Managing Balance Sheet accounts

Structuring Balance Sheet accounts

There are two things to remember when setting up balance sheet accounts:

• The account must be a Balance Sheet account type. This account type has an account balance carried forward from one year to the next.
• You normally set the balance type on the account to Balance Forward. This indicates that you do not wish to match/allocate transactions on the account. When you run a Ledger Cleardown, balance forward accounts are summarized according to specification, so that detailed transactions are removed. One exception may be the bank account. Where you are using the bank reconciliation facility, you should set the bank account as Open Item.

Debtors, creditors and client accounts in the Balance Sheet

In the SunSystems single ledger environment you do not need to create control accounts for debtors/receivables, creditors/payables and client accounts. Balance sheet reports can show the total balance for the entire range of each of these account types.

Accounts that alternate between asset and liability

The debit/credit balance on a number of balance sheet accounts may vary from one month to the next. This dictates where the account is shown on balance sheet reports. Examples include inter-company client accounts. One month the net balance might dictate that you show the figure as a current asset, while the next month it might belong under the current liability heading.

Financial Tables and Financial Statements both allow you to suppress a line on a report depending on whether amounts are debits or credits. In Financial Statement Rows, you can choose to suppress accounts with a debit or credit balance. This can be used to prevent netting off asset and liability accounts.

In Financial Table Columns or Financial Table Rows, you can split debits and credits at transaction level. For example, you can specify two columns one for debit transactions and one for credit transactions. You can create two lines, one under the current asset heading and another under the current liabilities heading. They both include the same account range but have opposing settings in the Suppress Line/Account field. Consequently, the balance on the account range is shown under the heading that is correct for the chosen period.

Managing your fixed assets

The SunSystems Fixed Assets module maintains full historic descriptive details of assets, acquisitions and disposals. It also allows automatic or manual depreciation calculations. You can inquire or report on assets.

Fixed Assets is a fully integrated part of the Financials single ledger, so that the same posting updates asset values in your asset register, and posts to the relevant accounts in Financials.

If you do not use the SunSystems Fixed Assets module, you must maintain the relevant asset accounts and enter all asset movement and depreciation transactions manually.

Memo accounts attached to the Balance Sheet

Memo accounts are generally used to record non financial information. A memo account can be used as a backup to a balance sheet account. The balance sheet account can show summary information, whilst the memo account can store detailed backup information. For example, staff loans might show as one figure on the balance sheet account, while a backup memo account provides detailed information of individual loans.

Accruals and prepayments

SunSystems caters for accrual and prepayment transactions in two ways:

• You can set up a journal in Journal Types (JNT) which automatically reverses in the period subsequent to entry.
• A standard journal type can be used. During Ledger Entry (LEN), a minimum of four lines are posted, two to the current accounting period, and two to the subsequent period. You can use Journal Presets (JNP) to automate this procedure.

Showing profit/loss in the Balance Sheet

The profit/loss figure in balance sheet reports is taken as the net balance of all income and expenditure accounts. The balance of accounts, which have been identified as account type Profit & Loss, is not carried over to a new accounting year. This has implications for your balance sheet reports, because you are required to show retained profit.

As part of your year end procedure, you must post the profit/loss for the year to a balance sheet account, which you can name appropriately.

Bank Reconciliation

SunSystems provides two methods of reconciling your bank statement details to the transactions posted to your bank account.

You can reconcile them manually using Account Allocations (ACA). Transactions that have cleared are identified using the allocation marker Reconciled. You can extract the transactions for the bank account and sequence them by date or reference, so that transactions are in the order you require. This makes it easier to find transactions. You can then amend the allocation marker beside the appropriate transactions to Reconcile.

Items that have not been accounted for, such as bank charges, can be entered manually in Account Allocations using the Generate option, or entered using a journal type that allows online allocation on entry.

You can report uncleared transactions using the Report menu option in Account Allocations. You should select only unallocated transactions to be included. Alternatively, you can design your own bank reconciliation reports using the financial report writers.

Alternatively, the SunSystems Reconciliation Manager facility can automate some of the bank reconciliation tasks. You can load the bank statement transactions into the ledger and match them automatically to the transactions on your bank account using selected match criteria.

You can also perform bank reconciliation by posting from your bank statements. Some countries require you to do this. Transactions generated in Payment Collection Run are posted to a clearing account. Other transactions are posted from the bank statement. The bank statement will contain offset entries for those debits and payments you have generated. Use Account Allocations to reconcile your remaining transactions, generating adjustments as necessary. When you complete this process, any unallocated transactions represent your cash in transit.