Projects — Complete User Guide — Two Accounts Web

Comprehensive guide for managing projects, tracking project income and expenses, and analyzing project profitability

Table of Contents

1. What Are Projects?
2. Enabling the Tab via Customize Menu
3. Field-by-Field Guide
4. Creating a Project
5. Using Projects on Transactions
   • Where the Project Field Appears
   • Income Classification
   • Cost Classification
   • Projects vs Divisions
   • LC-Related Transactions and Projects
6. Project Reports
   • Project Listing
   • Project Profit and Loss Report
   • Income Drill-Down
   • Cost Drill-Down
   • Purchase Orders Grid
7. Accounting Impact
   • How Income and Costs Are Classified
   • Profitability Calculation
8. Opening Balances
9. Sample Data and Report Output
10. Accounting Regulation Compliance

1. What Are Projects?

A Project is a classification dimension that groups transactions across multiple documents. Projects allow you to track the financial performance of specific initiatives, contracts, or work streams independently from the rest of the business.

Projects are different from transaction types — they don't create GL entries or change accounting. Instead, they add a reporting dimension that lets you filter and group transactions by project.

Projects are used for:

• Contract profitability — tracking income and expenses for a specific customer contract
• Internal initiatives — monitoring the cost of an internal project (e.g., office renovation, IT implementation)
• Grant tracking — separating grant-funded activities from regular operations
• Capital projects — tracking costs for asset construction before capitalization
• Event management — budgeting and tracking a specific event or campaign

2. Enabling the Tab via Customize Menu

Projects is a standalone tab that does NOT depend on other tabs. To enable:

1. Open Customize Menu
2. Find "Projects" in the list of available tabs
3. Toggle to Visible
4. Click Save

Once enabled:

• Projects appears in the navigation bar — the main listing of all projects with income, expenses, and profitability columns
• The Project field becomes available on transaction lines throughout the system

3. Field-by-Field Guide

4. Creating a Project

1. Go to Projects > New Project
2. Enter the Name (required)
3. Add Custom Fields if configured
4. Save

Projects can also be made inactive later by editing and checking the Inactive checkbox. Inactive projects are hidden from dropdowns on new transactions.

5. Using Projects on Transactions

5.1 Where the Project Field Appears

The Project field appears on the line items of the following transaction types, provided the selected GL account supports projects:

5.2 Income Classification

A transaction line assigned to a Project is classified as Income when:

• The line has a Customer reference (i.e., it originates from a Sales Invoice, Receipt from customer, or Credit Note)
• The line is not a project cost (see below)

Income lines appear in the Income column on the Projects listing and can be drilled down via the income transactions viewer.

5.3 Cost Classification

A transaction line assigned to a Project is classified as Cost when any of these conditions apply:

• The line is marked as Cost of Goods Sold
• The line is a Billable Expense
• The line has no Customer reference and is not a Receipt (i.e., it's a supplier invoice, payment, expense, or adjustment)

Cost lines appear in the Expenses column on the Projects listing and can be drilled down via the incurred cost transactions viewer.

5.4 Projects vs Divisions

Projects and Divisions are independent classification dimensions that can coexist on the same transaction line:

Both can be set simultaneously on the same line — a transaction can belong to a Division AND a Project at the same time for complete reporting.

5.5 LC-Related Transactions and Projects

Letters of Credit — both Import and Export — fully support Project assignment. The Project field can be set at the LC header level or on individual cost lines, and the value flows through to the general ledger transactions created by the LC.

Import LC (Letter of Credit)

Project resolution follows this priority:

1. Cost line Project field — if set on the individual cost line, this takes highest priority
2. LC header Project field — used as fallback for cost lines that do not have their own Project
3. AP/LCP balancing entries — always use the LC header Project

Import LC GL entries have Supplier reference but no Customer reference. Per the project cost classification rules, all Import LC entries with a Project assigned are classified as Costs on the Project listing.

Export LC (ExportLetterOfCredit)

The LC header Project field is used for all GL entries created by the Export LC, including fee entries. The Export LC GL entries carry a Customer reference (the exporter), so they are classified as Income per the project classification rules.

Export LC Receipt (ExportLCReceipt)

The ExportLCReceipt reads its Project from the linked Export Letter of Credit's header Project. All four GL entries it creates carry this Project and are classified as Income (they all have a Customer reference).

Summary of LC classification in Projects:

6. Project Reports

6.1 Project Listing

The main Projects page shows all projects with their financial performance:

6.2 Project Profit and Loss Report

Clicking the Profit value on the Projects listing opens the Project P&L Report. This report shows:

• Income section — all transaction lines grouped by GL account, showing income generated by the project
• Expenses section — all cost lines grouped by GL account, showing costs incurred for the project
• Profit total — the net result (Income minus Expenses) for the project

6.3 Income Drill-Down

Clicking the Income value opens a transaction viewer showing every GL transaction classified as income for that project. The viewer shows: Date, Reference, Description, Debit/Credit amounts, and running balance. Uses sign reversal (MultipleByOne = true) for display.

6.4 Cost Drill-Down

Clicking the Expenses value opens a transaction viewer showing every GL transaction classified as a project cost. This includes the Cost of Goods Sold calculation to ensure all inventory-related costs are captured.

6.5 Purchase Orders Grid

Clicking the Purchase Orders value opens a grid showing all purchase orders linked to this project, with columns: Date, PO Reference, Supplier, Project, Order Amount, Invoiced Amount, and Uninvoiced Balance.

7. Accounting Impact

7.1 How Income and Costs Are Classified

The system automatically determines whether a project-tagged transaction line is income or cost based on these rules:

A line is classified as a PROJECT COST if:
    - It is a Cost of Goods Sold transaction, OR
    - It is a Billable Expense, OR
    - It has no Customer reference AND is not a Receipt

A line is classified as PROJECT INCOME if:
    - It has a Customer reference (from Sales Invoice, Receipt, Credit Note)
    - AND it is NOT classified as a project cost

All other project-tagged lines are classified as income.

The system does NOT create separate GL entries for projects — projects are a reporting dimension only. The underlying GL posting follows the standard rules for each transaction type (Sales Invoice creates Dr AR / Cr Revenue; Purchase Invoice creates Dr Expense / Cr AP; etc.).

7.2 Profitability Calculation

Project Profit = Project Income − Project Expenses
Revised Profit = Project Profit − Open Purchase Orders

Where:
    Project Income = Sum of all amounts for income-classified Project lines
    Project Expenses = Sum of all amounts for cost-classified Project lines
    Open Purchase Orders = PO amounts linked to the Project minus invoiced amounts

All amounts are calculated in the base currency. The Income and Expenses values are clickable for drill-down to the underlying transactions.

8. Opening Balances

Projects cannot have opening balances. The Project listing derives all its financial data from transaction lines that have a Project assigned. There is no "opening balance" field on a Project record — all project income and expenses are built up from individual transactions over time.

If you need to set a starting position for a project that existed before the system was implemented, create a Journal Entry with:

• A line debiting or crediting the appropriate P&L accounts with the project assigned
• A balancing line to Retained Earnings (or Suspense)
• The Project field set on the line(s)

This will correctly seed the project's income and cost balances from the opening date.

9. Sample Data and Report Output

Setup

Transactions

GL Transactions Created

PI-001 (ConstructCo Ltd — Renovation):
    Dr  Renovation Expense                     500,000.00
        Cr  Accounts Payable (ConstructCo)                   500,000.00
    Project assigned: Office Renovation
    Classification: COST (no customer, not a receipt)

PMT-001 (Payment to ConstructCo):
    Dr  Accounts Payable (ConstructCo)          500,000.00
        Cr  Cash at Bank                                     500,000.00
    No Project assigned (bank account — projects not supported for this account type)

JE-001 (Consulting Income):
    Dr  Accounts Receivable                      50,000.00
        Cr  Consulting Income                                 50,000.00
    Project assigned: Office Renovation
    Classification: INCOME (not a cost)

Project Listing — Office Renovation

Calculation Verification

Income:
    JE-001 Consulting Income:            50,000.00
    Total Income:                        50,000.00 ✓

Expenses:
    PI-001 Renovation Expense:         500,000.00
    Total Expenses:                     500,000.00 ✓

Profit:         50,000.00 − 500,000.00 = −450,000.00 ✓
Revised Profit: −450,000.00 − 100,000.00 = −550,000.00 ✓

DR = CR Verification

PI-001 (Project cost):
    Dr  Renovation Expense               500,000.00
        Cr  Accounts Payable                         500,000.00
    DR = CR: 500,000.00 − 500,000.00 = 0.00 ✓

PMT-001 (Payment — no project):
    Dr  Accounts Payable                 500,000.00
        Cr  Cash at Bank                              500,000.00
    DR = CR: 500,000.00 − 500,000.00 = 0.00 ✓

JE-001 (Project income):
    Dr  Accounts Receivable               50,000.00
        Cr  Consulting Income                           50,000.00
    DR = CR: 50,000.00 − 50,000.00 = 0.00 ✓

Scenario B — Import LC — Header-Based Project

Setting Project once on the LC header cascades to all cost lines and balancing entries.

GL Transactions with Project Assignment

LC-001 CIF cost line (Widget-X, inventory):
    Dr  Inventory On Hand                      16,50,000
        Cr  AP / LCP (via balancing)                        16,50,000
    Project: "Warehouse Expansion" (inherited from LC header)
    Classification: COST (Supplier reference, no Customer)

LC-001 Duties cost line (Period Cost):
    Dr  LC Expense (Duties)                    10,06,500
        Cr  AP / LCP (via balancing)                        10,06,500
    Project: "Warehouse Expansion" (inherited from LC header)
    Classification: COST

LC-001 Landed cost line (Landed Cost):
    Dr  Inventory On Hand (Landed)              2,12,750
        Cr  AP / LCP (via balancing)                         2,12,750
    Project: "Warehouse Expansion" (inherited from LC header)
    Classification: COST

--- Liability split at 30% margin ---

LC-001 AP Balancing entry (margin + other costs):
    Dr  Accounts Payable                      17,14,250
        Cr  Cash / LC Payable                               17,14,250
    Project: "Warehouse Expansion" (LC header Project — balancing always uses header)
    Classification: COST (no Customer)
    Composition: CIF margin 4,95,000 + Duties 10,06,500 + Landed 2,12,750

LC-001 LCP Balancing entry (financed portion):
    Dr  Letter of Credit Payable              11,55,000
        Cr  Cash                                           11,55,000
    Project: "Warehouse Expansion" (LC header Project)
    Classification: COST (no Customer)
    Composition: CIF financed portion 70% = 11,55,000

Verification: AP 17,14,250 + LCP 11,55,000 = 28,69,250 = Total cost lines ✓

Scenario B2 — Import LC — Line-Level Project Override

When LC costs need to be split across multiple Projects, set individual Projects on specific cost lines.

GL Transactions — Line-Level Override

LC-002 CIF cost line:
    Project: "Warehouse Expansion" (from cost line — same as header) ✅

LC-002 Duties cost line:
    Project: "Warehouse Expansion" (from cost line) ✅

LC-002 Landed cost line:
    Project: "Customs Clearance Project" (from cost line — overrides header!) ✅

LC-002 AP Balancing entry (17,14,250):
    Project: "Warehouse Expansion" (uses header Project, not cost line) ✅
    Note: The 17,14,250 total includes the landed cost of 2,12,750 that belongs to
    "Customs Clearance Project" — but the balancing entry posts all to the header Project.

LC-002 LCP Balancing entry (11,55,000):
    Project: "Warehouse Expansion" (uses header Project) ✅

Project Listing — Warehouse Expansion (Scenario B)

Debit entries (costs):    +16,50,000 + 10,06,500 + 2,12,750 = +28,69,250
Credit entries (liability): −17,14,250 − 11,55,000        = −28,69,250
Net incurred costs:                                          0.00

Calculation verification:

Cost lines (debit entries):
    CIF cost line:                         16,50,000
    Duties cost line:                      10,06,500
    Landed cost line:                       2,12,750
    Total costs incurred:                  28,69,250

Balancing entries (credit entries):
    AP balancing:                         −17,14,250
    LCP balancing:                        −11,55,000
    Total balancing:                      −28,69,250

Net in Project listing (costs + balancing):    0.00
    (Dr + Cr entries cancel — both carry the Project)
    Use the Expenses drill-down to see actual costs.

Profit: 0.00 − 0.00 = 0.00 (before drill-down filter)
Actual resource costs: 28,69,250 (visible in drill-down)

Scenario C — Export LC with Project "Export Sales Q2"

GL Transactions with Project Assignment

ELC-001 — Dr ExportLCReceivable ($10,000 @ 110):
    Dr  Export LC Receivable                 11,00,000
        Cr  Export LC AR Clearing                         11,00,000
    Project: "Export Sales Q2" (ELC header)
    Classification: INCOME (has Customer reference)

ELC-001 — Fee entries ($250 @ 110):
    Dr  LC Expense (Bank Fees)                   27,500
        Cr  Export LC Receivable                             27,500
    Project: "Export Sales Q2" (ELC header)
    Classification: INCOME (has Customer reference)

SI-002 — Revenue recognition ($10,000 @ 110):
    Dr  Accounts Receivable                   11,00,000
        Cr  Export Revenue                                  11,00,000
    Project: "Export Sales Q2"
    Classification: INCOME (has Customer reference)

ExportLCReceipt ELCR-001 ($9,750 net receipt @ 110):
    Dr  Cash at Bank                          10,72,500
    Dr  Export LC AR Clearing                 10,72,500
        Cr  Export LC Receivable                           10,72,500
        Cr  Accounts Receivable (SI-002)                   10,72,500
    Project: "Export Sales Q2" (inherited from linked ELC)
    Classification: INCOME (all 4 entries have Customer reference)

Project Listing — Export Sales Q2

Dr ExportLCReceivable     +11,00,000 → +Income (sign-flipped)
Cr ExportLCARClearing     −11,00,000 → −Income (sign-flipped)
Cr ExportLCReceivable(fee)  −27,500 → +Income
Dr LCExpense               +27,500 → −Income
Cr ExportLCReceivable     −10,72,500 → +Income (receipt)
Dr ExportLCARClearing     +10,72,500 → −Income (receipt)
Cr AccountsReceivable     −10,72,500 → +Income (receipt)
Dr CashAtBank             +10,72,500 → −Income (receipt)

Net Income from all ELC entries:             0.00

Calculation verification:

Scenario B — Warehouse Expansion:
    Income:          0.00
    Expenses:       64,54,975.00 (all LC costs + balancing entries)
    Profit:        −64,54,975.00 ✓

Scenario C — Export Sales Q2:
    Income:         11,00,000.00 (SI-002 revenue — ELC entries net to zero)
    Expenses:        0.00
    Profit:         11,00,000.00 ✓

DR = CR Verification — LC Scenarios

LC-001 CIF cost line:
    Dr  Inventory On Hand              16,50,000
        Cr  AP / LCP balancing                      16,50,000
    DR = CR: 16,50,000 − 16,50,000 = 0.00 ✓

LC-001 Ship balancing:
    Dr  AP balancing                   24,30,725
    Dr  LCP balancing                  11,55,000
        Cr  Cash                                   35,85,725
    DR = CR: 24,30,725 + 11,55,000 − 35,85,725 = 0.00 ✓

ELC-001 Issuance:
    Dr  Export LC Receivable           11,00,000
        Cr  Export LC AR Clearing                   11,00,000
    DR = CR: 11,00,000 − 11,00,000 = 0.00 ✓

ELC-001 Fee entry:
    Dr  LC Expense (Bank Fees)             27,500
        Cr  Export LC Receivable                        27,500
    DR = CR: 27,500 − 27,500 = 0.00 ✓

SI-002 Revenue:
    Dr  Accounts Receivable            11,00,000
        Cr  Export Revenue                           11,00,000
    DR = CR: 11,00,000 − 11,00,000 = 0.00 ✓

ExportLCReceipt ELCR-001:
    Dr  Cash at Bank                  10,72,500
    Dr  Export LC AR Clearing         10,72,500
        Cr  Export LC Receivable                   10,72,500
        Cr  Accounts Receivable                    10,72,500
    DR = CR: 10,72,500 + 10,72,500 − 10,72,500 − 10,72,500 = 0.00 ✓

10.1 IAS 11 / IFRS 15 — Construction Contracts / Revenue

Requirement (IFRS 15 §9): Revenue is recognized when control of goods or services transfers to the customer. For long-term contracts, revenue may be recognized over time if certain criteria are met.

How this system complies: Projects provide the tracking dimension for contract revenue and costs. The Project P&L report shows the complete financial picture of each contract, supporting both point-in-time and over-time revenue recognition models. The Purchase Orders column shows committed costs not yet recognized, providing visibility into future obligations.

10.2 IAS 2 — Inventories (Project Costs)

Requirement (§12-14): The cost of inventories includes costs directly attributable to the production process. Abnormal costs are expensed as incurred.

How this system complies: The project cost classification correctly captures all direct costs assigned to a project through transaction lines. Cost of Goods Sold transactions are automatically classified as project costs. The Cost of Goods Sold calculation includes project-tagged inventory movements, ensuring inventory-related project costs are fully captured.

10.3 IAS 37 — Provisions, Contingent Liabilities and Contingent Assets

Requirement (§14): A provision is recognized when a present obligation exists from a past event, payment is probable, and the amount can be reliably estimated.

How this system complies: The Purchase Orders column on the Projects listing shows committed but not yet invoiced amounts. This provides visibility into future obligations related to each project, supporting the assessment of whether a provision for onerous contracts (IAS 37 §66) may be required.

10.4 IAS 1 — Presentation of Financial Statements

Requirement (§10-11): An entity may present additional information beyond the minimum requirements. Segment reporting provides useful information about different business activities.

How this system complies: Projects add a reporting dimension that segments income and expenses by project. The Project P&L report provides disaggregated financial information, supporting internal management reporting and decision-making. Projects complement, rather than replace, the standard financial statements.

10.5 DR = CR Verification

Every transaction with a Project assignment follows standard double-entry rules.
The Project field is a reporting dimension only — it does NOT affect the
underlying GL posting or double-entry balance.

PI-001: Dr Renovation Expense 500,000 / Cr AP 500,000
    Project assigned: Office Renovation
    DR = CR: 500,000 − 500,000 = 0.00 ✓

PMT-001: Dr AP 500,000 / Cr Cash 500,000
    No Project (bank account)
    DR = CR: 500,000 − 500,000 = 0.00 ✓

JE-001: Dr AR 50,000 / Cr Consulting Income 50,000
    Project assigned: Office Renovation
    DR = CR: 50,000 − 50,000 = 0.00 ✓

10.6 Relevant but Not Applicable

• IFRS 16 (Leases): Lease costs can be assigned to a Project via the Project field on transaction lines, but the Project itself is not a lease arrangement.
• IAS 7 (Cash Flow Statement): The Project dimension does not affect cash flow classification. Project-related cash flows appear in the same CFS categories as non-project transactions.
• IAS 21 (Foreign Exchange): Projects do not have a currency — they inherit the transaction's currency from the customer, supplier, or bank account used.

End of Projects Guide