How To Set Chart Of Accounts For Business Expense?

Hello! :slight_smile:

Just trying to get my head around the accounting system in ERPNext. I used Plaid to import my bank transactions and now I am trying to fill in the other bits.

I created a Purchase Invoice for a bank transaction - license for a software I use.

And within that Purchase Invoice I created an Item for the license

I then created a Payment entry attached to the purchase invoice

But when I look in Profit/Loss statement the Chart of Accounts it is associated with is Cost Of Goods Sold - where as it should be something more approrpiate. Where do I change that value?

I unticked the Manage Stock option in the Item field, as I believe I should do for all things that are not tangible, or things to be sold on etc?

Kind regards,

Should I perhaps be using a Journal Entry instead of a payment entry?

I tried this with another transaction - but I was unsure what to set the Debit and Credit accounts to.

Should I Debit the bank account I used to pay for it and Credit the expense account?

Open your Item “Software License”, and in the section “Sales, Purchase, Accounting Defaults” open the row for your company. Use the field “Default Expense Account” to set the appropriate account for this expense.

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It all makes sense now! I didn’t know you could expand that element to see more options. Thanks a ton!:slight_smile:

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