Budget information can be entered for any income or expense account. There are two options when entering budget information:
| • | Fixed monthly budget - Use this option when your estimates for an account are relatively fixed. For instance, your monthly rent is a fixed item. The monthly fields can be populated with the same amounts or changed at the users discretion. These fields are entirely flexible. |
| • | Variable percentage budget - Use this option when account activity is based on a percentage of another account. For instance, many accounts can be estimated as a percentage of sales. |
There is enough room in the percentage budget entry process to allow you to do some illogical things that will make your budget report useless. Allowing flexibility opens the door to mistakes. Here are a few guidelines to keep you on track:
| • | The budget reference account when entering a percentage budget should always be a fixed budget account. |
| • | Watch out for circular references. The budget reference account can never be an account that the account you are working on totals into. For example, it would be invalid to have a general account called sales and define one of the detail accounts that totals into sales with a percentage budget based on the general sales account. |
Once the budget information is entered, go to the Accrual Basis General Ledger to view budget related reports.
We will now enter some budget information, for use in the General Ledger financial reports.
From the Accounting Node select Ledger > Chart of Accounts.
Find the record for account number 5300 Office Rent.
Click Fixed monthly budget in the Budget Information section at the bottom of the window.
Enter 1943.72<Tab> for the Period 1 budget amount.
Notice that the amount we entered in Period 1 has been carried down to the successive periods.
Press the <Tab> key until the focus moves to Period 6.
In June, our rent will increase to 2020.42.
Enter 2020.42<Tab> for Period 6. Notice that the updated amount has been carried to the remaining periods.
The budget we just entered was for a Detail Account, but you may also enter budgets for General Accounts. Be careful not to duplicate amounts. The Budget Reports will total the budgets for all levels.
If you entered $300 per month for General Account 570 - Outside Services, and entered $50 per month for account 5702 Accounting Services, (a Detail account that totals into account 570) the total budget for account 570 would be reported as $350.
Let’s enter one more fixed budget account.
Find account number 4000, Product Sales – Brokerage, and enter a fixed budget of $81000 per month.
Now find account number 5000, Product Purchased – Brokerage. We are going to set the budget for this account as a percentage of our sales in account 4000.
This time, click Variable percentage budget in the Budget Information section at the bottom of the window. Enter account 4000 <Tab>for the budget reference Account.
Enter 65 <Tab> for the Percent.
The steps above will cause our item purchases to be budgeted at 65% of our sales.
