The difficulty with Analyzing Amazon Transactions:
We often get asked by our new A2X users “How do I map my Accounts and Taxes?”.
It is no wonder when you have transaction descriptions that look like this:
Other other transaction FBA Inventory Reimbursement INCORRECT_FEES_ITEMS
We will attempt to breakdown the terminology for you so it is easier to make sense of account coding and refine your mapping for reporting. Amazon creates new transaction types all the time so we won’t be able to cover all types that might show up, but hopefully this guide will help you categorize transactions more easily.
Disclaimer: This article is not meant to be used as accounting advice. It is simply an explanation of what we have learned about Amazon transaction terminology. Please seek the advice of a qualified accountant to establish the right account code mapping for your business. All examples use Amazon.com or Amazon.ca and USD. The explanations here are not market - or currency - specific.
A2X Can Create Accounts for You
For those who are just starting out with A2X and have a fairly simple Amazon business (few SKUs, one marketplace), A2X provides an easy way to get started mapping your accounts by offering to create accounts for you in your accounting software Chart of Accounts.
This is what the Accounts and Tax Mapping page looks like before mapping.
Net Revenue, Net Expense
The basic premise for the A2X-created accounts is simplicity. A2X creates only nine accounts under four account types (Revenue/Income, Expense, Current Asset, Current Liability) in the easy-start mapping of Accounts and Taxes. These are very general transaction categories, and, because of this, some transactions in a revenue category may seem more like an expense, and some in an expense category may seem like revenue.
Net Revenue Example in A2X
An example is "shipping fees" found under the Shipping category, for which A2X generates a revenue/income account. Such categories are generally assumed to "net" Shipping revenue with shipping fees.
Here is an example from an actual settlement:
A2X-generated “Amazon Shipping Income” shown in the example below is categorized as a Revenue type of account.
Reading down, line for line, the equation in the settlement results in no Amazon Shipping Income. The reason we do this is that it is the simplest way to account for Shipping as a category:
“Shipping Charge to Customer - Discounts on Shipping Charges - Refunds of Shipping Charges + Refunds of Shipping Discounts back to Seller - Shipping fees charged to Seller.”
The net shipping or the total Shipping revenue using the A2X-generated “Amazon Shipping” is “0” as a result. (995.14 - 529.60 - 9.11 + 9.11 - 465.54 = 0)
View Specific Amazon Transaction Descriptions
Back in Accounts and Taxes, you can see the more specific transaction descriptions that come through your settlements when you use the orange “+” sign to the right of any general transaction category.
Amazon Settlement Terminology
This is an example of that expanded Sales and Refunds Category. Below this screenshot is an explanation of how to break down the terminology:
What does the term, ItemPrice mean?
“ItemPrice” always indicates revenue and it is associated with Orders, Shipping Charges, Giftwrap, and Taxes - anything charged as part of a sale to a customer.
These are examples from the category,
Here are examples of how “ItemPrice” typically shows up in the category,
What does the term, ItemFees mean?
“ItemFees” always indicates a fee Amazon charges the Seller related to the sale of a product. You see them most often in Shipping, Commissions, and Giftwrap. Here are some examples in the following categories of
More Types of Fees:
The following screenshots show a variety of other fees.
There are other fees that will have the word “Fee” attached but not “Item”, such as
Special Deals Fees:
Fulfillment and Warehousing:
These are all amounts charged to the Seller (fees), that may or may not contain the word “fee.”
"Promotion" (or Discounts given to the customer) can be on “Principal”, otherwise known as the item being sold, or on Shipping.
Remember this one from the beginning of this article?
Other other transaction FBA Inventory Reimbursement INCORRECT_FEES_ITEMS
The easy part is that all Reimbursements from Amazon to the Seller have that word in the description:
What do the words in ALL CAPS mean? There are literally dozens of reimbursements Amazon can be making to you. Amazon does not provide great explanations for the purpose of their reimbursements, so the best approach is to consider the words in ALL CAPS as the reason for the reimbursement.
Here are some examples explained, starting with INCORRECT_FEES_ITEMS:
Other other transaction FBA Inventory Reimbursement INCORRECT_FEES_ITEMS - This implies that Amazon charged fees to the Seller on Items (as in ItemFees) incorrectly and is reimbursing the amount of the incorrect fees back to the Seller.
Other other transaction FBA Inventory Reimbursement Customer Service Issue - This implies that there was a Customer Service issue related to FBA Inventory. It caused a loss to the Seller and Amazon has determined the amount to reimburse the Seller for it.
Other other transaction FBA Inventory Reimbursement MISSING_FROM_INBOUND - This implies that there were items expected but missing from an inbound shipment to FBA Inventory. Amazon claimed fault for the loss and determined an amount to reimburse the Seller for the missing items.
How Sales and Refunds category and Refund and Return Fees category are different:
The word “Refund” occurs in different contexts. “Refund” in Sales and Refunds transactions means funds from a sale were returned to a customer. A refund does not necessarily mean a return of items occurred. (Returns of items are not accounted for in the Sales and Fees settlements as they are not cash transactions but related to inventory movement instead.)
“Refund” in Refund and Return Fees transactions refers to the Amazon fees for handling items returned in relation to a refund, and Amazon charged processing fees to the Seller. These are just fees, not Refunds or Returns.
Below are examples in the “Refund and Return Fees” category in which the word “Return” occurs:
Amazon.com ServiceFee ItemFees FBACustomerReturnPerOrderFee
Amazon.com ServiceFee ItemFees FBACustomerReturnWeightBasedFee
Amazon.com other transaction ItemFees FBACustomerReturnPerOrderFee
Amazon.com other transaction ItemFees FBACustomerReturnPerUnitFee
What are Reserved Balances?
This is a hold-and-release of funds. There are usually just two transaction types:
a. Other other transaction other transaction Current Reserve Amount
b. Other other transaction other transaction Previous Reserve Amount Balance
The first is Amazon placing a hold on some of the Seller’s sales funds, often to verify product authenticity and usually when Sellers first start up their marketplace. The second is Amazon releasing those funds to the Seller.
Mapping Reserved Balances transactions
Note: When using A2X’s suggested default accounts, a Current Asset Account is created to map the Reserved Balances transactions. These transactions are neither sales nor expenses. They are simply funds held back and then released to the Seller from previous sales.
Such an event (simplified) can look like this example:
The reserved balances affect the net deposit, not the total sales or fees.
If a Seller has a loan with Amazon, Amazon Capital Services will be included in the description of an Amazon Loan Payment transaction:
Note: This payment combines both Principal and Interest. A2X does not have access from Amazon for the actual breakdown. As a result, the Seller will need to look up the interest in Amazon and manually re-allocate the amount to interest in their accounting software.
A2X creates only 8-9 accounts. Beyond these A2X-created accounts, mapping transactions to accounts and tax codes does take some accounting knowledge.
If you don’t have any accounting knowledge, try using the accounts A2X creates for mapping Amazon transactions, and seek advice from your accountant as soon as you are able. A2X mapping can be customized to your business at anytime.
If you do have some accounting knowledge, it is still advisable to seek advice from your accountant on the things you are less sure about. It is important to make sure you are compliant with your country’s tax laws.
Our A2X Experts can help you dial in your A2X account mapping and help you with compliance to your country’s taxation laws. Please search our directory for your region or reach out to us at firstname.lastname@example.org for a reference if your region is not listed.
Questions, Comments? We would love to hear from you.