General Ledger Application

1
General Ledger Application

• Small Business Information SystemBarry Floyd

2
Agenda

• General Ledger Application
• Reporting
• Budgeting
• Review of QuickBooks
• Setup of a loan account
• Recurring transactions
• Sending out statements
• Discussion of reports
• Reconciliation of bank accounts (not required)
• ERP overview discussion

3
Learning Objectives

• Understand the notion of a General Ledger
  function
• Understand the interaction of the GL with the
  other applications
• See how to create transactions in QuickBooks
• Understand key reports in QuickBooks

4
General Ledger Application

• The mainstay of an integrated set of accounting
  modules
• Houses the Chart of Accounts
• Provides functionality for budgeting and
  reporting activities

5
GL Activities

• Update General Ledger Accounts
• Post adjusting entries
• Prepare Financial Statements
• Produce Managerial Reports
• Create budgets

6
Update General Ledger Accounts

• Consists of posting journal entries that
  originate from two sources
• Accounting subsystems
• For example, revenue cycle subsystem would
  generate a summary journal entry debiting
  accounts receivable and cash and crediting sales
  for all sales made during the update period.
• Could also update accounts in real time.
• Treasurer
• Treasurers office creates individual journal
  entries to update the general ledger for
  nonroutine transactions such as the issuance or
  retirement of debt, the purchase or sale of
  investment securities, or the acquisition of
  treasury stock.
• Journal entries to update the general ledger may
  be documented on a form called a journal voucher.

7
Post adjusting entries

• Adjusting entries originate from the controllers
  office after the initial trial balance has been
  prepared.
• The trial balance is a report that lists the
  balance for all general ledger accounts but does
  not include adjusting entries

8
Adjusting Entries

• Accruals
• Entries made at the end of the accounting period
  to reflect events that have occurred but for
  which cash has not yet been received or disbursed
• Interest revenue earned, wages payable
• Deferrals
• Entries made at the end of the accounting period
  to reflect exchange of cash prior to performance
  of the related event.
• Recognizing the portion of advance payments from
  customers earned during a specific period and
  expensing the portion of prepaid assts (e.g.,
  rent, interest, and insurance) used in this
  period.

9
Adjusting Entries (continued)

• Estimates
• Entries that reflect a portion of expenses that
  occur over a number of accounting periods.
  Examples include depreciation and bad debt
  expenses.
• Revaluations
• Entries made to reflect either differences
  between the actual and recorded value of an asset
  or a change in an accounting principle. Examples
  include change in method to value inventory,
  reducing the value of inventory to reflect
  obsolescence, etc.
• Corrections
• Entries made to counteract the effects of errors
  found in the general ledger

10
Output of Adjusting Entry Process

• Adjusted Trial Balance Statement

11
Prepare Financial Statements

• Income statement
• Uses information from the revenue and expense
  account balances in the adjusted trial balance.
• Balance Sheet
• Closing entries that zero out all revenue and
  expense accounts and transferring the net income
  or loss to retained earnings.

12
Reports

• Managers
• Detailed information about the results of
  performance in their particular area of
  responsibility
• Investors and Creditors
• periodic financial statements to help them assess
  the organizations performance

13
Budgeting

• Discussed in last class

14
Summary

• The General Ledger is the heart of an accounting
  information system
• It tracks all records of transactions and
  provides the functionality necessary for
  reporting.

15
ERP Discussion

• What is ERP?
• How can ERP improve a company's business
  performance?
• How long will an ERP project take?
• Will ERP fix my integration problems?
• What will ERP fix in my business?
• Will ERP fit the ways I do business?
• What does ERP really cost?
• When will I get payback from ERPand how much
  will it be?
• What are the hidden costs of ERP?
• Why do ERP projects fail so often?
• How do I configure ERP software?