If you want to be precise in your accounting, you will likely have a large number of accounts to describe each type of income, expense, asset or liabilities that you wish to follow. This can make any analysis tricky, unless we organize the accounts in a way to consolidate those of the same type into a nice summary line. For instance, you may want to track your gas, electricity, water and telephone bills. At the same time, it can cloud the larger picture. What if we could put all those expenses in a bigger folder, named ‘Utilities’?.
BudgetInMind uses 5 hierarchical levels:
- The Account is the primary envelope carrying a given type of expenses, such as Cell Phone, Electricity, …
- A Subclass holds a set of Accounts, such as Utilities, Food & Home, …
- A Cluster holds a set of Subclasses, such as Recurring Expenses, Food & Home, …
- A Class holds a set of Clusters. There are 5 Classes: Income, Expenses, Assets, Liabilities, and Special.
- A Type holds a set of Classes. There are 3 Types: Income Statement, Balance Sheet, and Special.
We recommend that you use the hierarchy to organize your accounts.
Tip: Use the new file wizard to create an overall structure. This will give you a very good organization to start from.
Naming accounts in the Book
Since there are five levels of hierarchy, an account is uniquely identified with its full path Type:Classe:Cluster:SubClass:Account. However, it would be very tedious to enter this full chain everytime you want to enter a transaction.
BudgetInMind simplifies the transaction entry by requiring that unicity is made on SubClass:Account. For instance, BudgetInMind uniquely identifies the Gas account by selecting Utilities:Gas in the example above.
This requires that Types, Classes, Clusters, and SubClasses to be unique. Said differently, if you name a subclass Utilities, you cannot name any other subclass in the hierarchy Utilities, same for Clusters, Classes and Types. In practice, it is not an issue, since the only places where you want to have several times the same name is on Accounts as shown below.
Class is BudgetInMind‘s main visible hierarchy object. There are 5 classes, and they cannot be changed. Any account will belong to one of these classes. These classes configure each account’s behavior (increase on credit, balance yearly reset, cumulative sign for the result calculation).
- Assets: Holds all your assets accounts, such as Banks, Customer, Immobilization, etc…
- Liabilities: Holds all your liabilities accounts, such as Debt, Suppliers, Capital, Reserves, etc…
- Expenses: Holds all your expense accounts, such as Food, Gas, Electricity, Clothes, etc…
- Income: Holds all your income accounts, such as Wage, Bonus, Dividends, Interests, Capital Gains, etc…
- Special: Holds special accounts, used by BudgetInMind.
Cluster is BudgetInMind‘s first fully customizable level. You can create as many clusters as you wish. They are solely for aggregation purposes and while you must created at least one per Class, you can elect to hide this level if you feel there are too many levels and you have a simple accounting system.
Remember: Clusters must be unique. There can be only one cluster with a given name.
The SubClass level is also extensively customizable. You can create as many subclasses as you wish. They are very important since every account will be identified by its fullname Subclass:Account. The figure below shows an example of a possible subclass structure (in bold black).
Caution: Some subclasses are protected by BudgetInMind since automated entries can be made or because BudgetInMind expects that subclass to exist. You cannot change their name, or delete them.
The protected subclasses are:Bank, Customer, Supplier, Capital Funds, Profit or Loss, Asset Revalorisation, Financial Fees, Stock Gains,and Liaison.
These subclasses are marked by an asterisk (*) in the above figure.
The Account level is the placeholder of all the actual accounts. It is the lowest hierarchical level and the smallest granularity. It is also extensively customizable. You can create as many accounts as you wish. The figure below shows an example of a possible account structure (in plain black).
An Account hold monthly amount, balance, forecast, and you can control their visibility for each {User, Year, Currency}. All your book entries are made on accounts.
Since BudgetInMind allows accounts to have the same name, but since we must ensure unicity of an account, each account will be identified by its fullname: Subclass:Account. For instance, John’s Wage account is Wages:John, the liaison account between Chase Bank and ETrade Bank for interbank transfer is Liaison:Chase – ETrade, the electricity account is Utilities:Electricity, and John and Linda’s clothing expense accounts are respectively John:Clothes and Linda:Clothes.
Caution: Some accounts are protected by BudgetInMind that generated automated entries for these accounts. You cannot change their name, or delete them.
The protected accounts are:Capital Funds:Capital, Capital Funds:Profit or Loss, and Profit or Loss:Operating Income.
These accounts are marked by an asterisk (*) in the above figure.