General Ledger Overview
Some European countries add a separate Analytical Accounting system to track revenue and expense accounts.
The Chart of Accounts form defines account numbers used throughout the system to record, track, and report costs. An account in the General Ledger tracks domestic currency spent or earned by business activities, such as paying bills, receiving payments, cutting payroll checks, purchasing and receiving supplies from vendors, paying rent, and material and job transactions.
Financial information collected during day-to-day operations is posted frequently to distribution journals. Once their accuracy can be verified, the transactions are posted to the General Ledger at regular intervals. These are the distribution journals:
- Accounts Receivable
- Accounts Payable
- Fixed Assets
- Inventory
- Multi-Site
- Payroll
- Purchasing
- Order Entry
- Shop Floor Control
- Work Center
- Currency Banking Journal
- Project Control.
In addition to the distribution journals, there is a General journal that you can use to hold closeout and summary entries for year-end procedures.
You can also create user-defined journals - custom journals to store, retrieve, and track entries specific to your business. Examples include Accruals, Reversing Entries, Adjusting Entries, Intercompany Eliminations, Banking Transfers, Charges, and Credit.
Four unit codes can be activated for each account in the Chart of Accounts, to collect key management data. You can define unit codes to track those costs important to your business, such as sales territory, individual sales representative, product or product family, location of manufacture, work center, cost center, and department. See About Unit Code Reporting for more information.
Benefits of the General Ledger include:
- Provides detailed financial statements/reports.
- Maintains complete journal and ledger transaction details.
- Allows detailed or summarized account information.
- Provides a bank reconciliation feature.
- Maintains all journal transactions in edit list form prior to posting to General Ledger.
- Provides the ability to report prior or future years with budgeting and planning comparisons for current year.
- Provides complete support for multi-site financial reporting, including financial consolidations.
- Distributes an expense among more than one account according to allocation rules. For example, you can divide a monthly office lease payment among the departments sharing the building quarters. For more information, see Setting up Account Allocations.
- Automates the process of storing and posting recurring entries by using recurring journals. Simply create an entry once for each recurring expense, and the system automatically enters the transaction into the general ledger each period.
- Provides flexibility so you can decide when and how to handle month-end closes. And you can begin entering next month's business transactions even before the current month has completely closed.
- Calculates retained earnings for the fiscal year at year-end closing.
- Provides statistical accounts in financial statements to compare important non-financial data to related financial data for measuring such things as productivity and controlling costs.
- Offers a financial statement capability, which presents financial information from the General Ledger in a variety of formats to meet requirements of auditors, investors, and managers.
General Ledger form
On the General Ledger form, four different domestic currency balances are shown for each account:
- Balance on the day before the period start date (appears in either the debit or credit column).
- Period-to-date debits (up to period end date).
- Period-to-date credits (up to period end date).
- Total of 1, 2, and 3; this amount is the current balance of the account on the period end date (appears in either the debit or credit column).
If you select the Show All Transactions check box, either a debit or credit amount displays, followed by the entire transaction description.