Definition
A party, or counterparty, is a customer, supplier, employee or other person or company the business deals with. Tagging journal entry lines with a party lets the books show receivable and payable balances, statements of account and ageing per counterparty, while the chart of accounts keeps a single receivables and a single payables account.
How it works
Parties replace the old practice of opening a ledger account for each customer. One counterparty can appear on many accounts: a supplier may have a payable, an advance paid and a deposit, all visible together on the party's statement.
Make the party mandatory on control accounts such as receivables, payables, advances and related-party balances. Without it, the per-customer subsidiary ledger cannot be reconciled to the general ledger.
In Ledgeriano parties are created per business with codes, contact details and tax numbers, and party balance reports come straight from posted lines.
Example: one supplier on two accounts
An advance of 2,000 is paid to a supplier, then a bill of 5,000 is booked. The party statement shows a net 3,000 owed.
| Account | Party | Debit | Credit |
|---|---|---|---|
| Advances to suppliers | Northwind Parts | 2,000 | |
| Accounts payable | Northwind Parts | 5,000 |