Cost Element
A Cost Element is an extra cost that rides on a purchase: freight, customs duty, insurance, clearing. It says how its value is worked out and which side posts where. On an invoice, a cost element that touches the item ledger is added to the cost of the goods.
What it is for
Each side of a cost element posts to an account layer:
- General Ledger: a named account.
- Vendor Ledger: the vendor's account (the vendor is charged or credited).
- Item Ledger: the cost of the item. The invoice spreads it over the lines and revalues the stock.
Both sides cannot be the same layer when that layer is Item Ledger or Vendor Ledger.
Every field in plain words
| Field | What it means | What to put |
|---|---|---|
| Cost Element | The code | Required, unique |
| Name | The name | Required |
| Cost Category | A category for reports | Optional |
| Print Name | The name on printouts | Optional |
| Posting Debit: Account Layer, Debit Account | Where the debit goes | Layer required. The account is filled for a General Ledger layer |
| Posting Credit: Account Layer, Credit Account | Where the credit goes | As above |
| Tax Group | Tax on the cost | Optional |
| Value Drive From | What the value is worked from | Net amount, assessable amount, or a formula. Required |
| Value Drive Formula | The formula | Required when Value Drive From is formula |
| Value Drive From Percentage | The share of that base used | More than zero. 100 for the whole base |
| Currency | The cost's currency | Optional |
| Default Allocation Base | How it is spread over lines | Fixed, Percentage, Amount, Quantity, Weight or Volume |
| For Assessable Calculation | Counts toward the assessable value of an import | Tick for duty-bearing costs |
How to configure it
- Freight paid to the goods vendor and added to stock: Debit Item Ledger, Credit Vendor Ledger.
- Freight paid to a transporter separately: Debit Item Ledger, Credit a General Ledger accrual account.
- Duty as 10 percent of the assessable value: Value Drive From assessable amount, Allocation Base Percentage, value 10.
Scenarios
- An importer adds freight, insurance and duty. Three cost elements, each Debit Item Ledger. They come onto the purchase order and the invoice, and land in the item cost.
What it is connected to
- Auto Cost Elements: brings cost elements onto documents by themselves.
- Cost Element Group.
- Vendor Invoice: the cost element windows.
If something looks wrong
- "Value Drive From cannot be empty", "Value Drive From Percentage cannot be smaller then or equal to zero".
- "Cannot save both Account layer with Item Ledger", "Cannot save both Account layer with Vendor Ledger".
- "Cannot save General Ledger Debit Credit same account".
- "Cost Element Cannot be Duplicate".
- "Formula cannot be empty when Value Drive From is Formula".