Cost Codes

Cost codes (also called profit centers in some systems) allow adding an additional dimension to accounting entries. Working with cost codes is recommended when there is a fixed list of expenses that repeats itself. The disadvantage of cost codes is more complex accounting entries.

Example – for a company that manages a vehicle fleet, there is a list of expense accounts for each vehicle (fuel, insurance, etc.). In order to track each vehicle, we would need to open this list of expense accounts for each vehicle, which creates a cumbersome index. In this case, it would be preferable to open a single cost code for each vehicle and make sure that in the accounting entry, the cost code is entered in addition to the expense account entry.

The system automatically pulls the cost codes created in bookkeeping. In order to enable working with cost codes in the system, you should ask support to enable this option for your company.

Example of journal entries for a purchase invoice totaling 117 (100+17 VAT)****

Cost code A 60, Cost code B 40

=

Debit expense Cost code A 60

Debit VAT Cost code A 10

Credit supplier Cost code A 70

Debit expense Cost code B 40

Debit VAT Cost code B 7

Credit supplier Cost code B 47