Costing to Job Costing and General Ledger

When cheques have been issued, you can cost the payroll costs to the general ledger and job cost centres. This is a process where transactions are created from the cheques to their target accounts and job centres.

What are Transactions?

Transactions are records of money that will add to or take money away from g/l accounts. Note that this utility only creates transactions. You, or someone with responsibility for updating the G/L, will be able to review them before updating them to the general ledger. The G/L is updated with the transactions when you run the G/L Trial Balance and Update utility.

When you drill down into a general ledger account, you can see how all the money came and went from the account. That’s because Abio creates transaction records to record when costs are posted to general ledger accounts.

Transactions always net out to zero, so when amounts are credited to one account, they’re debited from another account. For example, money is taken out of the bank and added to wages payable.

When are Transactions Created?

After cheques are issued you can cost the transactions to the G/L. Navigate to [c] Payroll, then [k] Cost to J/C and G/L.

Running this utility will create transactions for all the component parts of the payroll.

General Ledger Transactions

You can define which accounts the payroll components are posted to. Navigate to [d] General Ledger, then [u] Set Up, then [f] Control Account Entry to review the account assignments.

The first tab has all the payroll assignments.

Transactions for Individual Cheques

When you run the ‘Cost to G/L and J/C’ the following transactions are created for each cheque in the payroll run:

  • If the cheque is for an employee, then the net pay is taken out of the bank account.
  • If the cheque is for a subcontractor, then the net pay is taken out of the subcontractor owing account. That account will be cleared when an accounts payable invoice is posted to it to pay the subcontractor. The invoice will be generated on your behalf when payroll is transacted.
Cheque Summary Transactions

The following cheque amounts are accumulated as ‘Cheque Summary’ transactions and posted once each time payroll is transacted:

  • The net amount of advances and repayments are posted to the advance/repay account.
  • The net amount of earnings from all cheques are posted to the wages payable account. This includes hourly earnings, travel, taxable and non-taxable living out allowance, taxable and non-taxable mileage, taxable and non-taxable site allowance, other taxable pay, vehicle allowance, retro pay, pay in lieu of notice, turnaround, taxi, meal, non-taxable living.
  • The net amount of fringe expenses are posted to the fringe recovery account. This includes CPP, the employer’s portion of EI, the employer’s union remittance, WCB, provincial employer taxes, vacation, statutory, training, employer RRSP contributions, personal safety, group safety, staff safety, production bonuses, small tools (smtc), incentives, and union and employer RRSP pay outs.
  • The net amount of CPP is posted to the CPP payable account.
  • The net amount of EI is posted to the EI payable account.
  • The net amount of income tax is posted to the employee income tax account.
  • The net amount of insurance is posted to the insurance payable account.
  • The net amount of training is posted to the training payable account.
  • The net amount of personal safety is posted to the personal safety account.
  • The net amount of group safety is posted to the group safety account.
  • The net amount of staff safety is posted to the staff safety account.
  • The net amount of small tools allowance (smtc) is posted to the small tools account.
  • The net amount of incentive is posted to the incentive account.
  • The net amount of production bonus is posted to the production bonus account.
  • The net amount of retention is posted to the retention account.
  • The net amount of recruitment is posted to the recruitment account.
  • The net amount of charity is posted to the charity account.
  • The net amount of security deposit is posted to the security deposit account.
  • The net amount of employer payroll tax is posted to the account specified on the Employer Payroll Tax tab on the Provincial Tax Entry screen.
  • The net amount of employee payroll tax is posted to the account specified on the Employee Payroll Tax tab on the Provincial Tax Entry screen.
tIMESHEET amounts

Timesheets posted to G/L accounts are summarized and posted to those G/L accounts.

Timesheets posted to jobs are summarized and added to the Job Costing labour costs account.

Timesheets posted to Equipment are summarized and posted to equipment costs.

Any GST recovery on timesheets is posted to the GST recovery account.

The fringe expense associated with job costs is taken out of the fringe recovery account.

The wages component of timesheets is taken out of wages payable.

Labour Corrections

When payroll is transacted, the labour dispersion rules are applied and job costs are moved to the centres indicated by the dispersion type.

This allows you to move timesheet components, such as meals or living out allowances, to different cost centres than the timesheet is posted to. This will isolate labour costs from other overhead, giving you a clearer picture of the cost of actually doing the work.

We cover this in more detail in the course on Job Costing.

Transaction Reports

A single payroll run can generate hundreds of transactions. In their entirety they can be overwhelming. But transactions are how Abio is able to give you continually more detail about all the costs and expenses that contribute to an account balance.

Drilling down into a period balance for any account gives you a list of all the transactions posted to that account in that period. We looked at one example of that when we were setting up trade unions.

Let’s look at one of the payroll accounts for another example. We can drill down into wages payable.

Which brings us the G/L Account entry screen.

Drilling down into May brings up all the transactions for May.

If we double click on the selected line, we see all the timesheets in the timesheet summary, and the earnings for the timesheets match the timesheet summary.

We can go one further and drill down into the individual timesheets.

We can review transactions by drilling down from entry screens and reports, but Abio also lets you select your own criteria. Navigate to [d] General Ledger, then [i] Transaction Reports. There are four varieties of transaction reports.

Account Transactions
Job G/L Activity by Source
Job Cumulative G/L Activity
Job Revenue Activity by Client