When implementing or changing your general ledger accounts, planning is the first and most important step. It's imperative that you clearly define the accounting guidelines you will follow and identify all significant reporting requirements before moving forward.
For example, your revenue/cost recognition policy for jobs and service may state:
The company follows accrual based accounting principles and recognizes revenue/costs when jobs and service tickets are closed. A deferred revenue liability account is credited when jobs and service tickets are invoiced. Work in process (WIP) is debited as costs are incurred for parts, labor, commissions and other items. Deferred revenue is moved to revenue and WIP is moved to cost of sales when a job or service ticket is closed.
Here is a partial list of issues to consider:
- Recognition of revenue/costs
- Method of costing parts
- Definition of costs to be included in the labor cost rate
- Treatment of variances between standard and actual costs
- Treatment of parts overhead (i.e. freight), wire, subcontractor charges, third-party charges (i.e. permits)
- Profit center and departmental accounting
After formulating your answers, you'll be able to create a chart of accounts and design a set of financial statements that will accommodate all of your requirements.