequence Settings}

These sequences are used to generate user identifiers for quotations, invoices,

and the like. If an identifier is not added, the next number will be used.

A common application is to set invoices, etc. to start at 1000 in order to hide

the number of issued invoices from a customer.

\subsection{Audit Control}

Auditibility is a core concern of the architects of any accounting system. Such

ensures that any modification to the accounting information leaves a trail which

can be followed to determine the nature of the change. Audits can help ensure

that the data in the accounting system is meaningful and accurate, and that no

foul play (such as embezzlement) is occurring.

\subsubsection{Explaining transaction reversal}

In paper accounting systems, it was necessary to have a means to authoritatively

track corrections of mistakes. The means by which this was done was known as

"transaction reversal."

When a mistake would be made, one would then reverse the transaction and then

enter it in correctly. For example, let us say that an office was renting space

for \$300 per month. Let us say that they inadvertently entered it in as a

\$200 expense.

The original transaction would be:

\begin{tabular}{l|r|r}

Account & Debit & Credit \\

\hline

5760 Rent & \$200 & \\

2100 Accounts Payable & & \$200\\

\end{tabular}

The reversal would be:

\begin{tabular}{l|r|r}

Account & Debit & Credit \\

\hline

5760 Rent & & \$200\\

2100 Accounts Payable &\$200 & \\

\end{tabular}

This would be followed by re-entering the rent data with the correct numbers.

This was meant to ensure that one did not erase data from the accounting books

(and as such that erasing data would be a sign of foul play).

Ledger-SMB has a capability to require such reversals if the business deems this

to be necessary. When this option is enabled, existing transactions cannot be

modified and one will need to post reversing transactions to void existing

transactions before posting corrected ones.

Most accountants prefer this means to other audit trails because it is well

proven and understood by them.

\subsubsection{Close books option}

The option to close books requires transaction reversal for any transaction up

to a certain date.

\subsubsection{Audit Trails}

This option stores additional information in the database to help auditors trace

individual transactions. The information stored, however, is limited and it is

intended to be supplemental to other auditing facilities.

The information added includes which table stored the record, which employee

entered the information, which form was used, and what the action was. No

direct financial information is included.

\subsection{Departments}

Departments are logical divisions of a business. They allow for budgets to be

prepared for the individual department as well as the business as a whole. This

allows larger businesses to use Ledger-SMB to meet their needs.

\subsubsection{Cost v Profit Centers.}

In general business units are divided into cost and profit centers. Cost

centers are generally regarded as business units where the business expects to

lose money and profit centers are where they expect to gain money. For example,

the legal department in most companies is a cost center.

One of the serious misunderstandings people run up against is that Ledger-SMB

tends to more narrowly define cost and profit centers than most businesses do.

In Ledger-SMB a cost center is any department of the business that does not

issue AR transactions. Although many businesses may have cost centers (like

technical support) where customer fees may subsidize the cost of providing the

service, in Ledger-SMB, these are profit centers.

Ledger-SMB will not allow cost centers to be associated with AR transactions.

So if you want this functionality, you must create the department as a profit

center.

\subsection{Warehouses}

Ledger-SMB has the ability to track inventory by warehouse. Inventory items can

be moved between warehouses, and shipped from any warehouse where the item is in

stock. We will explore this concept more later.

\subsection{Languages}

Languages allow for goods and services to be translated so that one can

maintain offices in different countries and allow for different goods and

service descriptions to be translated to different languages for localization

purposes.

\subsection{Types of Businesses}

One can create types of businesses and then give them discounts across the

board. For example, one might give a firm that uses one's services as a

subcontractor a 10\% discount or more.

\subsection{Misc.}

\subsubsection{GIFI}

GIFI is a requirement for Canadian customers. This feature allows one to link

accounts with Canadian tax codes to simplify the reporting process.

It also has another use in that non-Canadians can use this functionality to

create customized reports by categorizing accounts using this field. This

allows for a sort of shallow "account hierarchy" like some users are used to

with other products.

\subsubsection{SIC}

Standard Industrial Classification is a way of tracking the type of business

that a vendor or customer is in. For example, an accountant would have an SIC

of 8721 while a graphic design firm would have an SIC of 7336. The

classification is hierarchical so one could use this field for custom reporting

and marketing purposes.

\subsubsection{Overview of Template Editing}

The templates for invoices, orders, and the like can be edited from within

Ledger-SMB. The submenus within the System submenu such as HTML Templates,

Text Templates and LaTeX templates provide access to this functionality.

\subsubsection{Year-end}

Although the Year-end functionality in Ledger-SMB is very useful, it does not

entirely make the process simple and painless. One must still manually enter

adjustments prior to closing the books. The extent to which these adjustments

are necessary for any given business is a matter best discussed with an

accountant.

The standard way books are normally closed at the end of the year is by moving

all adjusted\footnote{Adjustments would be entered via the General Ledger. The

exact process is beyond the scope of this class, however.} income and expenses

to an equity account usually called "Retained

Earnings." Assets and liabilities are not moved. Equity drawing/dividend

accounts are also moved, but the investment accounts are not. The reasoning

behind this process is that one wants a permanent record of the amount invested

in a business, but any dividends ought not to count against their recipients

when new investors are brought on board.

Ledger-SMB automatically moves all income and expense into the specified

year-end/retained earnings account. It does not move the drawing account, and

this must be done manually, nor does it automate the process of making

adjustments.

Contrary to its name, this function can close the books at any time, though this

would likely be of limited use.

\subsection{Options in the ledger-smb.conf}

For those who are unfamiliar with Perl as a programming language, the

ledger-smb.conf configures the software by assigning site-wide variables. Most

of these should be left alone unless one knows what one is doing. However, on

some systems some options might need to be changed, so all options are presented

here for reference:

\begin{itemize}

\item \$userspath is the directory where Ledger-SMB will store the user

accounts. The web server process must be able to read from and write to this

directory.

\item \$templates is the directory where the templates are stored.

\item \$memberfile is the master list of user configuration information

\item \$sendmail is the command to use to send a message. It must read the

email from standard input.

\item \$language allows one to set the language for the login screen and admin

page.

\item \$latex tells Ledger-SMB whether LaTeX is installed. LaTeX is required

for generating Postscript and PDF invoices and the like.

\item Various environmental variables (\$ENV...) can be set here too. One can

add paths for searching for LaTeX, etc.

\item \%printer can be used to set a hash table of printers for the software.

The primary example is\\

\%printer = ( 'Default' =\textgreater 'lpr', 'Color' =\textgreater 'lpr -PEpson' ); \\

However, this can use any program that can accept print documents (in

Postscript) from standard input, so there are many more possibilities.

\end{itemize}

I have omitted the variables used to configure Oracle as I do not believe it is

still supported (it could be with a small amount of work though).

\section{Goods and Services}

The Goods and Services module will focus on the definition of goods and services

and the related accounting concepts.

\subsection{Basic Terms}

\begin{description}

\item[COGS] is Cost of Goods Sold.  When an item is sold, then the expense of

its purchase is accrued as attached to the income of the sale. It is tracked as

COGS.

\item[List Price] is the recommended retail price.

\item[Markup] is the percentage increase that is applied to the last cost to get the sell price.

\item[ROP] Re-order point.  Items with fewer in stock than this will show up on

short reports.

\item[Sell Price] is the price at which the item is sold.

\end{description}

\subsection{The Price Matrix}

It is possible to set different prices for different groups of customers, or for

different customers individually. Similarly, one can track different prices

from different vendors along with the required lead time for an order.

\subsection{Pricegroups}

Pricegroups are used to help determine the discount a given customer may have.

\subsection{Groups}

Groups represent a way of categorizing POS items for a touchscreen environment.

It is not fully functional yet, but is sufficient that with some stylesheet

changes, it could be made to work.

\subsection{Labor/Overhead}

Labor/overhead is usually used for tracking manufacturing expenses. It is not

directly billed to a customer. It is associated with an expense/Cost of Goods

Sold (COGS) account

\subsection{Services}

Services include any labor that is billed directly to the customer. It is

associated with an expense/COGS account and an income account. Services can be

associated with sales tax.

\subsubsection{Shipping and Handling as a Service}

One approach to dealing with shipping and handling is to add it as a service.

Usually I place the unit as a dollar (USD) and then bill it as \$1 per unit.

This allows me to add the exact amount of shipping and handling as necessary.

\subsection{Parts}

A part is any single item you might purchase and either might resell or use in

manufacturing an assembly. It is linked to an expense/COGS

account, an income account, and an inventory account. Parts can be associated

with sales tax.

\subsection{Assemblies and Manufacturing}

Manufacturers order parts but they sell the products of their efforts.

Ledger-SMB supports manufacturing using the concept of assemblies. An assembly

is any product which is manufactured on site. It consists of a selection of

parts, services, and/or labor and overhead. Assemblies are treated as parts in

most other regards.

However, one cannot order assemblies from vendors. One must instead order the

components and stock them once they are manufactured.

%Excersize 1

\subsubsection{Stocking Assemblies}

One stocks assemblies in the Stock Assembly entry on the Goods and Services

submenu. When an assembly is stocked the inventory is adjusted properly.

The Check Inventory option will cause Ledger-SMB to refuse to stock an assembly

if the inventory required to produce the assembly would drop the part below the

reorder point.

\subsection{Reporting}

\subsubsection{All Items and Parts Reports}

The All Items provides a unified view of assemblies, parts, services, and labor

for the company, while the Parts report confines it to parts.

Types of reports are:

\begin{description}

\item[Active] lists all items not marked as obsolete.

\item[On Hand] lists current inventory

\item[Short] Lists all items which are stocked below their ROP

\item[Obsolete] Lists all items which are marked as obsolete

\item[Orphaned] Lists all items which have never had a transaction associated

with them.

\end{description}

One can also list these goods by invoice, order, or quotation.

For best results, it is a good idea to enter some AR and AP data before running

these reports.

\subsubsection{Requirements}

This report is designed to assist managers determine the quantities of goods to

order and/or stock. It compares the quantity on hand with the activity in a

given time frame and provides a list of goods which need to be ordered and the

relevant quantity.

\subsubsection{Services and Labor}

This is similar to the Parts and All Items menu but only supports active,

obsolete, and orphaned reports.

\subsubsection{Assemblies}

This is similar to the Parts and All Items reports but it also provides an

ability to list individual items in the assemblies as well.

AP Invoices, Purchase Orders, and RFQ's are not available on this report.

\subsubsection{Groups and Pricegroups}

These reports provide a simple interface for locating groups and pricegroups.

The report types are similar to what they are for services.

\subsection{Translations}

One can add translations so that they show up in the customer's native language

in the issued invoice.

To issue translations, one must have languages defined. One can then add

translations to descriptions and part groups.

\subsection{How Cost of Goods Sold is tracked}

Cost of Goods Sold is tracked on a First-In, First-out (FIFO) basis. When a

part is purchased, its cost is recorded in the database. The cost of the item

is then added to the inventory asset account. When the good is sold, the cost

of the item is moved to the cost of goods sold account.

This means that one must actually provide invoices for all goods entered at

their actual cost. If one enters in \$0 for the cost, the cost of goods sold

will also be \$0 when the item is sold. We will cover this entire process in

more depth after we cover the AP and AR units below.

\section{AP}

\subsection{Basic AP Concepts}

The Accounts Payable module tracks all financial commitments that the company

makes to other businesses. This includes rent, utilities, etc. as well as

orders of goods and services.

\subsection{Vendors}

A vendor is any business that the company agrees to pay money to.

One can enter vendor information under AP-\textgreater Vendors-\textgreater Add Vendor. The vendor list

can be searched under AP-\textgreater Vendors-\textgreater Reports-\textgreater Search.

In older versions of Ledger-SMB, vendors would continue to populate the list of

active vendors forever and there was no way to delete them. Now one can enter

start and end-dates and this can be used to filter out vendors in searches or

drop-down boxes.

A few fields that need explanation are:

\begin{description}

\item[BIC] Bank Identifier Code is often the same as the S.W.I.F.T. code.  This

is a code for the bank a customer uses for automated money transfers.

\item[IBAN]  International Bank Account Number is related to the BIC and is used

for cross-border automated money transfers.

\item[Terms] is the number of days one has to pay the invoice.

\item[Vendor Number] is automatically generated.

\end{description}

\subsection{AP Transactions}

AP Transactions are generally used for items other than goods and services.

Utilities, rent, travel expenses, etc. could be entered in as an AP transaction.

If the item is paid partially or in full when the transaction is entered, one

can add payments to the payment section.

All other payments can and should be entered under cash payment (below).

The PO Number and Order Number fields are generally used to track associations

with purchase orders sent to vendors, etc. These fields can be helpful for

adding misc. expenses to orders for reporting purposes.

The department drop-down box appears when one has created one or more

departments. A transaction is not required to be associated with a department,

but one can use this feature for budget tracking.

With AP Transactions, there is no option for internal notes. All notes will

appear on any printed version of the transaction.

Note: Printing a transaction does not post it. No data is committed until the

invoice is posted.

\subsection{AP Invoices}

AP Invoices are used to enter in the receipt of goods and services. Goods and

services are deemed entered into the inventory when they are invoiced.

This screen is reasonably similar to the AP Transaction Screen, though the part

entry section is a bit different.

The AP Invoice section has a capacity to separate internal notes from notes

printed on the invoice. Note, however, that since these are received invoices,

it is rare that one needs this ability.

Note that Ledger-SMB can search for partial part numbers or descriptions.

Also if you have a group you can use this to select the part.

To remove a line item from an invoice or order, delete the partnumber and click

update.

\subsubsection{Correcting an AP Invoice}

If an invoice is entered improperly, the methods used to correct it will vary

depending on whether transaction reversal is enforced or not. If transaction

reversal is not enforced, one can simply correct the invoice or transaction and

repost.

If not, one needs to create a *duplicate* invoice with exactly opposite values

entered. If one part was listed as received, then one should enter a negative

one for the quantity. Then one can enter the invoice number as the same as the

old one (though I like to add an R to the end to show that it is a reversing

transaction). Once this is posted, one can enter the invoice correctly.

\subsection{Cash payment And Check Printing}

In general, it is a bad idea to repost invoices/transactions just in order to

enter a payment. The Cash-\textgreater Payment window allows one to enter payments against

AP invoices or transactions.

The printing capability can be used to print checks. The default template is

NEBS 9085, though you can use 9082 as well (as Quickbooks does).

The source field is used to store an identifying number of the source document,

such as the check number. One must select the item to have it paid, and then

enter the amount. One can then print a check.

\subsubsection{Rapid Payment Entry Screen}

One can also use the rapid payment entry screen to print multiple checks.

However, this does not allow you to print the multiple checks to the screen as a

separate document is created for each check. In this event, one must print

directly to a printer as postscript.

\subsection{Transaction/Invoice Reporting}

\subsubsection{Transactions Report}

This report is designed to help you locate AP transactions based on various

criteria. One can search by vendor, invoice number, department, and the like.

One can even search by the shipping method.

The summary button will show what was placed where, while the details button

will show all debits and credits associated with the transaction.

To view the invoice, click on the invoice number. In the detail view, to view

the account transactions as a whole, click on the account number.

Open invoices are ones not fully paid off, while paid closed invoices are those

that have been paid.

\subsubsection{Outstanding Report}

The outstanding report is designed to help you locate AP transactions that are

not paid yet. The ID field is mostly useful for locating the specific database

record of a duplicate invoice number exists.

\subsubsection{AP Aging Report}

This report can tell you how many invoices are past due and by how much.

A summary report just shows vendors while a detail report shows individual

invoices.

\subsubsection{Tax Paid and Non-taxable Report}

These reports are not generally used in the US because most of the time

wholesale goods are not taxable. However, for businesses with offices in other

countries including Canada, it is often important for them to be aware of this

functionality. In these countries, one generally pays sales tax even on

wholesale goods and then takes a tax credit for these when when paying the sales

tax to the country of province. Thus one needs to be able to track taxable and

non-taxable expenses, and how much was paid. For now, it is sufficient to know

that they are there.

\subsection{Vendor Reporting}

\subsubsection{Vendor Search}

The Vendor Search screen can be used to locate vendors or AP transactions

associated with those vendors.

The basic types of reports are:

\begin{description}

\item[All] Lists all vendors

\item[Active] Lists those vendors currently active

\item[Inactive] Lists those vendors who are currently inactive.

time frame.

\item[Orphaned] Lists those vendors who do not have transactions associated with

them. These vendors can be deleted.

\end{description}

One can include purchase orders, Requests for Quotations, AP invoices, and AP

transactions on this report as well if they occur between the from and to dates.

\subsubsection{Vendor History}

This report can be used to obtain information about the past goods and services

ordered or received from vendors. One can find quantities, partnumber, and

sell prices on this report. This facility can be used to search RFQ's, Purchase

Orders, and AP Invoices.

\section{AR}

\subsection{Customers}

Customers are entered in using the AR-\textgreater Customers-\textgreater Add Customer menu.

The salesperson is autopopulated with the current user who is logged in.

Otherwise, it looks fairly similar to the Vendor input screen. Customers, like

vendors can be assigned languages, but it is more important to do so because

invoices will be printed and sent to them.

The credit limit field can be used to assign an amount that one is willing to do

for a customer on credit.

\subsubsection{Customer Price Matrix}

The price list button can be used to enter specific discounts to the customer,

and groups of customers can be assigned a pricegroup for the purpose of offering

specific discounts on specific parts to the customer. Such discounts can be

temporary or permanent.

\subsection{AR Transactions}

AR Transactions are where one can add moneys owed the business by customers.

One can associate these transactions with income accounts, and add payments if

the item is paid when the invoice is issued.

The PO number field is used to track the PO that the customer sent. This makes

it easier to find items when a customer is asking for clarification on a bill,

for example.

\subsection{AR Invoices}

AR Invoices are designed to provide for the delivery of goods and services to

customers. One would normally issue these invoices at the time when the

everything has been done that is necessary to get paid by the customer.

As with AP invoices, one can search for matches to partial part numbers and

descriptions, and enter initial payments at this screen.

\subsection{Cash Receipt}

The Cash-\textgreater Receipt screen allows you to accept prepayments from customers or pay

single or multiple invoices after they have been posted. One can print a

receipt, however the current templates seem to be based on check printing

templates and so are unsuitable for this purpose. This presents a great

opportunity for improvement.

\subsubsection{Cash Receipts for multiple customers}

The cash-\textgreater receipts screen allows you to accept payments on all open customer

invoices of all customers at once. One could print (directly to a printer only)

all receipts to be sent out if this was desired.

\subsection{AR Transaction Reporting}

The AR Outstanding report is almost identical to the AP Outstanding report and

is not covered in any detail in this document.

\subsubsection{AR Transactions Report}

This is almost identical to the AP Transactions Report.

If a customer's PO has been associated with this transaction, one can search

under this field as well.

\subsubsection{AR Aging Report}

This report is almost identical to the AP Aging report, with the exception that

one can print up statements for customer accounts that are overdue. One more

application is to calculate interest based on balance owed so that these can be

entered as AR transactions associated with the customer.

\subsection{Customer Reporting}

These reports are almost identical tot he AP Vendor reports and are not

discussed in these notes.

\section{Projects}

\subsection{Project Basics}

A project is a logical collection of AR and AP transactions, orders, and the

like that allow one to better manage specific service or product offerings.

Ledger-SMB does not offer comprehensive project management capabilities, and

projects are only used here as they relate to accounting.

One can also add translated descriptions to the project names as well.

\subsection{Timecards}

Timecards allow one to track time entered on specific services. These can then

be used to generate invoices for the time entered.

The non-chargeable is the number of hours that are not billed on the invoice.

One can then generate invoices based on this information.

The project field is not optional.

\subsection{Projects and Invoices}

One can select the project id for line items of both AR and AP invoices. These

will then be tracked against the project itself.

\subsection{Reporting}

\subsubsection{Timecard Reporting}

The Timecard Report allows one to search for timecards associated with one or

more projects. One can then use the total time in issuing invoices (this is not

automated yet).

\subsubsection{Project Transaction Reporting}

The Standard or GIFI options can be used to create different reports (for

example, for Canadian Tax reporting purposes).

This report brings up a summary that looks sort of like a chart of accounts. Of

one clicks on the account numbers, one can see the transactions associated with

the project.

\subsubsection{List of Projects}

This provides a simple way of searching for projects to edit or modify.

\subsection{Possibilities for Using Projects}

\begin{itemize}

\item One can use them similar to departments for tracking work done for a

variety of customers.

\item One can use them for customer-specific projects, such as this training.

\end{itemize}

\section{Quotations and Order Management}

This unit will introduce the business processes that Ledger-SMB allows. These

processes are designed to allow various types of businesses to manage their

orders allow for rudimentary customer relationship management processes to be

built around this software. In this module, we will introduce the work flow

options that many businesses may use in their day-to-day use of the software.

\subsection{Sales Orders}

Sales orders represent orders from customers that have not been delivered or

shipped yet. These orders can be for work in the future, or for back ordered

products, or work in progress. A sales order can be generated form an AR

invoice or from a quotation automatically.

\subsection{Quotations}

Quotations are offers made to a customer but to which the customer has not

committed to the work. Quotations can be created from Sales orders or AR

Invoice automatically.

\subsection{Shipping}

The Shipping module (Shipping-\textgreater Shipping) allows one to ship portions or

entireties of existing sales orders, printing pick lists and packing slips.

One can then generate invoices for those parts that were shipped.

In general, one will be more likely to use these features if they have multiple

warehouses that they ship from. More likely most customers will just generate

invoices from orders.

\subsection{AR Work Flow}

\subsubsection{Service Example}

A customer contacts your firm and asks for a quote on some services. Your

company would create a quotation for the job and email it to the customer or

print it and mail it. Once the customer agrees to pay, one creates an order

from the quotation.

When the work is completed, the order is converted into a sales invoice and this

is presented to the customer as a bill.

Note that in some cases, this procedure may be shortened. If the customer

places an order without asking for a quotation and is offered a verbal quote,

then one might merely prepare the order.

\begin{figure}[hbtp]

\caption{Simple AR Service Invoice Workflow Example}

\input{simple_ar_dataflow}

\end{figure}

\subsubsection{Single Warehouse Example}

A customer contacts your firm and asks for a quotation for shipping a part. You

would create the quotation and when you get confirmation, convert it to an

order. Once the parts are in place you could go to shipping and ship the part.

The billing department can then generate the invoice from the sales order based

on what merchandise has been shipped and mail it to the customer.

Note that this requires that you have the part in your inventory.

\begin{figure}[hbtp]

\caption{AR Workflow with Shipping}

\input{ar_workflow_ship}

\end{figure}

\subsubsection{Multiple Warehouse Example}

A customer contacts your firm and asks for a quotation for a number of different

parts. You would create a quotation and when you get confirmation, convert it

to an order. When you go to ship the item, you would select the warehouse in

the drop-down menu, and select the parts to ship. One would repeat with other

warehouses until the entire order is shipped.

Then the billing department would go to the sales order and generate the

invoice. It would then be mailed to the customer.

\begin{figure}[hbtp]

\caption{Complex AR Workflow with Shipping}

\input{ar_workflow_complex}

\end{figure}

\subsection{Requests for Quotation (RFQ)}

A request for quotation would be a formal document one might submit to a vendor

to ask for a quote on a product or service they might offer. These can be

generated from Purchase Orders or AP Invoices

\subsection{Purchase Orders}

A purchase order is a confirmation that is issued to the vendor to order the

product of service. Many businesses will require a purchase order with certain

terms in order to begin work on a product. These can be generated from RFQ's or

AP Invoices.

\subsection{Receiving}

The Shipping-\textgreater Receiving screen allows you to track the parts

received from an existing purchase order. Like shipping, it does not post an

invoice but tracks the received parts in the order.

\subsection{AP Work Flow}

\subsubsection{Bookkeeper entering the received items, order completed in full}

Your company inquires about the price of a given good or service from another

firm. You submit an RFQ to the vendor, and finding that the price is

reasonable, you convert it to an order, adjust the price to what they have

quoted, and save it. When the goods are delivered you convert the

order into an AP invoice and post it.

\begin{figure}[hbtp]

\caption{Simple AP Workflow}

\input{simple_ap_workflow}

\end{figure}

\subsubsection{Bookkeeper entering received items, order completed in part}

Your company inquires about the price of a given good or service from another

firm, You submit an RFQ to the vendor, and finding that the price is

acceptable, you convert it into an order, adjusting the price to what they have

quoted, and save it. When some of the goods are received, you open up the

purchase order, enter the number of parts received, convert that order into

an invoice, and post it. Repeat until all parts are received.

\begin{figure}[hbtp]

\caption{AP Workflow with Receiving}

\input{ap_workflow_ship}

\end{figure}

\subsubsection{Receiving staff entering items}

Your company inquires about the price of a given good or service from another

firm, You submit an RFQ to the vendor, and finding that the price is

acceptable, you convert it into an order, adjusting the price to what they have

quoted, and save it. When some or all of the goods are received, the receiving

staff goes Shipping-Receiving, locates the purchase order, and fills in the

number of items received.

The bookkeeper can then determine when all items have been received and post the

invoice at that time.

\begin{figure}[hbtp]

\caption{Complex AP Workflow}

\input{ap_workflow_complex}

\end{figure}

\subsection{Generation and Consolidation}

\subsubsection{Generation}

The Generation screen allows you to generate Purchase Orders based on sales

orders. One selects the sales orders one wants to use, and clicks "Generate

Purchase Orders." Then one selects clicks on the parts to order, adjusts the

quantity if necessary, and clicks "Select Vendor." This process is repeated

for every vendor required. Then the Generate Orders button is clicked.

\subsubsection{Consolidation}

One can consolidate sales and/or purchase orders using this screen. For the

consolidation to work you must have more than one order associated with the

relevant customer or vendor.

\subsection{Reporting}

The reporting functionality in the order management is largely limited to the

ability to locate purchase orders, sales orders, RFQ's, and quotations.

\subsection{Shipping Module: Transferring Inventory between Warehouses}

One can transfer inventory between warehouses if necessary by using the

Shipping-\textgreater Transfer Inventory screen.

\section{HR}

The HR module is currently limited to tracking employees for and their start and

end dates. It has very little other functionality. One could build payroll

systems that could integrate with it however.

\section{POS}

The Point of Sale screen is still fairly rudimentary, and it is one of the least

mature aspects of Ledger-SMB. It is suitable for small retail environments at

the moment but not much else.

\subsection{Sales Screen}

The sales screen looks very much like a normal invoice entry screen with a few

differences.

\begin{itemize}

\item The discount text field is not available, nor is the unit field..

\item The next part number is automatically focused when the data loads for

rapid data entry.

\item Hot keys for the buttons are Alt-U for update, Alt-P for print, Alt-O for

post, and Alt-R for print and post.

\item Part Groups appear at the bottom of the screen.

\end{itemize}

\subsection{Possibilities for Data Entry}

\begin{itemize}

\item Barcode scanners can be used to scan items in as they are being rung in.

\item One could use touch screens, though this would ideally require some custom

stylesheets to make it efficient.

\end{itemize}

\subsection{Hardware Support}

As Ledger-SMB is a web-based application, the web browser usually does not allow

the page to write to arbitrary files. Therefore hardware support for pole

displays, etc. is not readily possible from the application itself. In some

cases, there are add-on packages (such as SL-POS) which offer some additional

hardware options via simple additional networking programs.

Notes for specific types of hardware are as follows:

\begin{description}

\item[Touch screens:]  The default stylesheet is not really usable from a

touchscreen as the items are often too small. One would need to modify the

stylesheets to ensure that the relevant items would be reasonable. Setting down

the resolution would also help.

\item[Receipt Printers:] ESC/POS printers generally work in text mode.  Control

sequences can be embedded in the template as necessary.

\item[Pole Displays:]  Generally are unsupported in Ledger-SMB without add-on

patches and special network clients.

\item[Cash Drawers:] These should be attached to the printer.  The control codes

can then be embedded in the invoices so that the drawer opens whenever an

invoice is printed.

\item[Barcode Scanners:]  Most customers use decoded barcode scanners through a

keyboard wedge interface. This allows them to scan items as if they were typing

them on the keyboard.

\end{description}

\subsection{Reports}

\subsubsection{Open Invoices}

The POS-\textgreater Open screen allows one to find any POS receipts that are

not entirely paid off.

\subsubsection{Receipts}

The POS-\textgreater Receipts screen allows one to bring up a basic record of

the POS terminals. It is not sufficient for closing the till, however, though

it may help for reconciliation.

The till column is the last component or octet of the terminal's IP address.

Therefore it is a good idea to try to avoid having IP addresses where the last

octet is the same.

All entries are grouped by date and source in this report.

\section{General Ledger}

\subsection{GL Basics}

The General Ledger is the heart of Ledger-SMB. Indeed, Ledger-SMB is designed

to be as close as possible to a software equivalent of a paper-based accounting

program (but with no difference between the General Ledger and General Journal).

\subsubsection{Paper-based accounting systems and the GL}

In order to understand the principle of the General Ledger, one must have a

basic understanding of the general process of bookkeeping using double-entry

paper-based accounting systems.

Normally when a transaction would be recorded, it would first be recorded in the

"General Journal" which would contain detailed information about the

transaction, notes, etc. Then the entries from the General Journal would be

transcribed to the General Ledger, where one could keep closer tabs on what was

going on in each account.

In the general journal, all transactions are listed chronologically with

whatever commentary is deemed necessary, while in

the general ledger each account has its own page and transactions are recorded

in a simple and terse manner. The General Journal is the first place the

transaction is recorded and the General Ledger is the last.

At the end of the accounting period, the GL transactions would be summarized

into a trial balance and this would be used for creating financial statements

and closing the books at the end of the year.

\subsubsection{Double Entry Examples on Paper}

Let us say that John starts his business with an initial investment of \$10,000.

This is recorded in the General Journal as follows (in this example, suppose it

is page 1):

\begin{tabular}{|l|l|l|r|r|}

\hline

Date & Accounts and Explanation & Ref & DEBIT & CREDIT \\

\hline

March 1 & Checking Account & 1060 & 10000.00 &  \\

& John Doe Capital & 3011 & & 10000.00\\

& John Doe began a business & & & \\

& with an investment of & & & \\

& \$10000 & & & \\

\hline

\end{tabular}\medskip

This would then be transcribed into two pages of the General Ledger. The first

page might be the Checking Account page:\medskip

\begin{tabular}{|l|l|l|r|l|l|l|r|}

\hline

DATE & EXPLANATION & REF. & DEBITS & DATE & EXPLANATION & REF. & CREDITS\\

\hline

March 1 & & J1 & 10000.00 & & & & \\

\hline

\end{tabular}\medskip

On the John Doe Capital page, we would add a similar entry:\medskip

\begin{tabular}{|l|l|l|r|l|l|l|r|}

\hline

DATE & EXPLANATION & REF. & DEBITS & DATE & EXPLANATION & REF. & CREDITS\\

\hline

& & & & March 1 & & J1 & 10000.00\\

\hline

\end{tabular}\medskip

\subsubsection{The GL in Ledger-SMB}

The paper-based accounting procedure works well when one is stuck with paper

recording requirements but it has one serious deficiency--- all of this

transcribing creates an opportunity for errors.

Relational databases relieve the need for such transcription as it is possible

to store everything physically in a way similar to the way a General Journal is

used in the paper-based systems and then present the same information in ways

which are more closely related to the General Ledger book.

This is the exact way that the General Ledger is used in Ledger-SMB. The actual

data is entered and stored as if it was a general journal, and then the data can

be presented in any number of different ways.

All modules of Ledger-SMB that involve COA accounts store their data in the

General Ledger (it is a little more complex than this but this is very close to

the actual mechanism).

\subsection{Cash Transfer}

The simplest form of GL entry in Ledger-SMB is the Cash-\textgreater Transfer

screen. This screen shows two transaction lines, and fields for reference,

department, description, and notes.

The field descriptions are as follows:

\begin{description}

\item[Reference] refers to the source document for the transfer.  One can use

transfer sheets, bank receipt numbers, etc for this field.

\item[Description] is optional but really should be filled in.  It ought to be a

description of the transaction.

\item[Notes] provide supplemental information for the transaction.

\item[FX] indicates whether foreign exchange is a factor in this transaction.

\item[Debit] indicates money going {\bf into} the asset account.

\item[Credit] indicates money coming {\bf out} of the asset account.

\item[Source] is the source document for that portion of the transaction.

\item[Memo] lists additional information as necessary

\item[Project] allows you to assign this line to a project.

\end{description}

The credit and debit options seem to be the opposite of what one would think o

concerning one's bank account. The reason is that credits and debits are

recorded so as to balance any money that may be invested in or withdrawn from

the business. A debit to an asset account will be credited when money is

withdrawn from the business, for example.

Also note that in this screen, when an item is updated, it will reduce the

number of lines to those already filled in plus an extra line for the new line

in the data entry.

\subsection{GL Transactions}

The GL Transaction screen (General Ledger-\textgreater Add Transaction) is

identical to the Cash Transfer screen with the exception that it starts with

nine instead of two lines. Otherwise, they are identical.

Again, one must be careful with debits and credits. Often it is easy to get

confused. It is generally worth while to go back to the principle that one

tracks them with regard to their impact on the equity accounts. So expenses are

credits because they debit the equity accounts, and income is a debit because it

credits the retained earning equity account.

\subsection{Payroll as a GL transaction}

Currently payroll must be done as a GL transaction. The attempts to create a

payroll system that would ship with SL have largely stalled.

Most customers running their businesses will have an idea of how to do this.

\begin{figure}[hbtp]

\caption{Payroll as a GL Transaction (Purely fictitious numbers)}

\begin{tabular}{|l|r|r|}

\hline

Account & Debit & Credit \\

5101 Wages and Salaries & 500 & \\

2032 Accrued Wages & & 450 \\

2033 Fed. Income Tax wthd & & 30 \\

2034 State Inc. Tax. wthd & & 15 \\

2035 Social Security wthd & & 3 \\

2036 Medicare wthd & & 2 \\

2032 Accrued Wages & 450 & \\

1060 Checking Acct & & 450 \\

\hline

\end{tabular}

\end{figure}

\subsection{Reconciliation}

To reconcile an account (say, when one would get a checking account statement),

one would go to cash/reconciliation, and check off the items that have cleared.

One can then attempt to determine where any errors lie by comparing the total on

the statement with the total that SL generates.

This can be done for other accounts too, such as petty cash.\footnote{Petty cash

denotes a drawer of cash that is used to pay small expenses. When an expense is

paid, it is recorded on a slip of paper that is stored for reconciliation

purposes.}

\subsection{Reports}

The most flexible report in Ledger-SMB is the GL report because it has access to

the entire set of financial transactions of a business. Every invoice posted,

payment made or received, etc. can be located here.

The search criteria include:

\begin{description}

\item[Reference] is the invoice number, or other reference number associated

with the transaction.

\item[Source] is the field related to the source document number in a payment or

other transaction.\footnote{Source documents are things like receipts, canceled

checks, etc. that can be used to verify the existence and nature of a

transaction.}

\item[Memo] relates to the memo field on a payment

\item[Department] can be used to filter results by department.

\item[Account Type] can be used to filter results by type of account (Asset,

Liability, etc.)

\item[Description] can be used to filter out by GL description or by

customer/vendor name.

\end{description}

The actual format of the report looks more like what one would expect in a paper

accounting system's general journal than a general ledger per se. A

presentation of the data that is more like the paper general ledger is found in

the Chart of Accounts report.

\subsubsection{GL as access to almost everything else}

The GL reports can be used to do all manner of things. One can determine, for

example, which AP invoice or transaction was paid with a certain check number,

which invoice by a specific customer was paid by a specific check number.

\section{Recurring Transactions}

Any transaction or invoice may be repeated a number of times in regular

intervals. To schedule any GL, AR, or AP transaction or invoice, click the

schedule button.

In general the reference number should be left blank as this will force


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