Double-Entry Accounting in Practice

Main rules to learn how to manage double-entry accounting Double-entry accounting is based on four main account categories:

• The account is an entity that groups the amounts that belong to the same transaction category.
• Every account must be registered as debit or credit depending on the type of accounting transaction.
• Double-entry accounting uses debit and credit instead of income and expenses.

The General Rule

• The assets, liabilities, costs and revenues are subject to continuous variations: increases and decreases.

The increasing variations

The decreasing variations

Instruments in Double-entry Accounting

Double-entry accounting uses the following principal instruments: the Chart of Accounts, Journal, Balance Sheet and Profit and Loss Statement.

This is the list of all the accounts that group the different transactions categories together (ex. cash book, bank, purchases, sales, etc.).

• To use Banana Accounting, one must simply take an already predefined accounting plan, adapt it to the proper requirements and insert the transactions. The rest will be executed by the program.

This is the list of all the operations that influence the activity daily (withdrawals, deposits, purchases, sales, salaries, rent, etc.) It corresponds to that which the larger part of the small businesses already have even if it’s only on paper or Excel, to then give to the accountant.

This is a summary outline of the assets and liabilities. The difference between the assets and liabilities represents the net capital amount of the firm.

This is a summary outline of all the costs and revenues. The balance represents the operational result (profit or loss).

Starting Accounting

Procedure to start accounting with Banana Accounting

For the user of Banana's Double-entry accounting, it may seem strange that the revenue/income (sales) and the liabilities (start-up capital) appear in negative, while normally one expects that the sales appear in positive and the expenses in negative.

The double-entry accounting is based on the debit and credit principle that usually appear in two seperate columns. If the amounts in debit and in credit appear in one column, the mathematics of the Double-entry accounting anticipates the use of the minus sign (-), so that the amounts in debit can be easily distinguished from the amounts in credit.

Banana goes completely with the mathematical logic of the Double-entry accounting and thus indicates the amounts with the minus sign (and in red print to let the user distinguish even better the amounts in debit and in credit). In the Double-entry accounting the amounts in negative (credit) don't have the same meaning as in the accounting that is based on income and expenses.

The indication of the credit amounts in negative is a much more efficient system than other ones that add codes to amounts, such CR, DEB, CR or brackets.

This system is based on simple mathematical equations which assure that the accounting is correct. It is not by accident that the Double-entry accounting method has in fact been encoded by Luca Pacioli in 1494, one of the most illustrious mathematicians of the Italian Renaissance (he taught mathematics to Leonardo da Vinci). In his "Summa de arithmetica, geometria, proportioni et proportionalita", Luca Pacioli didn't just deal with the Double-entry accounting, but also with other mathematical questions.

In the Renaissance there were no electronic calculators, and so they used to indicate the amounts in debit and in credit in separate columns. The result was that it became easier to totalize the amounts. Today, with the computers, no calculations need to be made and the principal issue is to use a user-friendly system which is at the same time easy and correct.

For those interested in accounting mathematics and the equations on which Banana accounting is based, the following explanation can be interesting. 

Debit/Credit

The Double-entry accounting leans on the principle that each movement is noted in debit as well as in credit and the amounts have to match.

Debit = Credit

The balance (the total difference between debit and credit) has to always be equal to zero

Debit - Credit = 0

In order to easily distinguish (very useful while working on the screen), the amounts in credit are indicated in red, preceded by the minus sign 

Debit + (-Credit) = 0

Balance Sheet and Profit/Loss Statement

The mathematics of the Double-entry accounting anticipates the use of two "accounts".

• Balance Sheet Account (Balance Sheet) keeps note of the financial state at a certain moment.
  • Debit represents the Assets
  • Credit represents the Liabilities (here will always means including the Equity)
• Profit/Loss Account (Profit and Loss) keeps note of the progress.
  • Debit represents the Expenses
  • Credit represents the Revenue

The transactions are entered in debit and in credit in the appropriate accounts of the Balance Sheet and the Profit/Loss statement.

The same transactions can be represented in a single column (credit in negative)

The result is, of course, the same.

Equations for the business results

The business result is the balance (Debit - Credit) of the Balance Sheet and the Profit/Loss Statement.

One has a profit when the assets are higher than the liabilities and the revenue more than the expenses.

One has a loss when the liabilities are higher than the assets and the revenue is lower than the expenses. 

One has a profit, when the balance of the Balance Sheet is positive and the balance of the Profit/Loss Statement negative.  

One has a loss, when the balance of the Balance Sheet is negative and the balance of the Profit/Loss Statement positive.

Use of noting in a single column

Noting the data in double columns is ideal for transactions in paper books. The amounts in debit and in credit are inscribed in separate columns. The totals are being calculated at the end of the page and the totals and calculation of the results are being done at the end of the period.  

Computerized systems offer the possibility to keep the balances of the accounts constantly updated. For the calculations, the software therefore normally use noting in a single column, with the amounts in debit in positive and the amounts in credit in negative. In order to use noting in double columns, the software would have to register the credit amounts in the Balance sheet in negative, and, in the Profit/loss Statement, register the credit amounts in positive and the debit amounts in negative.

For the programmer's point of view, this solution is more complicated, and thus the majority of the software use internally the mathematics of the single column and noting in double columns only for the presentation. 

Banana Accounting instead systematically uses the minus sign to indicate the credit amounts. Initially, the user has to get used to this system, but it has the advantage of being linear and allows for a better understanding of the mathematics on which the Double-entry accounting is based, especially when more complicated operations are being required like write-off's, profit at the end of the year or VAT due/recoverable.  

For the presentation of the Balance Sheet and the Profit/loss Statement, the logic of the double columns is however more adapted. 

Thus the print-outs of the Balance Sheet and the Profit/Loss Statement that are used for the presentation of the results are edited with Assets, Liabilities, Expenses and Revenue always in positive. When the Profit/Loss Statement is presented in a scalar format (Revenue minus Expenses), the Revenue is indicated in positive and the Expenses in negative.

At the basis of the accounting, there are the accounting documents and receipts.
The type of one's organizing with regard to the accounting, depends on the size of the activity and the amount of documents.
The way one organizes things has to be adapted to what is needed.
We are listing down below an indication of possibilities that have proven to be very useful.
 

The different types of documents
It is important to distinguish and organize specifically the different types of documents.

• Basic documents: contracts for rent, telephone subscriptions, statutes, insurance contracts and everything that gets signed only once and is valid for several years. These documents need to be kept in a separate folder or binder, containing just this type of documents. For some of these very important documents (like receipts for down payments, etc.) it may be useful to make a photocopy and keep the original in a safe or a safe place. Don't make holes in important documents, but put them in transparent plastic folders. This binder is the basis of your activity/company and you need to handle it carefully.
• Documents related to employees: Contracts, insurances related to personnel, and other; it is useful to keep these in a separate binder.
  If there are lots of documents, we advise you to use one binder per theme.
• VAT Declarations: it is good to keep a special binder with the different declarations that you present at a regular basis (quarterly, by semester or yearly). For your VAT inscription or other general documents, it is better to keep them together with the basic documents.
• Accounting receipts and documents of the year: these are receipts, invoices or other items that are related to an expense or a receipt. These have to be kept separately, year by year. For every year you will have a binder with these kinds of documents.

Accounting documents
A good day- to-day order is needed in order to enter the accounting transactions and to control the situation of the company, such as the cash flow, the totals of debtors and creditors, etc.

1. All accounting documents (receipts, invoices, tickets) usually have to be kept for a minimum of ten years.
2. Classify and put the accounting documents in order by date, together with the related bank statements for the payment or the receipt.
3. Write a progressive number on the accounting documents (statements and others). With this number, that should be inserted in the Doc column, you can locate the accounting document, with the accounting as a starting point.
4. At the end of the year, print a copy of the journal and keep it together with the accounting documents.
5. Usually a new binder is being used for each year for the accounting documents.

Issued invoices or receipts with an accounting at the moment of payment
Small companies and associations enter the invoices only in the accounting at the moment of payment (cash method).

1. Separate the issued invoices and those for which you have received the payment.
2. Verify regularly the invoices on hold for which payment still needs to be received. As soon as the due date for the payment has passed, it is useful to send a payment reminder. Don't let too much time pass by, make sure you receive the payment for unpaid invoices. This takes time, but is it important.
3. Once these invoices are paid, put them together with the normal accounting documents.

Issued invoices or receipts with an accounting on the sales volume
The invoices are being registered at the moment they are issued as well as at the time of payment.
See also: Clients/Suppliers Registers

1. Separate the issued invoices and those for which you have received the payment.
2. Verify regularly the invoices on hold for which payment still needs to be received.
   As soon as the due date for the payment has passed, it is useful to send a payment reminder.
   Don't let too much time pass by, make sure you receive the payment for unpaid invoices. This takes time, but is it important.
3. When you enter the issuing of the invoice in the accounting, make note of the registration on the invoice. On the transaction row, use the "Doc. Original" column to insert the invoice number.
4. Once the are invoices are paid, move them over to the "paid" section, and enter them in the accounting.
5. When you have entered them, make note of the accounting transaction on the invoice (for example with a "checked" sign)

Transactions / frequency

• It is good to regularly enter the transactions in the accounting (daily, weekly, monthly).
• We strongly advise you to not neglect entering the accounting transactions, so that you always have updated information and can evaluate the progress of your activity.
• By going over the different expenses account numbers, you can easily have an overview of the different expenses that you made.
• The accounting is not just done for the tax authority.

Bookkeeping accounts

In order to create an account, go to the Accounts table and enter a number or a code in the Account column.
This same number is then used in the Transactions table as Debit or Credit account.

• The account number can be composed by numbers, letter and separations characters.
• It is not possible to have more than one account with the same number.
• Each account must have a BClass and must belong to a group.
   

The BClasse

Each account must belong to one of the following BClasses:

• 1  for Assets
• 2  for Liabilities
• 3  for Expenses
• 4  for Income

The BClasse number must be as indicated, regardless the account or group code. It is also possible to create Off Balance Sheet accounts (for example for warranty down payments, e conditional committments), that must have the following BClass:

• 5 for Off Balance Sheet: Assets
• 6 for Off Balance Sheet: Liabilities

Opening balances

The opening balance of each account is entered in the Opening + currency symbol column.

• The Assets balances are shown normally
• The Liabilities balances are entered with the minus sign (negative)
• Usually only the Assets and Liabilities opening balances are entered.

In order to automatically transfer the opening balances for the following year, please visit the Create New Year lesson.

Opening balances differences

In a correct accounting file, the total of the Assets opening balance should be equal to the total of the Liabilities opening balance, so no differences are shown.
If the totals do not match, the program will show a warning message telling you that there is a opening balances difference (Information window).
If you have changed some account numbers and you think the error message is not correct, please Recheck the accounting.
When using Banana Accounting for the first time, the opening balances must be entered manually.

Accounts with addresses

It is possible to add a few columns in the chart of accounts, to include the addresses management:
Tools menu -> Add new functionalities command

This command will add in the Chart of accounts the following things:

• several columns (name, last name, company, town, ...) where you can enter the client / supplier / member address and data
• the Address view where you can see the added columns (in order to change the view or the views organization please consult the Tables setup page)

Clients/supplier register
When in the accounting plan you need to manage a clients/supplier register, meaning a specific account list for all clients, you need to have complete data with address, phone number, email, VAT number, etc. in this case adding the columns of the Address view is very useful.

The grouping and totaling system

The Banana grouping and totaling system is based on the following columns:

• Group (TOTAL row)
  When, in a row, a group identifier is being entered, the row becomes a TOTAL row.
  In this row the amounts of the Gr column, that contain the same identifier, are being totaled. 
  When a group is present, there cannot be an account. .
• Gr (Adds this row into the TOTAL row)
  The number here must be one of the numbers defined in the Group column.

With this system, an account can be totaled in a group row, the group in another group and so on... in order to create different totaling levels. 
This totaling system is very powerful and flexible, but it takes some "getting used" to it, in order to be able use it well.

Examples of the main groupes in the Double-entry accounting

Every Chart of accounts uses its own totaling system. Hereunder the main groupes of the Double-entry accounting are being explained.

In the Double-entry accounting, the total of the Debit balances (positive) together with the Credit balances (negative) have to result in 0 (zero).

• The 00 is the row where all the amounts are being added together.
  It is the "Summa summarum" of all the Debit & Credit balances.
  In case the Balances columns do not amount to zero, it means there is a Debit/Credit difference and thus most likely a mistake. In these cases it is useful to proceed with a checking of the accounting (see next point).
  In the Debit and Credit columns of the Transactions view (Accounts table), there are only positive amounts, so also in the row of the 00 group, there will be the total of the transctions not equal to zero.

The calculation sequence to arrive at 00 is therefore as follows:

• The 1000 account -> group 1 (Total Assets)-> Group 00
• The 2000 account -> group 2 (Total Liabilities) -> Group 00
• The 3000 account -> group 3 (Total Revenue) -> Group 02 (result Profit & Loss Statement)  ->  Group 297 (Profit/Loss of the current year in the Balance Sheet) -> Group 2 (Total Liabilities) -> Group 00.
• The 4000 account -> group 4 (Total Expenses) -> Group 02 (result Profit & Loss Statement)  ->  Group 297 (Profit/Loss of the current year in the Balance Sheet) -> Group 2 (Total Liabilities) -> Group 00.
   

The result of profit & loss statement is added in equity

As you can see in the example, the Group 02 (Profit /Loss from Profit & Loss statement) is totalized in the 297 liabilities group (current year result).
With this group organization, we have several advantages:

• In current year operating result is displayed in the balance sheet
• The Total Liabilities will match the Total Assets (provided that there is no accounting error).

Adding or deleting subgroups

Adding a totaling level

With this system it is easy to add totaling levels.
When we want to create a subgroup for the Cash & Cash equivalents accounts:

• Enter an empty row after the bank account
  • Enter the value 10 into the Group column
  • Enter the value 1 into the Gr column
• Indicate the Gr 10 in the accounts 1000 et 1020
• The sequence for the calculation becomes:
  The 1000 account -> Group 10 (Cash & Cash equivalents) -> Group 1 (Total Assets) -> Group 00. 

In case you want to insert another subgroup, "Current Assets", proceed in the same way.

• Add an empty row above the row of the Total Assets.
• In the new row:
  • Indicate the number 11 in the Group column
  • Indicate the number 1 in the Gr column
• In the Clients and Goods for resale (inventory) rows, indicate the Gr 11.

Deleting subgroups

In case the Chart of accounts shows subgroups that are no longer needed or not wanted, these can be deleted. Just delete the row of the subgroup and modify the Gr of every account that was part of that subgroup.

Checking of the structure

Once the Chart of accounts has been set up, execute the Check accounting command of the Account1 menu. In case there are errors, the program issues a warning.

Infinite loop error

This warning appears when a Group is being totaled in a Group of a lower level, reason for which an infinite error loop is being created.
There would be an infinite loop when, in the preceding example, the Assets Group (1) would be totaled in Group 10.
The program, after having calculated the Group 1, would total the amount in Group 10, which in turn would total the amount in Group 1, and then again in 10 without ending.

Profit & Loss Statement with Gross Profit

It is also possible to use a Profit & Loss Statement that starts with the total Business result and that subtracts the costs.
Hereunder the example of the Swiss PME Chart of Accounts is shown.

Extended use of the totaling system

The totaling system is very flexible:

• In one Group, it is possible to add Groups as well as Accounts
  This can be seen in the earlier shown example where the Group Cash & cash equivalents (10) and the accounts (1100 and 1300) are being totaled in the Assets
• You can use whatever kind of numbering
• You can create up to a hundred totaling levels
  • The Total row can be after the rows
  • The Total row can be before the rows
  • The Total row can be completely elsewhere, in a separate position
    This is being used to create registers (for example, a client register)
• The accounts and the Groups can be totaled in one single other Group.
  It is not possible to total one and the same account at the same time in two groups.
• This system is also being used to total the Cost centers and the Segments
  Pay attention though to not use different groups for normal accounts and for cost centers, because the resulting amounts will not be correct. 

Totaling of the Amount columns

The calculation procedure totals the amount columns

• The amount columns defined by the system are being totaled.
• The amount columns added by the user are being totaled.

The sequence of the calculation

The programme calculates the totals in the following manner:

• Sets the values of the Amount columns of the Groups rows on zero
• Totals the amounts of the Account rows into the Group rows (first calculation level)
• Adds the balance of the Group rows into the Group(s) of a superior level
  Repeats the operation until all the levels have been calculated.

Related Documents

• Opening balances

In order to create automatically an Enhanced Balance Sheet with groups, the chart of accounts needs to be configured with special codes that are to be entered in the Section column:

Sections in the Assets

• Enter a * on the same row as the Balance Sheet title
• Enter 1 on the same row as the Assets title

Sections in the Liabilities

• Enter 2 on the same row as the Liabilities title

Sections in the Profit & Loss Statement

• Enter a * on the same row as the Profit/Loss Statement title
• Enter 4 on the empty row below the Profit/Loss Statement title

Note: when there is a clear distintion between Revenue and Expenses in the Chart of accounts, you need to:

• Enter 3 on the same row as the Expenses title
• Enter 4 on the same row as the Revenue (Income) title .

Sections in the clients/suppliers register

• Enter * in the same row as the Clients/Suppliers register title or on a empty row (as in the following example)
• Enter 01 on the same row as the Clients register title
• Enter 02 on the same row as the Suppliers register title

The amounts will be shown in the same way as for the Assets and the Liabilities.
This encoding is also valid when the clients and suppliers are configured as cost centers.

In case there are cost or profit centers configured, enter the following elements

• An * on the row of the Costs and Profit Centers title, or on a empty row
• 03 on the same row as the Cost centers title or on an empty row preceeding the Cost Centers
• 04 on the same row as the Profit centers title or on an empty row preceeding the Profit Centers

The Cost Centers amounts will be shown as positive (in black) like the expenses; the Profit Centers amounts will be shown in negative (in red)  like the revenue;

For more information please vist the Sections logic page

Related document: Enhanced Balance Sheet with groups

Introduction

Segments are being used to have a more detailed classification of the costs, also to obtain calculations of components or departments of the company. By using the segments you can obtain a Profit & Loss Statement per unit, department or branch, without having to create specific accounts for each unit.
For example a museum can use the segments in order to know the income, the personnel expenses or the setting up expenses for each exhibit.

Segments are being used when a systematic attribution is necessary, that follows the transaction in debit or credit.
Cost centers, on the contrary, are normally being used for additional cataloging, less structured and when the account sign is not necessarily being followed.

Cost centers and segements can be used at the same time.

Characteristics of the segments

• Segments are accounts preceded by a colon ":".
• Segments codes can consist of numbers or letters.
• There may be up to 10 levels of segments.
• The number of colons preceding the symbol for the segment indicates the number of level.
  • :LU segment of level 1
  • ::P1 segment of level 2
  • :::10 segment of level 3
• For each level there may be an illimited number of segments.
• The different levels of the segment are independent of each other.
• The segments do not have BClasses and do not have a currency symbol
• The calculations for segments are done in basic currency.
• In the transactions, the segment follows the debit and credit account.
  It is not possible to record on a segment without having an account.
• In the transactions, one can use a "-" as a separator instead of a ":" if on the File properties (Basic data) of the File menu the option Use the minus sign (-) as segments separator has been activated.
• Account cards of the transactions on single segments can be obtained.

Setting up segments

The segments have to be configured in the Accounts table, Account column, at the end of the chart of accounts.

• Insert an asterisk in the Section column in order to define the section relative to the segments
• In the Description column enter the Segments title
• Enter the description of the first-level segments, and in the Account column, insert ":"
  • List the segments of the first level, entering an identification code for each one of them in the Account column, preceded by ":"
  • Proceed by entering the segments of the second level (and, if necessary, those of the third), in the same way as those of the first level, with the only difference that the segment codes need to be preceded by "::" or by ":::", depending on their level.
     

Segment balance

The segment is a subdivision of what has been entered on an account. The segment amount is thus always relative to an account, and in order to have the segment total, you need to use an Accounting report (from the Account1 menu), with a subdivision by segment (Subdivision tab). 

In the chart of accounts the segment balance is indicated. This balance will be zero if the segment is used in both Debit and Credit accounts, since the amounts compensate themselves). The segment balance will be visible only when using it with the Credit or the Debit account, associated with the Profit and Loss statement account.

Transactions

The segments are being entered in the Transactions table, followed by the main account from the account segment.

Each segment is preceded by the colon, or by the minus sign (-), in case the option Use the minus sign (-) as segments separator has been activated in the File and Accounting properties (File menu).

If the chart of accounts contains accounts with "-" or "_", as for example in the clients/suppliers register's accounts), you can't use the same symbols as segments separators; in this case you need to deactivate the corresponding option and use the ":" symbol.

When a segment that belongs to more than one level is being recorded, the segment of the first level needs to be entered right after the main account; then, continue with the code of the second level.

Report

Reports of the segments are obtained with:

• Enhanced balance sheet with groups
• Accounting report.
• Account card
• Multi-level report
  In order to obtain reports that combine accounts and segments (for example, all the expenses of the LU Branch for P1), the features of the Banana applications need to be used.
   

Report subdivision by level

In the Enhanced Balance Sheet with groups, in the Subdivision tab, indicate the segment level to be used.

Summary Report

This is a summary with the segment that have been setup in the Accounting plan section, with a possible subdivsion (if desired) by period or by segment.

Segment non assigned

The "empy" segment gathers all the amounts that have been recorded without specifying a segment. It is possible to setup the title for this segment in the Accounts table. Please also select the Segment heather: Description option in the Subdivision section.

Related document: Managing different projects

The Cost and Profit centers (hereunder being indicated as Cost centers) allow the user to catalog the transactions according to different criteria than the usual accounts.

Characteristics of Cost centers

• The Cost and Profit centers (CC) are accounts, preceded by the ".", "," and ";" signs
• There are three cost center levels:
  • CC1 preceded by a period "."
  • CC2 preceded by a comma ","
  • CC3 preceded by a semicolon ";"
• Each level is independant of the other
• For each level, there can be an unlimited number of cost centers.
• A superior level can be used without using an inferior
• Cost center codes can be alphabetic or numeric
• Cost centers can have there own grouping, different than those of normal accounts. For the same level of cost centers, subgroups can be created. Be careful to not mix cost centers groups with other groups of a different level or with normal accounts or segments.
• Each cost and profit center has its own account card, complete with transactions and balance
• Recording on the cost center is independant of the account recorded in debit or credit. One can even record on a cost center without any account in the debit and credit column.
   

When to use cost centers

Cost centers are usually being used to catalog certain expenses to specific activities, that are not necessarily linked between each other.

• Projects, Events, Construction sites
• Clients and suppliers, Members, Sales agents
• Extra details for certain expenses

The segments, on the contrary, follow the debit and credit accounts, and are being used as further subdivisions for expenses and revenue.

It is possible to use cost centers and segments together at the same time.

Setting up cost centers in the Accounts table

Attention: If you work with a cash book, the cost and profit centers must be set up in the Categories table!

• Create a specific section for the cost centers.
  This setup will be necessary for the presentation of the cost centers in the Enhanced Balance Sheet by groups.
  • Enter a section with an asterisk * for a section change
  • In the next row, enter 03 (or 04 for a profit center).
• Add some empty rows for the cost center
  • In the Group column, enter the group to which the cost center account belongs
  • In the Account column, enter the cost center account precededs by a full stop "." for those to be registered in CC1 column (Transactions table), a comma "," for those to be registered in CC2 column and a semicolon ";" for the ones to be registered in the CC3 column.
  • In the Gr column, indicate the group in which the amounts have to be totalized.
  • In a Multi-currency accounting, the account currency is also specified.
• Add the cost center groups
  • In one and the same group, totalize only one specific level.
  • As for normal accounts, different levels can be created.

File Properties (VAT amount)

In the File and accounting properties command, in the VAT tab you can set the amount of cost centers with the following options:

• Use transaction amount - The amount of the cost center is registered according the registration amount
• Use amount excluding VAT - The amount of the cost center is registered net of VAT.
• Use amount including VAT - The amount of the cost center is registered inclusing the VAT.

Transactions

In order to register on the cost centers, it is assumed that the cost center accounts have already been entered into the Chart os accounts.

To proceed with the recordings, you need to be in the Transactions table, in the Cost centers view; in the CC1, CC2, CC3 columns, you need to enter the cost center account without the punctuation that precedes it.

• To record on the cost center in credit, the cost center needs to be entered preceded by the minus sign (-).
• For the Income & Expense accounting, in the File and accounting properties, you can define for the cost centers to follow the sign of the category.
• In order to record a global amount on more than one cost center of the same level, a different row needs to be created for each different cost center.

Cost center account card

The cost center is treated as any other account, so each cost center has its own account card with account balance and account transactions.
In order to view all cost center account cards, click on the command Account/Category cards in the Account1, and then on the Cost centers button (Filter option).
 

Related documents:

• Managing partners of an association
• Customers and suppliers with VAT on paid invoices
   

   

Adding a new account or category

• Position yourself in the row above the one where you want to add the new account
• Add a new empty row with the command Add rows from the Edit menu
• In the columns, insert the account number, the description, the BClass (1 for the Assets, 2 for the Liabilities, 3 for the Expenses and 4 for the Revenue), and the Gr which needs to be the same as the one inserted for the accounts belonging to the same Group.

Note: If you first enter a transaction with a non existing account and later you create the new account in the accounting plan, you will first get an error message, that will go away only if you recheck the accounting with the Shift + F9 key, or the Recheck accounting command from the Account1 menu.

Adding a new group

• Position yourself in the row above the one where you want to add the new group
• Add a new empty row with the command Add rows from the Edit menu
• In the columns, insert the group number, the description and the Gr which needs to be the same as the group you wish this group to be totalized.

Renaming an account or a group

• Position yourself in the Account or Group column in the Accounts table, or in the Category column of the Categories table (or in the VAT code column in the VAT codes table)
• Choose the Rename command from the Data menu
• Enter the new account, group, category or code number

The program will automatically update the Transactions table with the new number or code.

Deleting an account or a group

• Position yourself on the row number that contains the account that is to be deleted
• From the Edit menu, click on the Delete rows command
• Enter the number of rows that you wish to delete

After deleting an account, a category or a group it is necessary to use the Recheck accounting command from the Account1 menu. The program will give you a warning message if the deleted account, category or group was used in the Transactions table.

Avoid mistakes with Banana Accounting Plus

In order to facilitate checking your accounting work and to immediately find differences, in Banana Accounting Plus, our new version, we added the Balance column in the Transaction table. You can now see potential differences on each row and you can correct them right away. It is a very useful feature when closing the accounting period.
Many of our clients have already tried it and are enthusiastic about it. We advise you to switch now to Banana Accounting Plus and take advantage of the many new features.

Simple transactions

Simple transactions are the ones regarding two accounts (one Debit account and one Credit account) and entered in one single row. Each transaction has its own document number.


 

Composed transactions

Composed transactions with more than two accounts involved, have to be entered on several rows. The user should enter one account per row. The counterpart account for the entire transaction has to be entered on the first row.
The document number, entered on the different rows, is the same because we are dealing with one and the same transaction.

Note:
In composed transactions, the dates of the transaction rows should be the same, otherwise, when doing calculations by period, there may be differences in the accounting.

Recurring Transactions table

In order to avoid rewriting always the same texts, it is possible to store transaction groups in the Recurring transactions table (Account2 menu). These groups are identified with a code and can be retrieved and entered into the Transactions table just by entering the corresponding code.

When positioned on the Doc column of the Transactions table, the program proposes the list of the recurring transactions, grouped bycode. If one of these codes is selected:

• the program enters the recurring rows that have the same code
• the program completes the entered rows with the date and other values that have been entered earlier
• the program enters the progressif number in the Doc column (based on earlier entered values)

Entering recurring transactions

• You need to enter into the Recurring transactions table (or copy from the Transactions table) the transaction rows that should be retrieved regurlarly.
• Enter the code related to the recurring transactions group into the Doc column.
  Rows with the same group code will be retrieved together (transaction on multiple rows).

• Progressive numbering of documents "docnum"
  If, when retrieving recurring transactions, you wish to have a Doc number different from the automatic one, you need to create a row containing the code "docnum" in the Doc column, and your desired text in the Description column. For the following rows, the text specified in the Description column, will be applied in the Doc column when retrieving the transactions
  • "0" when no automatic numberting is desired
  • "1"  progressive numbering
  • "cash-1" progressive numbering with the prefix "cash-" (cash-2, cash-3)
    The program replaces the number indicated at the end of the text with the next progressive number.
     
• If you wish the program to suggest just one row per code, the description has to be preceded by:
  • An "*": displays just this row and not the others with the same code.
  • An "**" displays just this row, but don't retrieve this row (only title row).
  • An "\*" allows the user to start the description with an asterisk, without it being interpretated as a command.

It is not possible to save customized setups in the Recurring transactions table; it uses the views and columns setup of the Transactions table.

Retrieving the recurring transactions into the Transactions table

• Enter the date and the information of the other columns that should not be modified
• In the Doc column, choose one of the codes defined in the Recurring Transactions table and press Enter.
  • The program enters all the transactions with the same code, repeating the data column and other already entered values.
  • In the Doc column, a progressive number is being inserted or one as specified in the docnum
• Or indicate the code in the Doc column and press F6

Copying transaction rows into the Recurring Transactions table

In order to copy rows from the Transactions table into the Recurring transactions table:

• In the Transactions table, select the rows that need to be copied;
• Edit menu -> Copy rows command;
• Go into the Recurring transactions table;
• Edit menu -> Insert copied rows command;

To enter issued bank checks, the user needs to insert an Issued checks account in the Liabilities. 

The check is issued at the moment of paying a supplier and later on is being debited from the Bank current account.

The Issued checks account card after the transactions.  

Customers & Suppliers Management

In order to manage the invoices issued or received, we advise you to use the Customers Menu and the Suppliers Menu.

Associate an expiry date to a transaction

As an alternative to the customers and suppliers management, or for simpler checking purposes, you can also enter the payment date in the transaction row.

This is an operating mode that consents simplified checkup.

With the Columns Setup command (from the Data menu), you should make visible the Date Exp. and Date Pay columns.

You should then enter the invoice expiration date in the Date Exp. column, and the invoice payment date in the Date Pay. column.

Show expiry dates

With the Show expiry dates command from the Account2 menu, the program displays the transaction rows that have an expiry date but no payment date.
 

The DocLink Column

The DocLink column (Transactions table) makes it possible to enter a link to an external file (usually a scan of a receipt or an invoice).

• The DocLink column is usually not visible.
  In order to display it, use the Columns setup function.
• Once the Link column is visible, you can directly edit the file name.
• The file name is related to the accounting file; if the documents are in a sub-folder, the file name - in the DocLink column - will be preceded by the directory name.
• It is equally possible to manually enter a web address in the Link cell.
  In order to open the linked document, click on the Open link command of the Account2 menu, or click on the small square that appears on the upper right hand corner of the cell that contains the link.

Entering a link to a file

There are two ways to enter a link to a document:

• Place yourself on the row of the Transactions table and the activate the Add link command from the Account2 menu -> Links;
• Select the file that corresponds to the document which needs to be linked and click on the Open button; the program inserts the link automatically. 
  The program enters the file name in the DocLink column, even if this last one would be invisible.

Or

• Display the DocLink column in the Transactions table. See: Columns setup;
• Click on the small square at the upper right hand corner of the cell;
• Indicate the path where the file can be found and select it.

Editing a link

Proceed in the same way as when entering a new link.
 

Open link

There are two ways to open the link:

• Place yourself on the row of the Transactions table and the activate the Open link command from the Account2 menu -> Links;
• Place yourself on the DocLink cell and click on the icon to open the link.

For security reasons, the program opens only files with an extension that is considered secure, see Program Options -> Advanced, from the Tools menu.

Remove link

There are two ways to remove the link:

• Place yourself on the row of the Transactions table and the activate the Remove link command from the Account2 menu -> Links;
• Delete the contents of the DocLink cell.

Blockchain certification

Banana uses a digital certification system for the accounting data, using what is now called blockchain technology. Transactions can be locked and marked with digital codes that can guarantee, even after many years, that the accounting data are authentic. They also allow the user to make sure that the accounting data have not been modified. 

Banana.ch was the first company in the world to use the blockchain technology in the accounting field. This method (US Patent No. 7,020,640) was developped and patented in 2002..

This method guarantees one of the highest levels of data integrity and conformity to international law prescriptions. You can also see the evaluations on this matter of the audit company Ernst&Young, who verified the system conformity to the legislation requirements. The new versions of the Banana Accounting software don't use the MD5 method anymore (the one mentioned in the documents), but use the Hash SH256 method.

• Ernst&Young, compatibility check to Swiss legislation (pdf in German)
  See also: Verordnung über die Führung und Aufbewahrung der Geschaftsbücher, 24.04.2002 (in German)
• Ernst&Young, compatibility check to German legislation (pdf in German)

This method, based on the blockchain calculation system, is considered so reliable that it is employed to ensure the validity of the bitcoin and of all other modern crypto-currency.

The lock transactions command

With the Lock transactions command of the Account2 menu, the accounting transactions are locked and marked with control codes that can certify, over the years, that the transactions have not been modified.

• The validity of a possible already existing lock is being verified
• The transactions until the lock date are being numbered progressively and are being locked. For each transaction, the digital code of the row and the progressive one are being calculated.
  The calculation of the digital codes is being done according to the sequence of the columns.
• In the accounting is being indicated that transactions with an equal or earlier date than the lock date will no longer be accepted.

Date of new lock (inclusive)
Specify the date up until when the transactions will be locked.

Password (optional)
It is possible to insert a password to eventually unlock the transactions or to carry out a new lock in the future.
If the program finds no errors in the transactions included in the lock date, it will lock the transactions, calculate and assign individual numbers and codes to each row of transactions which can be viewed in the Lock view on the Transactions table.

Last lock
The data of the following fields are automatically filled out by the program based on the last executed lock.

Lock valid
A "Yes" is shown if the lock is valid.

Date of lock
The date of the last executed lock is shown.

Lock number
This is the value automatically entered by the program in the last row of the LockNum column.
When the lock is repeated, if the value of the last row lock number is unchanged, it means that the lock is valid and that the data have not been altered; if however the value is changed, the program shows the following codes:

• (-1) if the lock is invalid from the first row
• (-2) if there are rows that have the same LockNum.

Progressive Hash
This is the control code present in the last transaction.

Lock View

All digital codes are shown along with all the information that the program used to create the digital signature.

• LockNum: the progressive number that identifies the row
• LockAmt: the cumulative transactions total, similar to the total at the end of the page, as required by some national regulations
• LockLine (hidden column): the digital code calculated according to the row values.
• LockProg: the global electronic signature (SHA-256).

The digital code LockProg
This is the main element of the certification; it uses the blockchain methodology.
The digital code is calculated according to the following values:

• The contents of the current entry, including amounts, descriptions and the description of the account at the moment of the lock
• The progressive number (LockNum)
• The cumulative balance (LockAmt)
• The progressive code of the preceding entry (LockProg).

In case the accounting data undergo even the slightest modification (for example, a date or an amount is changed), the digital code will be different. If the control number remains the same, it implies that the data are original and therefore have not been changed.

Check Lock

With the Check lock info command of the Account2 menu, the program verifies the validity of the lock and displays the data.

• The program recalculates the digital control codes and verifies if they correspond with the ones related to the transactions.
  • If the codes correspond, the lock is considered valid, and therefore the data are original
  • If they do not correspond, it means that the data have been changed and that they are not the original ones calculated at the time of the lock. 

Unlock transactions

The Unlock transactions command removes the lock and the control codes. If the lock was set with a password it will be necessary to reenter the password in order to remove the lock.
If later on you want to relock the transactions, and they have not been modified, the control numbers will be the same as the ones of the earlier lock; if however some data have been changed, the control numbers will be different.

Partial lock

If the transactions have been locked, it is possible to unlock them even partially, from a specified date. If a lock password has been set, in order proceed unlocking the transactions, you need to enter it in the specific field.

Why unlock the accounting?

In principle, the locked accounting should not be unlocked. It might happen that, after the lock, you find errors in the accounting and see the need to make corrections.
To have the opportunity to make further changes, users kept a copy of the file before the lock. If they found errors, they would restore the previous situation. In the meantime other transactions had perhaps been made, so often it happened that restoring previous versions of the accounting proved wrong. To avoid this unnecessary waste of time it was decided to make the Unlock transactions command available.

The certification must not be confused with data security. The data certification is a methodology that ensures that the accounting data are original. To prevent data from being modified, the methodology is the one related to data security. Data security procedures, however, can only be implemented in an environment that limits data access.

If the file is fully available to the user, such as when it is on a PC, people have complete control of the data. They can thus replace files easily. With a certification one cannot prevent that the data are being altered, but it will allow you to know if the data are the original ones.

The person who keeps the books is responsible for the accounting and decides whether a change is permissible or not.

Organizing the certification and data verification

Once you locked the transactions of the period, you need to:

• Print the lock information or print the last certified transaction row with its specific certification number (LockProgr).
• Sign and store this information along with the accounting documentation or in any other safe place.

In order to check that the accounting data are the original ones, you need to proceed as follows:

1. Impart the Show lock info command.
2. Go back to the document that shows the digital control number 
3. Check whether the row identified with the LockNum still has the same digital control number

• If the number matches , the accounting data are the same as those certified
• If the number does not match , it means that the accounting data have been modified.      

Banana works on developing applications that make it possible to compare two files and obtain indications regarding data that have been altered.

Data security

Digital certification ensures that the data are still the original ones. It does not prevent the modification of data.
It is the responsability of the accountant to ensure that the data are not altered. Each administration must be organized according to its size and needs.
Those who want to make sure that the data are not being altered by unauthorized persons , must employ other methods and tools, such as :

• Save the data to a secure system (protected network drive), password protected.
• Keep the copies of the data.
• Encrypt archives.   

Long-term archiving

The accounting file contains the entered data. In order to open the file and obtain a report or an account card, you need to have the program at your disposition. 

Banana Accounting gives the possibility to export all the accounting data, and its printouts as well, to Pdf, Html and Xml.
The generated file can be saved on a CD and accessed on any computer even after many years, even by persons who do not have the Banana Accounting software.
 

Print the Balance Sheet with your logo

In the new Banana Accounting Plus version, the Balance Sheet with groups printout has been improved with new customization possibilities. Among the new features, the possibility to insert your logo.

We advise you to immediately switch to Banana Accounting Plus and take advantage of the many new features.

• The Balance Sheet represents all the Assets, Liabilities, Expenses and Income in a specific moment. The difference between Assets and Liabilities gives the personal capital.
• The grouping of the accounts is done according to the contents of the BClass column.
• The Enhanced Balance Sheet, shown in the preview, can be saved in different formats (PDF, HTML, MS Excel) and can be copied in the clipboard.
• In order to calculate, display and print it at the end of year or the end of a period, activate the Enhanced balance sheet command from the Account1 menu.
• Transactions without date are being considered as opening transactions and will not appear in the printouts of the Profit & Loss Statement.
• The following window, in which several printing options can be activated, appears.

See also Print Examples.
 

Page header

Rows 1 thru 4
In this field, enter texts to use as headers when printing.

Print cover page / Print date / Print page numbers
The activated options will be shown in the print-out.

Column header (Balance / Profit and Loss)
The first two vertical fields refer to the Balance Sheet, the two second ones refer to the Profit and Loss Statement.

Current year
Insert the final date of the current accounting.

Previous year
In this field, enter the final date of the previous year's accounting.

Print pages / Include in printout
By selecting the appropriate cells, it is possible to choose the options that should be activated in the printouts.

Other tabs

The explanations for the other tabs are available at the following pages:

• Period
• Style
• Texts
• Margins
• Composition

Results

Print the Balance Sheet with your logo

In the new Banana Accounting Plus version, the Balance Sheet with groups printout has been improved with new customization possibilities. Among the new features, the possibility to insert your logo.

We advise you to immediately switch to Banana Accounting Plus and take advantage of the many new features.

The Balance sheet with groups differs from the Balance sheet for the following characteristics:

• Includes also subgroups in the printout, as in the chart of accounts (and not only groups).
• Offers the possibility to exclude groups or accounts (for instance, to display only the total of the group and not the accounts of which the total is composed).
• In the Chart of accounts - Sections it is possible to select which accounts to include or leave out in the printouts
• It is possible to choose, for a given period, what kind of subdivision you want (for example in the first semester, you can choose wether to obtain the data by month or by quarter)
• It is possible to have a subdivision by segment
• ... and much more!

In order to calculate, display and print the Enhanced Balance sheet by groups, click on the Enhanced balance sheet with groups command from the Account1 menu; a window appears, with different sections that allow the user to define the print setup.

See also Print Examples.

FAQ

• If I exclude the groups with a zero balance, the title rows that refer to the excluded groups are still being displayed; how can I erase them?
  Go to Sections and activate Hide current row on the title rows that you wish to exclude.
• I would like to exclude the display of the period in the titles of the printouts ("1st Semester 2013"); how can i do it?
  Go to the Headers section and deactivate the Print period option.
• On the cover page, when there are long titles, I would like to be able to choose how to subdivide the texts on two rows and whether I wish to apply bold print. Is it possible?
  It is impossible to change the fonts on the cover page.
• Some amounts are not included in the indicated period. Why?
  Transactions without a date are being counted as openings and do not appear in the printouts of the Profit & Loss statement. Be sure to enter the date into all the transactions.
• The Total groups that contain all the accounts of the classes 3 and 4 are being renamed with the text Profit or Loss, depending on the result of the accounting period. Can I change that?
  Go to the Sections and overwrite the original text in the Alternate text zone of the active row.
• In case the Show previous year option is being activated, and in the previous year file there are groups that are no longer present in the current year, the program will give error messages. Can I do something about it?
  In order to print the Balance sheet with data of the previous and the current year, the groups of the previous year have to also be present in the current year.

The account card gives a complete list of the accounting transactions for one or several accounts, cost centers, segments and groupes.

Opening the Account card

There are two methods to open an account card or a category card:

• Select the Account/category Card (Cash book and Income & Expense accounting) command or the Account card (Double-entry accounting) command of the Account1 menu in order to open and print several or all account cards.
• On the account number cell there is a small blue symbol; click on it just once in order to obtain the account card.
  The groups of the Chart of accounts have the same symbol available as well, in order to display the account card.

Updating the accounting card

The account card table is temporary and it is calculated when the command is given to do so. If, in the Transactions table, transactions are altered or added, they are not automatically updated on the account card - the user needs to select the Account Cards command again or click, in the Transactions table, once more on the account number's blue symbol, or in case the account card is still open, click on the small Refresh button on the right side (see image hereunder).

It is not possible to modify the data in the Account card. Double-click on the row number to go back to the original corresponding row of the Transactions or Budget table.

The AccountSelected column

In the AccountSelected column, which can be made visible, starting from any account card, through the Data menu -> Columns setup, the account on which the transaction took place is being displayed.
When you get an account card of one or more accounts, groups and segments, you will see the exact account that has been used.

The contra account in the account cards

In the Account cards, the Contra Account column (C-Acct.), which indicates the account that completes the transaction, is being shown.

When there are transactions on multiple accounts (transactions on multiple rows) as in the example hereunder, and there is one account entered in debit and several accounts in credit, or the other way around, the software deducts the possible contra account using the following logic:

• In the first transaction row, the 1020 account is considered the common contra account of the transactions that follow.

• On the Account card 1020, the composed transaction (Payment various invoices) shows the contra account indicated by the [*] symbol. It is impossible to have the indication of the contra accounts directly in the account card, because the account has several contra accounts (4500, 6700, 6700). For this reason the program indicates the [*] symbol in the C-Acct (Conta-Account) column, which means that we are dealing with a transaction on multiple accounts.

• On the Account cards of the next transaction rows (4500, 6700, 6700), the common contra account is indicated between square brackets ("[1020]"), and indicates a deducted contra account.

Cards of groups and classes

In the Account card of a group or a class, all the transactions of the accounts that belong to the selected group or class are being grouped together.
The accounts of the group or the class can be displayed by making the AccountSelected column visible.

Print all account cards

To print the Account cards:

• Account1 menu, Account cards command
• By means of the Filter, all the account cards that need to be printed completely or partially (for example, only accounts, cost centers, segments) can be automatically selected
• In the various sections Period, Options, Composition, activate the desired options (for ex. period, 1 account per page, ...) 
• Press OK to confirm, after having selected the desired options.

For the explanations of the different tabs, please visit the next few pages: Accounts/Categories tab, Period and Options.
The program will show the selected account cards.

In order to print, choose the Print command from the File menu.

When you have activated the Budget table in your file, you may choose which transactions you want to see (actual transactions or budget transactions).

Save the settings

In case you regularly print the account cards of specific accounts, for example, all those that concern the Sales accounts, it is useful to create a specific composition.

• Go to the Composition tab
• Create a new composition, using the New button
• Indicate the name of the composition, for example "Sales accounts", in the Description field of the window
• Select the accounts that you want to be printed.

Every time you wish to print these accounts, you can select the composition that you created.

Page setup

In Page setup, you can specify the margins & other settings of the page.

New Customization possibilities

In the new Banana Accounting Plus version the Printouts have been improved thanks to the possibility of new customization possibilities.
We advise you to immediately switch to Banana Accounting Plus and take advantage of the many new features.

• This command allows the user to visualize the amounts of accounts with a specific grouping, for a specific period or with a specific subdivision.
• In order to calculate, obtain and print reports, choose the Accounting reports command form the Account1 menu.
• Transactions without date are being considered as opening transactions and will not appear in the printouts of the Profit & Loss Statement.

Base tab

Report
You can select the desired grouping scheme:

• As on Accounts table - the Report will show a list of all accounts just as in the Accounts table with the Opening balance and Balance columns
• Accounts by class - the Report will show the list of the accounts but without subgroups
• External accounting report - the Report will show the data according to a grouping system preset in a separate file (File menu, New command,  Double-entry accounting group, Accounting Report).

Options
You can select the accounts to be included or excluded:

• Show group totals only - only the group totals will be shown
• Include accounts with transactions - only accounts with transactions will be printed
• Include accounts with 0 balance -  accounts with zero balance will be printed as well
• Exclude groups without accounts - groups that contain only accounts with zero balance will not be printed.

Other tabs

The explanations for the other tabs are available at the following pages:

• Period tab
• Subdivision tab
• Composition tab

Report result

A new table is created where the results are shown.

With Banana Accounting the Journal corresponds to the Transactions table. It is possible to print the whole journal or just a part of it, selecting the rows that you wish to print.

In order to personalize the journal printout you can change the columns order and headings: you can find all the information on how to proceed in the Columns setup page; you can also choose several options in the printout; please visit the Page setup page.

There are different ways to print:

• place yourself in the Transactions table and click on the Print icon
• place yourself in the Transactions table and launch the Print command form the File menu
• from the Account1 menu click on the Print journal by period command; in this case you should then indicate if you wish to print the whole table or just a specific period

The information on the Period tab are explained in detail in the Period page of the General settings.
 

In the Sort column tab in is possible to choose the criteria the journal should be sorted and printed.

Avoid mistakes with Banana Accounting Plus

In order to facilitate checking your accounting work and to immediately find differences, in Banana Accounting Plus, our new version, we added the Balance column in the Transaction table. You can now see potential differences on each row and you can correct them right away. It is a very useful feature when closing the accounting period.
Many of our clients have already tried it and are enthusiastic about it. We advise you to switch now to Banana Accounting Plus and take advantage of the many new features.

Differences in the opening balances

At the opening of the Accounting year, the amounts of the Total Assets should correspond to the Total Liabilities, otherwise it is not possible to have a correct balancing. You need to check that in the information window there is no Opening balances difference message. If there is, you first need to correct the opening balances of the Balance Sheet so that the Total Assets balances the Total Liabilities (Opening balance column).

In the following example the program shows an error message reporting a difference of 150.- CHF.

After having corrected the opening balances the Total Assets must correspond to the Total Liabilities.

It is also possible to check the balancing in the Totals table.