Elements

Elements are the fundamental building blocks of a Castaway project. Each element is unique and has specific settings that support the nature of the element type. Choosing the correct Element setting as you set up your Project is critical to effective business modeling. It saves rework and error correction.

There are 12 elements that you can set up yourself; 5 elements in the Profit and Loss and 7 elements in the Balance Sheet. They are:

Profit and Loss Balance Sheet

Sales

Bank Account

Costs

Debtors
Inventory Fixed Asset
Provisions Investment
Wages Loans
  Other Asset/Liability
  Equity

 

Learn more about Element Types

Decisions to make

When building your Chart of Accounts, there are essentially 2 things you need to decide:

  1. Where you want to place your element: Your Chart of Accounts can be structured using Sections and Sub-sections
  2. What element to select when adding a general ledger account

This article will guide you on the latter.

Profit and Loss

There are 5 elements you can choose from within the Profit and Loss.

The Elements themselves are pretty straightforward, but below are some guidelines for you:

  1. Sales: For all revenue or income accounts
  2. Costs: For any expense accounts that are not associated with inventory expenses, wages and salaries or their associated on-costs, and provision expenses
  3. Inventory: For any expense accounts that are associated with inventory expenses such as Purchases or Cost of Goods Sold. If the purchase and COGS are for the same product, set them up as a single Inventory element to ensure that the calculations are held within the same stock account
  4. Provisions: For any non-cash expense accounts that are associated with provisions such as Provision for Doubt Debt or Provision for Annual Leave. Income/Corporation Tax Provision does not need to be set up as a Provision element as it has its own in-built element in the Balance Sheet
  5. Wages: For any expense accounts that are associated with wages and salaries. This does not include on-costs such as Superannuation (Pension), PAYG (PAYE), and Payroll Tax (Employee Tax)

Balance Sheet

There are 7 elements you can choose from within the Balance Sheet.

The Balance Sheet Elements may require a little bit more guidance:

  1. Bank Account: For any trading accounts that hold funds. Accounts like Cash on Hand or Credit Cards can be set up as a Bank Account or as an Other Asset/Liability
  2. Debtors: For recording an additional/separate category of debtors
  3. Fixed Asset: For any intangible or tangible Fixed Asset accounts that depreciate
  4. Investment: For any investment accounts such as Share Investments
  5. Loans: For any loan accounts that generate interest such as Loan Payables or Receivables or Hire Purchases. For Hire Purchases, we suggest that you map both the Hire Purchase and the Unexpired Charges as one Loan element for neater reporting
  6. Other Asset/Liability: For any other asset and liability accounts that do not fit the other Balance Sheet elements such as Deposits, Other Payables/Receivables or clearing accounts
  7. Equity: For any equity-related accounts such as Owner Drawings, capital or reserve accounts. A Dividend Declared account does not need to be set up as an equity element as it has its own in-built element in the Profit and Loss

In-built elements

There are some elements that you don't need to build as Castaway has built them for you as part of its integrity check.

We strongly recommend you use the In-built Elements created by Castaway so your model is built as accurately as it can be. 

Note: You can also map your accounts to In-built Elements via drag and drop when Integrating.

The In-built Elements you do not need to create are:

        • Income (Corporations) Tax (in the P&L)
        • Dividends (in the P&L)
        • Main Bank Account 
        • General Trade Debtors
        • General Trade Creditors
        • Payroll Liabilities such as:
          • Tax Withheld
          • Pension
          • Employer Taxes
        • GST/VAT Liabilities such as:
          • Tax Accrual
          • Tax Payable
        • Income Tax Liabilities such as:
          • Income Tax Provision
          • Income Tax Payable
        • Dividend Payable
        • Retained Earnings

Partner elements

Partner Elements are similar to In-built Elements except Partner Elements are created when a corresponding and specific element is built first.

This is part of Castaway's design as a 3-way modeling tool.

Similar to the In-built Elements, you'll need to understand how these Partner Elements are generated and their corresponding relationship, so your model is set up well.

You can also map your accounts via Integrations to Partner Elements, but you may be required to create the specific element first. 

Profit and Loss Elements

Element (to be created first) Partner Element
Sale
  • General Trade Debtor: Uncollected sales receipts are recorded in the in-built General Trade Debtor account
  • Prepayment/Accrual: If the invoice method is set to Prepaid or Accrued, a corresponding Prepayment or Accrual account will be created in the Balance Sheet
Cost 
  • General Trade Creditors: Unsettled payments are recorded in the in-built General Trade Creditors account
  • Prepayment/Accrual: If the invoice method is set to Prepaid or Accrued, a corresponding Prepayment or Accrual account will be created in the Balance Sheet
Inventory
  • A corresponding Inventory asset in your Balance Sheet
Provisions
  • A corresponding Provision liability in your Balance Sheet based on the Provision Type selected
Wages
  • Balance Sheet (Tax Witheld): Any unpaid Tax Withheld will be recorded as a Payroll Liability in your Balance Sheet 

Balance Sheet elements

Element (to be created first) Partner Element
Bank Account
  • Interest Income and Interest Expense account in the Profit and Loss 
Fixed Asset
  • Depreciation/Amortisation Expense in the Profit and Loss
  • Accumulated Depreciation/Amortisation in the Balance Sheet
  • Gain on Sale of Asset in the Profit and Loss
Investment
  • Investment Income in the Profit and Loss
  • Gain on Sale of Investment in the Profit and Loss
  • Investment Receivables/Payables in the Balance Sheet
Loan
  • Interest Income and Interest Expense account in the Profit and Loss 

Other Asset/Liability

  • Other Expense/Other Revenue in the Profit and Loss

Conclusion

Familiarising yourself with the elements and their relationship to one another will help you build a better forecast as the elements then become integrated between the Profit and Loss and the Balance Sheet. 

If you think you've made an error in your setup, you can always create the correct one and delete the incorrect element.

If you're unsure about the setup of your accounts. please contact our Customer Success team.