Accounting Methods

The accounting method you use determines how revenue and expenses are recorded in Unity® Accounting. This is setup when you create a new company under File > New / Create Company > Financial Settings.

Two accounting methods are provided for firms operating in Canada. Both are Accrual Based Accounting methods.

Accrual Accounting – Billed as Revenue
Accrual Accounting – Unbilled as Revenue

The method selected, depends on how the firm records revenue and expenses. The Accountant will be able to determine which method is best for the firm. Select the appropriate accounting method during the initial setup and before entering data.

Important:

Accounting method cannot be changed after users have began entering transactions.

Accrual-Based Accounting Methods

In the accrual method, revenue is recorded when it is earned, and expenses are recorded when they are incurred. Bills are recognized as expenses when received them rather than when the firm pays them. Billings can be recorded as revenue, or unbilled time (work in progress) as revenue. If billings are recoded as revenue, revenue is recorded when bills are entered. If work in progress is recorded as revenue, revenue is recorded when a user enters fees using the Time Entry program.

Option 1

Accrual Accounting – Billed as Revenue

Listed below are the general ledger control accounts for system’s that use Accrual Accounting – Billed as Revenue.

Review this section to configure the firm’s Chart of Accounts.

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 Disbursements (WIP)	1075	Asset account in which daily disbursements are recorded.
Accounts Receivable - Fees	1045	Asset account used to record billings for professional fees.
Accounts Receivable -Disbursements	1050	Asset account used to record billings for disbursements and TAX.
Write-off – Billed Fees	5400	Revenue reversal or expense account used to record write-offs of Accounts Receivable fees.
Write-off – Billed Disbursements	6200	Revenue reversal or expense account used to record write-offs of Accounts Receivable disbursements.
Anticipated Disbursements	6050	Client Recovery account used to record Anticipated Disbursements
Write-off – Unbilled Fees	5405	Expense account used to record write-offs of unbilled (WIP) fees.
Write-off - Unbilled Disbursements	6205	Expense account used to record write-offs of unbilled (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	Liability account to record TAX Receivable (GST/HST) billed on goods and services.
GST/HST Billed/Collected	2054	Liability account used to record TAX Payable/Collected from client billings.
PST/QST Credits	2057	Liability account used to record TAX Payable written off on client billing. Depending on the TAX laws in the province/territory, the firm may not need to use this account.
PST/QST Billed/Collected	2056	Liability account used to Tax Payable collected from client billing. Depending on the TAX laws in the province/territory, the firm may not need to use this account.
Trust Transfer Clearing Account	1400	Asset account used to track the trust transfer process. Trust Cheques are recorded if entered as “Trust Transfer to Pay Bills” or using the “Create Bills” applying available Trust Funds to the bill. These Trust Cheques are offset/cleared against the General Bank receipt.
Suspense	9999	Expense account reserved for the software. This account will be used during any disruption during posting in order to keep the posting debit & credit. If there are any transactions posted in GL 9999, a journal entry is required to move the amount to the relevant GL.

Option 2

Accrual Accounting – Unbilled Fees as Revenue

This topic lists the general ledger control accounts for system’s that use Accrual Accounting – Unbilled Fees as Revenue.

Review this section to configure the firm’s Chart of Accounts.

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.
Billed Fees Revenue	4005	Revenue account used to record professional fees revenue generated when billing.
Unbilled Fees (WIP)	1070	Asset account in which daily time entries are recorded.
Unbilled Disbursements (WIP)	1075	Asset account in which daily disbursements are recorded.
Accounts Receivable - Fees	1045	Asset account used to record billings for professional fees.
Accounts Receivable -Disbursements	1050	Asset account used to record billings for disbursements and TAX.
Write-off – Billed Fees	5400	Revenue reversal or expense account used to record write-offs of Accounts Receivable fees.
Write-off – Billed Disbursements	6200	Revenue reversal or expense account used to record write-offs of Accounts Receivable disbursements.
Write-off – Unbilled Fees	5405	Expense account used to record write-offs of unbilled (WIP) fees.
Write-off - Unbilled Disbursements	6205	Expense account used to record write-offs of unbilled (WIP) disbursements.
Fee Variance	4007	Revenue account used to record the difference between WIP fees, and the amount of fees billed.
Billed Disbursements Revenue	4015	Revenue 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	Liability account to record TAX Receivable (GST/HST) billed on goods and services.
GST/HST Billed/Collected	2054	Liability account used to record TAX Payable/Collected from client billings.
PST/QST Billed/Collected	2056	Liability account used to Tax Payable collected from client billing. Depending on the TAX laws in the province/territory, the firm may not need to use this account.
PST/QST Credits	2057	Liability account used to record TAX Payable written off on client billing. Depending on the TAX laws in the province/territory, the firm may not need to use this account.
Anticipated Disbursements	6050	Client Recovery account used to record Anticipated Disbursements
Suspense	9999	Expense account reserved for the software. This account will be used during any disruption during posting in order to keep the posting debit & credit. If there are any transactions posted in GL 9999, a journal entry is required to move the amount to the relevant GL.
Trust Transfer Clearing Account	1400	Asset account used to track the trust transfer process. Trust Cheques are recorded if the user enters “Trust Transfer to Pay Bills” or using the “Create Bills” applying available Trust Funds to the bill. These Trust Cheques are offset/cleared against the General Bank receipt.