Any "best practices" for the use of header vs detail accounts?

Well...   There was a reason you came up with the Sub Accounts in the first place to keep things straight.  So why are your going against your own standards?

You can just post to the header and it will come up as "Other" on the reports.  But whenever I see this I assume something did not end up in the correct Sub Account.  So maybe you could create a "General" or some other named Sub Account so that there is no doubt by anyone else looking at the reports to wonder why a transaction is not in a Sub.

Thanks @Pete_Mc 

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@Pete_Mc wrote:

Well...   There was a reason you came up with the Sub Accounts in the first place to keep things straight.  So why are your going against your own standards?

Not sure I follow. I'm not adhering to any standard I know of, mine or otherwise. And the reason I came up with Sub Accounts is the usual one -- to group transactions into different levels of hierarchy so that at reporting time I can choose whether to have a coarse-grained view of things, fine-grained, or whatever.

But the question as to whether or not to post transactions to headers cuts across all that. Thing is, I have seen it done both ways, and I've seen different accounting software handle it differently. Some packages simply don't permit posting to Headers; some, like QuickBooks not only permits it, but even provides a consistent mechanism for reporting where Headers contain transactions. (e.g. QB knows when to roll up and when not to, depending not only on the account hierarchy but also what your current view is in a report.

So it can work both ways, but I just wondered if anyone had any opinions as to one way being superior to the other. For example:

Pro allowing Header posting:

Allowing Headers to have transactions means there is no need for any "Other" accounts in the various groups.  The Header account itself effectively becomes "Other" and QuickBooks knows to report on it as such. So in a P&L report you might see:

-------- 61220 Temporary Offices

------------ 61221 City Center

------------ 61222 Outside City

------------ 61220 Temporary Offices - Other

If displayed non-collapsed like that, then the topmost mention of 61220 would have zero against it and the bottommost one -- the one with "Other" appended (automatically by QB) to the end of the name, would show the value of the transactions posted directly to the Header.

BUT

Anti-allowing Header posting:

Sometimes we may want to relocate one of a Header's sub-accounts (either a detail, or another sub-tree) to a different Header. That can be slightly easier if we know for sure that Headers never contain transactions.

Okay, I thought you organized the Chart of Accounts.  So that's why I thought it was your "standard" for breaking things into Sub Accounts.  I always do it for things like Loans.  So even though one may have been paid off and closed, if you do a new construction project or anything else that requires a loan, all transactions for that loan are in one account, not mixed with others. 

Similar to what you've appear to have done.

There is no absolute.  But if you're looking for "Best Practice" then my recommendation would be that if there was a reason to create Sub accounts, then stick to it under that primary heading.  Cononsistency is always a key factor in Best Practice for me. 

Also, I think it just makes things clearer when someone else looks over the books or someday takes over for you. 

Hey Pete,

Again, thanks for taking the time to reply. However, I think we're still at crossed purposes. My question isn't whether or not to have sub-accounts. In all of my companies, we alway have had, still do, and will continue to have an account hierarchy. The one I'm working on has three levels. That's all fine.

The question is, given that some accounts have subs, but some do not, should we make a rule that says, in effect, "No posting to accounts with subs"

Couple of practical examples.

In one of the companies I've run, I got involved well after the CofA had been established, and the accountants who'd set things up for them told them never to post to headers -- i.e. if an account had a sub, you weren't allowed to post to it. And in fact all header accounts had "(H)" at the end of their name, so as to remind people not to post there.

By contrast, in another firm, their approach was not only to allow header posting, but in fact they had a rule that said you should not have any catchall "Other" accounts. So in the following:

1 TRAVEL

1.1 Airfare

1.2 Accommodation

1.3 Ground Transport

1.4 Meals and Incidentals

1.5-8 (others, I forget)

1.9 Other travel

That 1.9 account was not allowed. But what that meant was that if you did have to book a travel expense that didn't fit into any of 1.1 to 1.8, you were supposed to post it directly to the header account, "1 Travel". 

So one setup forbade posting to headers, while one effectively required it. 

I mean, what do you yourself do? Do you allow posting to accounts that themselves have sub accounts? Or do you only ever post transactions to accounts with no subs?

thx.

Hey @Pete_Mc ,

> I (personally, no accounting precedent here...) believe that if you're going

> to have Subs for those categories that that make sense, then ALL entries

> go in a Sub, NOTHING should be put in the Primary/Header Acct.  But

> again, some CPA class may tell you different.

>...

> I disagree that you should not have an Other Travel when you look at the

> report and the stuff you put in the Header is called Other anyway.  But

> transaction that maybe should be in 1.1-8 might get lost in the "Other"

> if they're accidentally put in the Header.

I think you're right, and I've just found a good reason to break what was for me the tie between the two methods. And your comment about something getting lost in "Other" pretty much nails it.

And that reason is that Intuit appear to have changed the way this whole thing is handled when comparing QB Desktop vs QB Online. As a result, if you have any transactions in a Header account, then when you migrate -- or even just try to compare -- there is a lot of scope for confusion. I've just found that QB Online does not report transactions directly to the Header account as being in that virtual "Other account. That's just a QB Desktop thing. Instead, QB Online simply reports any direct-to-the-Header right on the Header line itself. So while in QB Desktop a (non-collapsed) P&L report might have:

-------- 61220 Temporary Offices                       

------------ 61221 City Center                                $2,000.00

------------ 61222 Outside City                              $1,000.00

------------ 61220 Temporary Offices - Other     $1,000.00

In QBO that same report would instead have:

-------- 61220 Temporary Offices                        $1,000.00

------------ 61221 City Center                                $2,000.00

------------ 61222 Outside City                              $1,000.00

That in itself is annoying, but there is a situation where it could be even worse than that. 

But anyway, the problem just doesn't exist if the approach you advocate is taken -- i.e. as you said:

> So again, my Best Practice is that if you need or decide to have Subs

> for any reason, ALL transaction in that Acct should be in a Sub.

Yup.

Well done my friend. If we don't hear from any of the CPAs or GAAP experts telling us why we're wrong, I think we can conclude that what we've converged on IS the best practice! :-)

thanks for your help.

we have a header for Food Expense with other entries below, but we have an entry amount in the ones below with the header number assigned, and we did not make this entry; it just appeared. 

Example:

65042 Food Expense.   

   65041 Food Supplies. 7,182.13

   65045 reimbursement   -298.00

   65047 Misc.                         20.50

   65042 Food Expense.  5,916.74. (WHICH WE DID NOT INPUT...IT JUST SHOWED UP). 
Total 65042 Food Expense.  12,821.37

Anyone have any ideas how that 5,916.74 appeared????

Thanks!

Thank you for joining this thread, Coxjandj,

Someone may have accidentally created categorize transactions under 65042 Food Expense. That's why a total of 5,916.74 appeared in this section.

You'll want to click the amount to see what transactions are created. Then, change the account from there when necessary.

You can also use the Audit log feature in QuickBooks Online. It records the following activities:

• The date of any change to your books
• The name of the user who made the change
• The type of change or event
• The name of any customer or vendor related to the change
• Any original transaction date and amount

Feel free to read through this article: Use the audit log in QuickBooks Online for more details and how to use it.

Keep me posted if there's anything else I can help you. I'm always right here to help.