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      Unity® Accounting Accounting Methods

      Unity® Accounting Accounting Methods

      The accounting method you use determines how revenue and expenses are recorded in Unity® Accounting.  Two accounting methods are provided for firm operating in Canada and four accounting methods for firms operating in the United States – two methods of accrual accounting (Canada & US) and two methods of cash-basis (US only) accounting.  The method you choose depends on how your firm records revenue and expenses and on the country in which your firm operates.  Your accountant will be able to determine which method is best for your firm.  You must select the appropriate accounting method before you begin data entry and during the initial setup.

      Accrual-basis accounting

      In the accrual method, revenue is recorded when it is earned and expenses are recorded when they are incurred.  Bill are recognized as expenses when you receive them rather than when you pay them.  You can record billings as revenue, or unbilled time (work in progress) as revenue.  If you record billings as revenue, revenue is recorded when you enter bills.  If you record work in progress as revenue, revenue is recorded when you enter fees using the Time Entry program.

      Cash-basis accounting

      In cash-basis accounting, revenue is recorded when it is received and expenses are recorded when they are paid.  For example, bills are recognized as expenses when you pay them, not when you receive them.  Firms using cash-basis accounting typically do not record accounts receivable, accounts payable, or accrued expenses.  Cash-basis and modified cash accounting do not apply to firms operating in Canada.

      To determine which accounting method is in use, select the Accounting tab on the Global Settings screen.  ‘My accounting method is’ code indicates the accounting method that is in use.

      Revenue Type Code Accounting method Available In
      Unbilled as Revenue        Accrual, with unbilled fees (work in progress) recorded as revenue      Canada / USA / Int’l     
      Billed as Revenue Accrual, with billings recorded as revenue Canada / USA / Int’l
      C Cash accounting USA / Int’l
      M Modified cash accounting USA / Int’l

      The program’s automatic journal entries are based on your accounting method.

      Important:  Accounting method cannot be changed after you begin entering transactions.

      Accrued – Unbilled Fees as Revenue

      This topic lists the general ledger control accounts for systems that use accounting method W – Unbilled Fees (WIP) as Revenue. Review this section so that you can configure your Chart of Accounts correctly.

       

      Control account Default  Description

      Client Funds in Trust

      2075

      		 Liability account used to record the total amount of funds for all clients/matters in all trust accounts.

      Professional Fees Revenue    

      4005

      		 Revenue account in which professional services (fees) revenue is recorded.
      Unbilled Fees (WIP Fees)

      1070

      		 Asset account in which daily time entries are recorded.
      Unbilled Disb (WIP Disb)

      1075

      		 Asset account in which daily disbursements are recorded.
      A/R Fees

      1045

      		 Asset account used to record billings for professional fees.
      A/R Disbursements

      1050

      		 Asset account used to record billings for disbursements.
      A/R Fee Write- offs                                     

      5400

      		 Revenue reversal or expense account used to record write-offs of A/R fees.
      A/R Disbursement Write-offs

      6200

      		 Revenue reversal or expense account used to record write-offs of A/R disbursements.
      Unbilled Fee Write-offs

      5405

      		 Revenue reversal or expense account used to record write-offs of WIP fees.
      Unbilled Disbs Write-offs

      6205

      		 Revenue reversal or expense account used to record write-offs of WIP disbursements.
      Fee Variance

      4007

      		 Revenue reversal or expense account used to record the difference between WIP fees and the amount of fees billed.
      Billing Variance Revenue

      4015

      		 Revenue reversal or expense account used to record the difference between WIP disbursements and disbursements billed.
      Retained Earnings

      3520

      		 Account to which revenue and expense accounts are closed out at year-end.
      Accounts Payable

      2015

      		 Liability account used to record payables.
      GST/HST Input Credits

      2053

      		 Receivable account used to accrue Tax 1 paid out by the firm for goods and services. This account may be set up as a liability account, reducing the amount of Tax 1 Collected. Depending on the tax laws in your state or province you may not need to use this account.
      GST/HST Billed/Collected

      2054

      		 Liability account used to accrue Tax 1 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      PST/QST Billed/Collected

      2056

      		 Receivable account used to record Tax 2 amounts paid to the government and then written off. Depending on the tax laws in your state or province, you may not need to use this account.
      PST/QST Credits

      2057

      		 Liability account used to accrue Tax 2 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      Anticipated Disbursements

      6050

      		 Expense account used to record anticipated disbursements posted from Create Pre-Bills & Bills.  Currently not used.
      Trust Clearing  

      1400

      		 Account in which trust checks are recorded if you enter trust transfers to pay A/R and trust checks using the Create Bills program. Write a receipt to deposit the amount to your general bank.
      Retainer Liability

      4008

      		 US Only – Liability account in which client retainers are recorded.  Will not be displayed in a Canadian system.

       

      Accrued – Billed as Revenue

      This topic lists the general ledger control accounts for systems that use accounting method B – Billings as Revenue. Review this section so that you can configure your Chart of Accounts correctly.

      Control account Default  Description
      Client Funds in Trust 2075 Liability account used to record the total amount of funds for all clients/matters in all trust accounts.
      Time Equity 1071 Equity account to which professional fees are entered prior to billing.
      Unbilled Fees (WIP) 1070 Asset account in which daily time entries are recorded.
      Unbilled Disb (WIP) 1075 Asset account in which daily disbursements are recorded.
      A/R Fees 1045 Asset account used to record billings for professional fees.
      A/R Disbursements 1050 Asset account used to record billings for disbursements.
      A/R Fee Write-offs 5400 Revenue reversal or expense account used to record write-offs of A/R fees.
      A/R Disbursement Write-offs 6200 Revenue reversal or expense account used to record write-offs of A/R disbursements.
      Unbilled Fee Write-offs 1071 Revenue reversal or expense account used to record write-offs of WIP fees.
      Unbilled Disbursements Write-offs 6205 Revenue reversal or expense account used to record write-offs of WIP disbursements.
      Billed Fees Revenue 4005 Revenue account used to record professional fees revenue generated when billing.
      Billed Disbursements Revenue 4015 Revenue account used to record revenue generated when billing client disbursements.
      Retained Earnings 3520 Account to which revenue and expense accounts are closed out at year-end.
      Accounts Payable 2015 Liability account used to record payables.
      GST/HST Input Credits 2053 Receivable account used to accrue Tax 1 paid out by the firm for goods and services. This account may be set up as a liability account, reducing the amount of Tax 1 Collected. Depending on the tax laws in your state or province you may not need to use this account.
      GST/HST Billed/Collected 2054 Liability account used to accrue Tax 1 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      PST/QST Credits 2057 Receivable account used to record Tax 2 amounts paid to the government and then written off. Depending on the tax laws in your state or province, you may not need to use this account.
      PST/QST Billed/Collected 2056 Liability account used to accrue Tax 2 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      Trust Clearing 1400 Account in which trust checks are recorded if you enter trust transfers to pay A/R and trust checks using the Create Bills program. Write a receipt to deposit the amount to your general bank.
      Retainer Liability 4008 US Only – Liability account in which client retainers are recorded. Will not be displayed in a Canadian system.

      Cash-based – Cash accounting

      This topic lists the general ledger control accounts for systems that use accounting method C – Cash accounting. Review this section so that you can configure your Chart of Accounts correctly.

      Control account

      Default

      Description

      Client Funds in Trust

      		  

      Liability account used to record the total amount of funds for all clients/matters in all trust accounts.

      Fees Revenue

      		  

      Revenue account in which professional services (fees) revenue are recorded.
      Client Expenses  

      Expense account in which daily disbursements are recorded.
      Billed Disbursements Revenue  

      Revenue account used to record revenue generated when billing client disbursements.
      Retained Earnings  

      Account to which revenue and expense accounts are closed out at year-end.
      Accounts Payable  

      Expense account used to record payables.
      Tax 1 Credits  

      Receivable account used to accrue Tax 1 paid out by the firm for goods and services. This account may be set up as a liability account, reducing the amount of Tax 1 Collected. Depending on the tax laws in your state or province you may not need to use this account.
      Tax 1 Billed/Collected  

      Liability account used to accrue Tax 1 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      Tax 2 Credits  

      Receivable account used to accrue Tax 2 paid out by the firm for goods and services. This account may be set up as a liability account, reducing the amount of Tax 2 Collected. Depending on the tax laws in your state or province you may not need to use this account.
      Tax 2 Billed/Collected  

      Liability account used to accrue Tax 2 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      Trust Clearing  

      Account in which trust checks are recorded if you enter trust transfers to pay A/R and trust checks using the Create Bills program. Write a receipt to deposit the amount to your general bank.
      Retainer Income  

      Income account in which client retainers are recorded.

      Cash-based – Modified Cash accounting

      This topic lists the general ledger control accounts for systems that use accounting method M – Modified Cash accounting. Review this section so that you can configure your Chart of Accounts correctly.

      Control account

      Default 

      Description
      Client Funds in Trust  

      Liability account used to record the total amount of funds for all clients/matters in all trust accounts.
      Fees Revenue  

      Revenue account in which professional services (fees) revenue are recorded.
      WIP Disbursements  

      Asset account in which daily disbursements are recorded.
      WIP Disbursements Write-offs  

      Revenue reversal or expense account used to record write-offs of WIP disbursements.
      Billed Disbursements Revenue  

      Revenue account used to record revenue generated when billing client disbursements.
      Retained Earnings  

      Account to which revenue and expense accounts are closed out at year-end.
      Accounts Payable  

      Expense account used to record payables.
      Tax 1 Credits  

      Receivable account used to accrue Tax 1 paid out by the firm for goods and services. This account may be set up as a liability account, reducing the amount of Tax 1 Collected. Depending on the tax laws in your state or province you may not need to use this account.
      Tax 1 Billed/Collected  

      Liability account used to accrue Tax 1 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      Tax 2 Credits  

      Receivable account used to accrue Tax 2 paid out by the firm for goods and services. This account may be set up as a liability account, reducing the amount of Tax 2 Collected. Depending on the tax laws in your state or province you may not need to use this account.
      Tax 2 Billed/Collected  

      Liability account used to accrue Tax 2 collected from billing. Depending on the tax laws in your state or province, you may not need to use this account.
      Trust Clearing  

      Account in which trust checks are recorded if you enter trust transfers to pay A/R and trust checks using the Create Bills program. Write a receipt to deposit the amount to your general bank.
      Retainer Income  

      Income account in which client retainers are recorded.