This article explains the process of entering and importing general ledger journals in automated accounting systems. Learn about the basic validations that must happen before the accounting data can be imported from any internal or external sub-system to the general ledger. Finally, understand what we mean by importing in detail or in summary.
Journals can either be directly entered in General Ledger or can be imported from Sub Ledgers. Most of the journals are created along-with business transactions like sales, purchases, receipts, and payments and get recorded in respective sub-ledgers. As sub-ledgers generally capture data at a more granular level, the relevant accounting information must flow to the general ledger for posting and subsequent reporting. From sub-ledgers, they need to be imported to the general ledger for financial recording and reporting.
Journal Entries can also be created manually in General Ledger by entering all the relevant accounting information. ERPs can also automate certain types of Journal Entries like recurring, reversing, or allocating journals. In case of manual entry follow the steps and guidelines outlined in the Recording Journals tutorial.
While importing journals from Sub Ledgers, journals can be clubbed together for the same accounts and posted in General Ledger as summarized.
Various general ledger systems provide the functionality to create Summary Journals which summarize all transactions for the same account, period, and currency into one debit or credit journal line. This results in fewer transactions in the general ledger systems and makes financial reports more manageable in size. In the case of summary journal users, lose the one-to-one mapping of detail transactions in the sub-ledger to the summary journal lines created by the import process. However most of the organizations use this feature as this prevents too many transactions in GL Accounts and transactions get clubbed based on category, type, or transaction source.
Using the drill-down functionalities available in most of the modern general ledger systems, users can still perform various review and analysis functions, as even if the system creates summary journals, it can still maintain a mapping of how Journal Import summarizes sub-ledger detail transactions from feeder systems into general ledger journal lines.
ERP’s and automated accounting systems must have built in validations during the import process to ensure that the data is correct and complete. An effective Journal Import program should validate key accounting information before it creates journal entries in the General Ledger application to prevent errors and reconciliation efforts.
Given below are some of the common data validations that can happen during the GL Import process:
Suspense posting puts the remaining amount in the suspense account in case the debits and credits of the journal are not matching. In case it is not required, Journal Import should reject all invalid lines that do not balance.
If the batch name is a unique field then Journal Import should ensure that a batch with the same name does not already exist for the same period in the General Ledger application. Similarly, it must also check to ensure that more than one journal entry with the same name does not exist for a batch.
Attributes that can be validated to ensure that journals contain the appropriate accounting data could be accounting books, period, source, currency, category, accounting date, reversal period, account validation, account code combinations, effective date, roll date, and any other required validations.
In today’s accounting world, financial and operational data typically is stored in a variety of programs and formats. Excel is one of such tools, most widely used by the accountants! When accountants need to prepare a report based on data from various systems, the first step is to export the data into Excel. Many times accounting information is stored in chronological order in excels by the accountants, and examples include adjusting entries and recurring entries.
Benefits of using the excel upload feature are that it makes life much easier for data operator and accounts executives. The great flexibility of excel based application increases productivity and results in reduced training costs as most users are already familiar with the excel functionalities and also improves user acceptance for automated systems. The biggest benefit comes from the fact that excel upload can also work in disconnected environments.
Typically, most of the automated systems provide the functionality to import accounting data from Excel to the general ledger and create journals. Most ERPs provide the ability to upload journals using the MS Excel worksheet. You can create journals in Excel Template and upload directly to General Ledger.
For any company that has a large number of transactions, putting all the details in the general ledger is not feasible. Hence it needs to be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger. Understand the concept of the subsidiary ledgers and control accounts.
In this article we will focus on and understand the accounting process which enables the accounting system to provide the necessary information to business stakeholders. We will deep dive into each of the steps of accounting and will understand how to identify accounting transactions and the process for recording accounting information and transactions.
Legal Structures in Businesses
Businesses not only vary in size and industry but also in their ownership. Most businesses evolve from being owned by just one person to a small group of people and eventually being managed by a large numbers of shareholders. Different ownership structures overlap with different legal forms that a business can take. A business’s legal and ownership structure determines many of its legal responsibilities.
The purpose of the general ledger is to sort transaction information into meaningful categories and charts of accounts. The general ledger sorts information from the general journal and converts them into account balances and this process converts data into information, necessary to prepare financial statements. This article explains what a general ledger is and some of its major functionalities.
Accrued expenses, sometimes referred to as accrued liabilities, are expenses that have been incurred but have not been recorded in the accounts. Discuss the need to record accrued liabilities and why they require an adjustment entry. Understand the treatment for these entries once the accounting period is closed and learn to differentiate when the commitments become liabilities.
Multitude of these legal and operational structures clubbed with accounting and reporting needs give rise to many reporting dimensions at which the organization may want to track or report its operational metrics and financial results. This is where business dimensions play a vital role.
Introduction to Organizational Structures
Organizations are systems of some interacting components. Levitt (1965) sets out a basic framework for understanding organizations. This framework emphasizes four major internal components such as: task, people, technology, and structure. The task of the organization is its mission, purpose or goal for existence. The people are the human resources of the organization.
Funds contributed by owners in any business are different from all other types of funds. Equity is the residual value of the business enterprise that belongs to the owners or shareholders. The funds contributed by outsiders other than owners that are payable to them in the future. Liabilities are generally classified as Short Term (Current) and Long Term Liabilities. Current liabilities are debts payable within one year.
Prepayments and Prepaid Expenses
Prepayments are the payment of a bill, operating expense, or non-operating expense that settle an account before it becomes due. Learn the concept of prepaid expenses. Understand the accounting treatment for prepaid expenses. Understand the concept by looking at some practical examples and finally learn the adjusting entry for these expenses.
Hierarchical Organization Structures
Hierarchical structure is typical for larger businesses and organizations. It relies on having different levels of authority with a chain of command connecting multiple management levels within the organization. The decision-making process is typically formal and flows from the top down.
© 2023 TechnoFunc, All Rights Reserved