Hierarchy of default accounts

The hierarchy of default accounts provided by Zenskar is described in this article.

📚

Definition

In Zenskar, a business entity (or entity) is a company wholly controlled by another company called a holding company or parent. A business entity is also known as a subsidiary.

In Zenskar, an organization is the holding company or parent that wholly controls all business entities.

Assets

• Cash: a type of current asset account for all money owned by the entity.
• Accounts receivable: money that an entity expects to receive for services and products already delivered.
  • Payment gateways: money than an entity expects to receive from payment gateways.
  • Customers: money that an entity expects to receive from its customers.
• Unbilled revenue: money that an entity has earned by providing services or products but has not billed its customers for.

Liabilities

• Customer wallet: balance that a customer can use as an offset against billed amount.
• Accounts payable: money that an entity must pay to its vendors. Typical payable items include supplier invoices, legal fees, contractor payments, and so on.
• Deferred revenue: also known as unearned revenue, deferred revenue is a type of contract liability that denotes money that an entity has billed its customers for but has not earned it yet by delivering the goods or services.

🚧

Note

Deferred revenue is considered a liability to the entity because there is a possibility that the service or product may not be delivered, or the customer might cancel the order.

Deferred revenue is the opposite of unbilled revenue.

• Sales tax: money that an entity must pay as taxes in appropriate tax jurisdictions.
• Contra accounts receivable: in general, a contra account reduces the value of a related asset account. In Zenskar, contra account accounts for money that an entity must pay to other entities in the form of refunds, thereby reducing the value of cash account:
  • Customers: refund amount to be paid by an entity to its customers.
  • Payment gateways: refund amount to be paid by an entity to a payment gateway.

Income

• Sales and services revenue: the default revenue account for accrued revenue of the entity from its main activities like sales and services.
• Other revenue: the alternate revenue account for accrued revenue of the entity from side activities that is unrelated to the entity's day-to-day activities, such as dividend income or profiits from investments.

Expenses

• Sales returns and allowances: expenses due to sales returns or promotional allowances given to customers.
• Tax withheld: tax paid by an entity on behalf of the customer.
• Payment gateway fees: expense incurred due to payment gateway charging some transaction fees.