Bookkeeping Concepts in Sage

Overview

This lecture introduces key bookkeeping concepts using Sage Business Cloud, focusing on managing nominal codes, chart of accounts, and exporting financial data.

Introduction to Nominal Codes in Sage

• Sage uses a unique four-digit numerical coding system for all nominal (ledger) accounts.
• The chart of accounts is Sage’s list of nominal codes, grouped by ranges that link to financial statements.
• Users can add or amend nominal codes, but must ensure codes fall into the correct range to avoid errors in financial reporting.
• “Ledges” in this context refers to individual accounts within the nominal ledger.

Creating a New Nominal Code

• To add a new nominal ledger account, go to Settings > Financial Settings > Chart of Accounts.
• Check if the desired code (e.g., 7501 for Postage) is unused and falls within the correct range (expenses start with 7).
• Click "New Ledger Account" to enter the account name, display name, code, and select the correct category (e.g., Overheads).
• Assign a VAT rate; this can be overridden during transactions.
• Ensure the new account is visible and included in the chart of accounts before saving.

Amending an Existing Nominal Code

• Access Settings > Financial Settings > Chart of Accounts to view all accounts.
• Highlight and select the account to edit (e.g., changing "Postage" to "Postage and Other Services").
• Update the name and any other details as needed, then save changes.
• Verifying correct code, category, VAT rate, and visibility avoids misreporting in financial statements.

Exporting the Chart of Accounts

• The full chart of accounts can be exported to a CSV file for use in Excel.
• Use the export function in the Chart of Accounts screen to download and review account data in spreadsheet form.

Importance of Correct Coding

• Correctly assigning codes ensures expenses and revenues appear in the right sections of the statement of profit or loss and statement of financial position.
• Misplaced codes can cause errors in financial reporting.

Key Terms & Definitions

• Nominal Code — a unique four-digit number assigned to each account in Sage.
• Chart of Accounts — the complete listing of all nominal codes/accounts in Sage.
• Ledger Account/Ledge — an individual record within the nominal ledger.
• CSV File — a spreadsheet format used for importing/exporting data.
• Statement of Profit or Loss — also called the income statement, shows business performance over a period.
• Statement of Financial Position — also known as the balance sheet, shows assets, liabilities, and equity at a point in time.

Action Items / Next Steps

• Review the chart of accounts ranges in your learning materials.
• Practice creating and amending nominal codes in Sage Business Cloud.
• Familiarize yourself with the process to export account data to CSV format.
• Contact your tutor on the student community forum with any questions.