This article is relevant if you seek a better understanding of NetSuite’s system-generated accounts, account types, and special account types.
Background
In a new NetSuite implementation, a minimal chart of accounts is automatically initialized. I like to think of this as the base data structures needed to constitute the application so that it won’t produce errors during use. These system accounts are helpful to understand some of the fundamentals of the NetSuite business platform.
Modifying System Generated Accounts
System-generated accounts can be renamed and numbered. It is not a good idea to try to delete them. Many times, many of the accounts are not used and thus may not have a financial balance. It’s not uncommon to see these system-generated accounts “untouched” in an account listing as they are not assigned account numbers. I recommend you give system-generated accounts account numbers so they are integrated into your account model intentionally. While you can mark system-generated accounts with the inactive flag, doing so may produce an unwelcome surprise by producing an unexpected error when using the NetSuite application.
Avoid Using Journal Entries on System Generated Accounts
When advising clients in our NetSuite Systems Integration practice, I suggest using these out-of-the-box system accounts in day-to-day operations as they generally represent the control account against a sub-ledger application. The best practice rule-of-thumb is to avoid using journal entries on these accounts to help make it easier to reconcile and explain balance in the account at period end. Because NetSuite’s architecture is designed to roll up transactions to constitute a general ledger balance, the Journal Entry transaction type obscures the designed origin for the balance — the subsystem that was designed to record transactions against the system-generated account.
For example, the Accounts Payable general ledger account is tied to Vendor Bills, Vendor Credits, and Bill Payment transactions. These transaction types are tied to vendor entities. If we use a journal entry on the accounts payable account, we get the “- No Vendor -” (or the related “- No Customer/Job -” for Accounts Receivable) reference in accounts payable agings. It’s better to create another account that is a child of the control account for journal entries — we can then use the natural hierarchy account roll-up mechanism to see the balance during financial report presentation.
Account Types
NetSuite’s account types are “hardcoded” in order to help the system produce financial statements. All accounts must be tagged with an account type as indicated below. In the early days of NetSuite, it was possible to change the account type of a NetSuite account. But now, it’s usually not possible to change the account type (it does not hurt to try; I have a few times gotten away with it when I didn’t think it would allow me to change). To retire an account means to move the balance out from the source account to the target account. Again, avoid journal entries if possible on accounts that are system generated to modify the balance to avoid sub-ledger inconsistencies. Sometimes it is better to renumber and name the old account and move it as a child to the new account — if possible.
| Account Type | Category | Balance Type |
|---|---|---|
| Accounts Receivable | Asset | Debit |
| Bank | Asset | Debit |
| Deferred Expense | Asset | Debit |
| Fixed Asset | Asset | Debit |
| Other Asset | Asset | Debit |
| Other Current Asset | Asset | Debit |
| Unbilled Receivable | Asset | Debit |
| Equity | Equity | Credit |
| Cost of Goods Sold | Expense | Debit |
| Expense | Expense | Debit |
| Other Expense | Expense | Debit |
| Income | Income | Credit |
| Other Income | Income | Credit |
| Accounts Payable | Liability | Credit |
| Credit Card | Liability | Credit |
| Deferred Revenue | Liability | Credit |
| Long Term Liability | Liability | Credit |
| Other Current Liability | Liability | Credit |
Special Account Types
The special account types are helpful to understand which accounts are system generated. For example, I supply an inventory running total balance financial saved search. See my article, Learn How To Accumulate NetSuite Inventory Balances via Saved Search. In the search I provide, it keys on the “InvtAsset” special account type to explain inventory. While this usually works, you can create more than one inventory account — and these new accounts will not have the “InvtAsset” tag. Thus, that financial saved search must be modified to directly address the accounts supporting the inventory sub-ledger.
| Account Name | Special Account Type |
|---|---|
| Accumulated Depreciation | AccumDeprec |
| Advances Paid | AdvPaid |
| Commissions Payable | CommPay |
| Cost of Goods Sold | COGS |
| Cumulative Translation Adjustment-Elimination | CTA-E |
| Customer Payment Authorizations | CustAuth |
| Deferred Expense | DeferExpense |
| Deferred Revenue | DeferRevenue |
| Deferred Revenue Clearing | DefRevClearing |
| Direct Labor | DirectLabor |
| Estimates | Estimate |
| Exchange Rate Variance | FxRateVariance |
| External Inventory in Transit | InvInTransitExt |
| Failed ACH Transactions | FailedACH |
| Indirect Labor | IndirectLabor |
| Inventory | InvtAsset |
| Inventory In Transit | InvInTransit |
| Inventory Received Not Billed | RecvNotBill |
| Inventory Returned Not Credited | RtnNotCredit |
| Job Cost Variance | JobCostVariance |
| Opportunities | Opprtnty |
| Payroll Adjustments | PayAdjst |
| PST Expenses ON | PSTExp |
| PST Payable ON | PSTPay |
| Purchase Orders | PurchOrd |
| Realized Gain/Loss | RealizedERV |
| Refunds Payable | RefundPay |
| Requisitions | PurchReq |
| Return Authorizations | RtnAuth |
| Revenue Arrangement | RevArrng |
| Rounding Gain/Loss | RndERV |
| Sales Orders | SalesOrd |
| Sales Taxes Payable | SalesTaxPay |
| tax accounts – various names | Tax |
| Transfer Orders | TrnfrOrd |
| Unapproved Customer Payments | UnappvPymt |
| Unapproved Expense Reports | UnappvExpRept |
| Unbilled Receivable | UnbilledRec |
| Undeposited Funds | UndepFunds |
| Unrealized Gain/Loss | UnrERV |
| Unrealized Matching Gain/Loss | MatchingUnrERV |
| Vendor Return Authorizations | VendAuth |
| Work Orders | WorkOrd |
System Generated Accounts
NetSuite HELP documentation has the latest information about system-generated accounts. Depending on the NetSuite feature that is activated on the platform, as described below, you will find one or more system-generated accounts. The table below can be helpful for understanding the nature of the system-generated account and how it is used.
| Feature | System-Generated Account |
|---|---|
| A/P (Payable) | Accounts Payable |
| Note: Depending on your NetSuite Edition, the account may be named Acct Pay. | |
| When this feature is enabled for the first time, the Accounts Payable (AcctPay) account is created. However, this account is not inactivated or reactivated if the feature check box is cleared and then checked again. | |
| A/R (Receivable) | Accounts Receivable |
| Note: Depending on your NetSuite Edition, the account may be named Acct Rec. | |
| When this feature is enabled for the first time, the Accounts Receivable (AcctRec) account is created. However, this account is not inactivated or reactivated if the feature check box is cleared and then checked again. | |
| Customer Deposits (CustDep) | |
| Customer Deposits is not activated by the A/R (Receivable) or any other feature. | |
| Accounting | Undeposited Funds |
| Refunds Payable | |
| Note: If you are using NetSuite Canadian Edition, you also have Payable and Expenses accounts. In addition, the Tax (Tax) account is activated or inactivated when this feature is enabled or when the feature check box is cleared. If you are using NetSuite (U.S.), you have the additional Sales Tax Payable account. | |
| Advanced Receiving | Accrued Purchases |
| Advanced Revenue Management | Deferred Revenue |
| Deferred Revenue Clearing | |
| Revenue Arrangement (non-posting) | |
| Unbilled Receivable | |
| Note: When the Expand Account Lists accounting preference is enabled, these accounts may appear in other account lists. Do not select the Unbilled Receivable or the Deferred Revenue Clearing account from lists. All debits and credits to these accounts must be system-generated. | |
| Deferred Expense is generated when the accounting preference Enable Advanced Cost Amortization is checked. | |
| Amortization | Deferred Expense |
| Accumulated Depreciation | |
| Automated Intercompany Management | CTA Elimination |
| Note: This account is system-generated after a qualifying transaction. For example, a user must first run the Elimination process so that an Elimination Journal Entry is created that uses this account. | |
| Credit Card Payments and Customer Access | Unapproved Customer Payments |
| Direct Deposit | Failed ACH Transactions (FailedACH) |
| Electronic Funds Transfer | Failed ACH Transactions (FailedACH) |
| Employee Commissions, Partner Commissions/Royalties | Commissions Payable |
| Estimates | Estimates |
| Expense Reports | Unapproved Expense Reports |
| Advances Paid | |
| Accounts Payable | |
| When this feature is enabled for the first time, the Accounts Payable (AcctPay) account is created. However, this account is not inactivated or reactivated if the feature check box is cleared and then checked again. | |
| Intercompany Framework | IC Netting Clearing Account |
| Intercompany Time and Expense | If you enabled this feature after April 2014, when you created a qualifying journal entry the system created a single Intercompany Clearing Account of the Type: Other Current Asset. The account was set to the Root Subsidiary and included all child subsidiaries. Adjustment journal entries were correctly posted to this new account, and no other currency-locked Intercompany Clearing Accounts were created. |
| If you enabled this feature prior to April 2014, when you created a new adjustment journal entry the system created a new Intercompany Clearing Account (no currency), which became the parent of all other existing clearing accounts. New adjustment journal entries use this parent account, and the existing currency-locked Intercompany Clearing Account remained intact. | |
| Note: If you edit a transaction that was originally posted to the existing currency-locked Intercompany Clearing Account, the GL Impact of that transaction affects that account. | |
| Inbound Shipment Management | External Inventory In Transit (InvInTransitExt) |
| This account is activated or inactivated when the feature is enabled, or when the feature check box is cleared. | |
| Intercompany Framework | Netting Clearing Account |
| NetSuite uses this account when you create netting settlements. It is another current asset type account and is associated with all subsidiaries. NetSuite balances this account to zero after each netting. NetSuite also balances this account at the consolidated subsidiary level. | |
| Inventory | Inventory Asset |
| Cost Of Goods Sold | |
| Job Costing and Project Budgeting | Direct Labor (DirectLabor) |
| Indirect Labor (IndirectLabor) | |
| Job Cost Variance (JobCostVariance) | |
| These accounts are activated or inactivated when these features are enabled, or when the respective feature checkboxes are cleared. | |
| Multi-Location Inventory | Transfer Orders |
| Inventory In Transit | |
| Multiple Currencies | After qualifying revaluation transactions, the system generates the Realized Gain/Loss, Unrealized Gain/Loss, Unrealized Matching Gain/Loss, Rounding Gain/Loss accounts. |
| Note: Depending on the year in which your NetSuite account was established, you may also have the Exchange Rate Variance account. | |
| Opportunities | Opportunities |
| Payroll | Payroll Adjustments |
| Payroll Service | Failed ACH Transactions (FailedACH) |
| This account is activated or inactivated when the feature is enabled, or when the feature check box is cleared. | |
| Purchase Orders | Purchase Orders |
| Requisitions | Requisitions |
| Return Authorizations | Return Authorizations |
| Revenue Commitments | Unbilled Receivables |
| Note: When the Expand Account Lists account preference is enabled, this account may appear in other account lists. Do not select the Unbilled Receivable account from lists. All debits and credits to this account must be system-generated. | |
| Sales Orders | Sales Orders |
| Split Tender | Customer Payment Authorizations (CustAuth) |
| This account is activated or inactivated when this feature is enabled, or when the feature check box is cleared. | |
| Vendor Return Authorizations | Vendor Return Authorizations |
| Purchases Returned Not Credited | |
| Work Orders | Work Orders |
Work with NetSuite Professionals
In general, I notice that most of our clients have not given much thought to the system-generated accounts — understandably; NetSuite runs quite well with these account definitions in the background. The most common challenge is to clean up the sub-ledgers. Thus, the more informed NetSuite Administrator pays attention to the system-generated accounts and urges these accounts to be used in normal operation and away from standard journal entries.
If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you have questions about your NetSuite accounts, let’s have a conversation.
Hi Marty,
I have question please if you can help. For Intercompany Transfer orders item receipt clearing account auto generating. I wanted to know since its between 2 companies is there any background entry create to offset these clearing account between companies?
Hello,
I had some conversations with our Accounting Practice Leader on this and we both agree we need more information. We recommend that you contact us directly at https://www.prolecto.com/contact-us
Marty