Entity Default GL Accounts

Every time REDA records a transaction, it has to decide which accounts to use. When you raise an invoice, where does the amount owed go? When a payment arrives, which account does the cash land in? For the routine, repeating parts of accounting, REDA answers these questions from a set of default GL accounts held on the entity. Set them once and every posting lands in the right place — automatically, the same way, every time.

This article does two things: it explains, in plain language, the bookkeeping ideas you need, and then it walks every default account — what it is, when REDA uses it, and a worked example showing the actual accounting entry.

A quick primer (skip if you know double-entry)

Control & cash accounts

These four are the backbone — they're touched by almost every sale, purchase and payment.

Default AR Account — what customers owe you

The receivables control account. Debited when you raise a Sales Invoice (the customer now owes you), and credited when they pay (the debt clears).

Default AP Account — what you owe vendors

The payables control account. Credited when you record a Purchase Invoice (you now owe the vendor), debited when you pay it.

Default Cash & Default Bank Account — where money moves

The Default Bank Account is the bank record auto-selected on new receipts and disbursements; its linked GL is where the cash posts. The Default Cash Account is the fallback cash/bank GL used when no specific bank is chosen. These are the "Bank" lines in the examples above and below.

Revenue & expense fallbacks

A line's account normally comes from the product on it. These defaults are the safety net for when a line has no product account.

Default Retained Earnings — where the year's profit goes

At year-end, REDA "closes" the profit & loss accounts and moves the net result into Retained Earnings — the running total of profits the company has kept. A profitable year:

Recognition & holding accounts

Default Unapplied Cash — a customer prepayment

A customer sends money before there's an invoice to match it to. It can't be income yet — you owe them goods/service — so it parks in Unapplied Cash (a liability) until you apply it to an invoice.

Default Unapplied Payments — a vendor prepayment

The mirror image: you pay a vendor before their bill arrives. It's money owed to you (an asset) until matched, so it parks in Unapplied Payments.

Default Deferred Revenue — cash-basis income

On a Cash-basis entity, an invoice can't be counted as income until you're paid. The revenue parks in Deferred Revenue and is released when cash arrives.

Discounts

Sales Discount — a discount you give

A contra-revenue account. A discount reduces what the customer owes, and is recorded separately so you can see gross vs net revenue.

Purchase Discount — a discount you take

When you pay a bill early and earn a settlement discount, the saving is income (or a cost reduction) recorded here.

Foreign exchange (multi-currency only)

When you trade in a currency other than the company's own, exchange rates move between invoicing and payment. Those movements create gains and losses that have to be recorded. (New to this? See 3-Tier Currency.)

Default Realized FX — settled at a different rate

You invoice a US customer $1,000 when £1 = $1.25, so it's booked at £800. They pay later when £1 = $1.22, so $1,000 is now worth £820 — a real £20 gain.

Default Unrealized FX — open items restated at period-end

The invoice is still unpaid at month-end. If your accounting policy requires restating open foreign-currency balances at the closing rate — typically done with an adjusting journal at period end — the open $1,000 (booked at £800) is restated at £1 = $1.27 → £787: a £13 paper loss, recorded here but not yet realised.

Default FX Gain/Loss is the general account for exchange differences and is required in a multi-currency org — REDA won't save a multi-currency entity without it. Realized and Unrealized are the more specific accounts for splitting differences between settled items and still-open ones.

Intercompany — when your own companies trade

If Meridian's UK company does £500 of work for its US sibling, both companies must record their side, and the group offsets them on consolidation. The IC Receivable and IC Payable accounts (set as a pair) give those entries their home.

Withholding tax

In some countries the payer must hold back a slice of a payment and remit it to the tax authority on the other party's behalf. (New to this? See Understanding Withholding Tax.)

Default WHT Payable — you withhold on a payment

You owe a contractor £1,000 but must withhold 10%. You pay them £900 and owe £100 to the tax authority.

Default WHT Receivable — a customer withholds from you

A customer owes you £1,000 but withholds £100 and pays £900. The £100 is a tax credit you'll reclaim, recorded as a receivable.

Three defaults that aren’t accounts

Alongside the GL accounts, the entity carries three companions worth knowing:

A separate bank account for paying expenses

Every entity has a Default Bank Account — the account REDA reaches for when it needs to know "which bank did the money move through." Some organizations, though, pay their expenses from a different account than they use for everything else: a dedicated operating or petty-cash account, kept apart from the main receipts account for control.

The Default Bank Account – Expenses field lets an entity nominate that second account. When it is set, REDA uses it as the paying bank for:

• Cash Disbursements,
• the batch payment run, and
• auto-payments on Expense-type Purchase Invoices.

Leave it blank and nothing changes — REDA falls back to the entity's ordinary Default Bank Account, exactly as before. As with any bank account default, the chosen account's own GL Account drives the Cash Account used when those payments post.

The new Default Bank Account – Expenses field on the Entity, in the Default GL Accounts section — leave it blank to reuse the entity's Default Bank Account.

Where to go next

1. Entity Fields Reference — where the default GL fields sit.
2. Creating an Entity — set defaults while building the company.
3. Entity-Level Policy Settings — other per-entity behaviour to configure.
4. Creating GL Accounts — build the accounts you point to.
5. How Posting Works — how these defaults drive postings.

Frequently asked questions