Understanding General Ledger Sets

[COBS Tech Support]

What is a General Ledger Set?

A general ledger set is a table of 'cross references' that acts as the connecting link between your sub ledgers and your general ledger. You can create as many sets as you need and typically each set will serve some specific purpose in telling the general ledger which transaction is posted into an account found in your general ledger.

Why Use Them?

What is the purpose of general ledger sets? Well, many accounting programs - typically the simpler ones -- give you the ability to specify how a particular product item or account is to be treated by your general ledger. For example, you must want to treat a non-diminishing product item that you have created as a freight charge, rather than a product sale. In that case you would specify the general ledger code for 'sales' and assign it to 'freight charges'. You might also assign cost of goods sold to 'freight fees' or similar in your chart of accounts.

While this approach is simple, it can be lot of work later on to maintain and manage. If you change or expand your chart of accounts in the future, you will then also need to remember to change all the affected accounts in your product areas. Sometimes this can result in a lot of work.

So in order to avoid this future problem the concept of a general ledger set was introduced. For example, you could create a set called 'Freight' and then assign 'Sales' and 'Cost of Sales' to those accounts in your chart. Then the next step would be to assign that GL Set code to your product item. Later on, if you then need to make changes to your chart of accounts, you won't need to find and correct your affected product items. All you would need to do is adjust the GL code assignments in the set 'Freight'. A big job becomes a small job.

How to Manage Sets

A general ledger set is made up of a set code, a set description (this is so you can describe it so that it will be easier to remember) and a series of 'posting assignments'. To view, add or edit your general ledger sets do the following:

1. Start CAPITAL Business Manager.
2. Open the General Ledger area.
3. From the General Ledger menu select Manage|General Ledger Sets.

A set code can be up to 8 characters or numbers long.

An Example

Using the above freight example, in order to link a product item to your freight posting accounts in your general ledger you would:

1. Go to the General Ledger Sets area and create a new set. For the sake of the example you might assign this the code 'Freight'.
2. You would then edit the Freight set and assign its various posting areas such as 'Sales' to the general ledger set that tracks freight charges.

TIP: It is always easier to copy an existing set rather than set one up from scratch. It is recommended that you copy Set 0 and modify this as needed.

3. Once you've created your set, locate the product items you wish to affect, and enter the code 'Freight' against the 'GL Set' of the applicable records.