Accounting Mode

Maintain the integrity of your financial reports by preventing unintended changes to past transactions.

In this article, we will cover:

• Accounting Mode
• Accounting principles
• Financial reports
• Transactions

See also, Accounting Report.

Accounting Mode is a standard Retreat Guru feature designed to help maintain the integrity of your financial reports by preventing unintended changes to past transactions. The values presented in your realized revenue reports will remain the same, regardless of the date that the report is run.

What is realized revenue?

Retreat Guru supports accrual accounting - revenue is realized or reported as income on your financial statement when the stay occurs, or the item or service is delivered. Revenue will be realized regardless of when the payment is made. Read more about accounting principles and financial statements.

When can I edit a transaction?

In this context, transactions are the exchanges within a registration, like purchases, discounts, payments, and refunds. Read more about transactions.

You may edit transactions until 11:59 PM on the realized date of the transaction.

At 11:59 PM on the realized date, transactions are locked to prevent editing  - those entered today can be changed today and can be changed on future days up to and including the realized date of the transaction.

Once the realized date has passed, you can not edit the transaction. If you wish to correct errors you must reverse the original transaction and create a new transaction as an adjusting entry. That new transaction will be dated today - the day that you created the adjusting entry transaction.

When is revenue realized?

Retreat Guru supports the following revenue recognition types:

• First day - revenue is realized on the start date of the stay.
• Last day -revenue is realized on the end date of the stay 
• Nightly - revenue is distributed equally across all dates within the stay.
• Trans Date - revenue is realized on the date of the transaction.

Let's describe how revenue is recognized for past stays, current stays, and future stays.

Past stays - revenue recognition

If the end date of a stay is in the past (prior to today), registrations associated with that stay are past registrations. Dates for past stays cannot be changed.

A transaction completed in the past (prior to today) can be changed as long as the realized date for that transaction has not passed.

If you wish to change a transaction after its realized date has passed, you must first reverse that transaction by creating a new offsetting transaction. A new transaction made on a (past) registration will be dated today, the date that the (new) transaction occurred.

For transactions made today on past registrations, the revenue is realized today. For past registrations, this is true for all transaction category revenue types (single, nightly, trans date).

Transactions made today on past registrations can be modified until 11:59 PM on the realized date of the transaction (today).

Current stays - revenue recognition

If today is within the start-to-end date range of a stay, registrations for that stay are deemed to be current registrations - today is either the start date, the end date, or a date between.

Once the start date of a stay has passed, the start date cannot be changed, but the end date can be changed to today or any future date.

In the following examples, pre-existing transactions refer to those transactions that occurred prior to the start date of the stay.

For current registrations, revenue is realized as follows:

• First day realized type
  • Pre-existing transactions - revenue is realized on the first day of the stay (the start date).
  • Transactions entered today - revenue is realized today.
  • Cancellations - if a transaction is canceled today, the cancellation is realized today.
• Last day realized type
  • Pre-existing transactions - revenue is realized on the last day of the stay (the end date).
  • Transactions entered today - same as pre-existing transactions, revenue is realized on the last day of the stay (the end date).
  • Cancellations - if a transaction is canceled today, the cancellation is realized today.
• Nightly realized type
  • Pre-existing transactions - revenue is distributed equally across the stay dates.
  • Transactions entered today, where today is within the stay dates - revenue is distributed equally across today and the remaining stay dates. Revenue that was recognized (nightly) prior to today will not be affected.
  • Cancellations - if a transaction is canceled today, the cancellation is spread equally across today and the remaining days of the stay.
• Trans Date revenue type
  • Pre-existing transactions - revenue was realized on the transaction date (back then, when the transaction was entered).
  • Transactions entered today - revenue will be realized today, the date of the transaction.
  • Cancellations - if a transaction is canceled today, the cancellation is realized today.

Future stays - revenue recognition

If the start date of a stay is in the future (beyond today), registrations associated with that stay or program are future registrations. Future stay dates may be changed, but may not be moved into the past.

Transactions made today on future registrations can be modified until 11:59 PM on the realized date of the transaction. In the following examples, pre-existing transactions refer to those transactions that occur prior to the start date of the (future) stay.

For future registrations, revenue is realized as follows:

• First day realized type
  • Pre-existing transactions - for transactions entered today, or entered any day prior to the start date of the stay, revenue will be realized on a future date, specifically, on the first day of the stay.
  • Cancellations - if a transaction is canceled today, the cancellation is realized today.
• Last day realized type
  • Pre-existing transactions - for transactions entered today, or entered any day prior to the end date of the stay, revenue will be realized on a future date, specifically, on the last day of the stay.
  • Cancellations - if a registration is canceled today, the cancellation is realized today.
• Nightly realized type
  • Pre-existing transactions - for a transaction entered today, revenue will be realized on a future date, specifically, revenue will be distributed equally across the stay dates.
  • Cancellations - if a registration is canceled today, the transactions are realized today.
• Trans Date realized type
  • Pre-existing transactions - revenue was realized on the transaction date (back then, when the transaction was entered).
  • Transactions entered today - revenue will be realized today, the date of the transaction.
  • Cancellations - if a transaction is canceled today, the cancellation is realized today.

Special note about nightly realized type

Retreat Guru restricts the ability to modify a past Accounting Report. For this reason, the following behavior is in effect for reversed transactions in Transaction Categories configured as nightly realization type.

Assume that a guest registered for a 5-night stay from Dec 1 - 6 for a total of $5,000.

On December 2nd, a date during the stay, your registrar cancels the registration.

When the registration is canceled, Retreat Guru will automatically reverse the (realized nightly) transactions, affecting today and the remaining dates of the stay.

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Accounting principles

Retreat Guru supports accrual accounting - revenue is realized, or reported on your income statement, when the stay occurs, or the item or service is delivered, regardless of when the payment is made. 

Consider The Farm Center that offers one program every year, Yoga with Goats. The program begins on May 1st and ends on May 5th. May 1st is the first day of the stay, the arrival or check-in day. The stay is 4 nights. May 5th is the departure or check-out day, the last day. The stay dates are May 1st to 5th. 

Registration for Yoga with Goats costs $500.

On March 15th, more than a month before the program is scheduled to begin, Chris registers for the program (the sale is made with a purchase transaction) and Chris provides a $300 deposit (a payment transaction). 

In Retreat Guru, the Accounting Report for March shows:

• • Realized Revenue $0 - no revenue will be reported on your income statement for March.
  • Received Payments $300 - credit card, cash, and other payments received during March.
  • Realized Payments $0 - no payments were applied (realized as revenue) during March.
  • Sales $500 - or items sold (it’s a sale even if you haven’t received the payment).
  • Advanced Payments $300 - also known as deferred revenue, it’s payments
    received before or during March that will be applied to future stays.
  • Balance Due $0 - also known as accounts receivable, it’s the amount due for past stays, stays that occurred prior to March, that is, prior to the start date of the reporting period.
  • Future Revenue $500 - it’s revenue that you expect to recognize sometime after March,
    that is, after the end date of the reporting period.

During April, two more registrations are completed. Morgan registers for Yoga with Goats with a $400 deposit and Phoenix registers by paying the full amount of $500.

Side-by-side with March, the Accounting Report for April shows:

The program Yoga with Goats begins on May 1st with Chris, Morgan, and Phoenix in attendance. 

• • May 1st - upon arrival, Chris and Morgan pay their outstanding balances of $200 and $100 respectively. 
  • May 2nd - Chris purchases a book for $20 and pays cash. 
  • May 4th - Morgan and Phoenix both enjoy $120 massages and both pay by credit card. 

Since the program began on May 1st, the registration revenue is realized, or recognized, on May 1st. The book was delivered immediately, so its revenue is realized on May 2nd. The massage sessions were delivered immediately, so their revenue is realized on May 4th.

Side-by-side with March and April, the Accounting Report for May shows:

More details about these definitions and calculations are included in the sections that follow.

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Financial reports

Key financial reports generated by your accounting system help you measure the performance of your organization and forecast your future position.

These reports include:

• • Balance Sheet - a snapshot of assets and liabilities, the closing balances as of the report date. Assets include money in the bank and accounts receivable (money that people owe on past stays). Liabilities include deposits and other advanced payments - money that you have received for future stays.
  • Income Statement - shows your organization’s financial performance over a specified accounting period, usually monthly, quarterly, or annually. It is sometimes referred to as a Profit and Loss Report since it shows how revenue and expenses changed during the period and your net profit (revenue greater than expenses) or net loss (expenses greater than revenue) for the reporting period. Realized revenue is reported on the income statement.
  • Cash Flow Statement - summarizes cash inflow that you received from your ongoing operations and cash outflow that was used to pay for your business activities — these are actual funds that came into or went out of your bank account. A related report is the Cash Flow Forecast which predicts the amount of money that will flow in and out of your bank account during a future period. 

In the nonprofit world, the Income Statement is often called a Statement of Operations, and the Balance Sheet is often called a Statement of Financial Position.

Retreat Guru’s Accounting Report provides the values you need to make journal entries in your accounting system which will be summarized on your balance sheet and income statement. 

Within your accounting system is a list of each type of asset and liability, including various revenue and expense accounts, summarized in a chart of accounts.

Transactions affecting these accounts are recorded in a general ledger (GL). For example, you likely have a cash account in which every transaction involving cash is recorded, and a lodging revenue account for accommodation transactions. 

Each account is assigned a unique general ledger code (GL code). Department codes may be used to further organize transactions. 

For example, if your GL code for lodging revenue is 4200, your education department is identified as 1000 and your conferences department as 5500, the GL code 4200-1000 would identify lodging revenue for the education department, and the GL code 4200-5500 would identify lodging revenue for the conferences department.

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Retreat Guru Transactions

Within Retreat Guru, a transaction is an exchange between buyer and seller.

Transactions are grouped within a registration, and registrations are grouped within a stay, or program - everything takes place within the context of a stay or program.

You register for Yoga with Goats and make transactions to purchase tuition, accommodation, and meals, and to make a payment. Even if an item (product, service) is free, it must be purchased (via a $0 transaction).

In addition to purchases, transactions include discounts, taxes, deposits, payments, and refunds. A stay (or a program) has a start date (first day) and an end date (last day). The date that a transaction is performed is referred to as the transaction date.

Every transaction is assigned to a transaction category. Retreat Guru includes some built-in categories like program (tuition or registration fee), lodging, transport, financial aid, discount, card payment, card refund, cash payment, cash refund, and more. You may add additional custom categories like meals revenue, store revenue, conference revenue, lodging discount, and others.

For each transaction category, you may assign a descriptive name, general ledger account code (GL code), and a realized type. The id/slug is created automatically as a unique internal identifier.

Information about realized types was presented earlier in this document, but here’s a quick look:

• • First day realized type - revenue is realized on the start date of the stay.
  • Last day realized type —-revenue is realized on the end date of the stay 
  • Nightly realized type - revenue is distributed equally across all dates within the stay.
  • Trans Date realized type - revenue is realized on the date of the transaction.

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