slideshow 1a the general ledger. list of topics slide no. collegiate: sample company 3 setting up...

Slideshow 1ASlideshow 1A

The General The General LedgerLedger

List of TopicsList of Topics Slide No.Slide No.

COLLEGIATE: Sample Company 3

Setting Up the Company Files 4

Activating Administrative & Common Services 8

Verifying the Fiscal Year Starting Date 8

Creating the Company Profile 9

Activating the GENERAL LEDGER 10

Verifying the Fiscal Calendar 12

Setting Up the GENERAL LEDGER 13

Step 1: Define Options 15

Step 2: Define Account Structures 16

Step 3: Specify G/L Source Codes 17

Step 4: Create Source Journal Profiles 18

Generally Accepted Accounting Principles (GAAP) 19

GENERAL LEDGER

SYSTEM MANAGER

Common Services

Admin Services

DatabasePervasive SQL

ACCOUNTS RECEIVABLE

ACCOUNTS PAYABLE

COLLEGIATE: Sample Company

Throughout the book, you will be working on the accounts of Collegiate Computer Systems Limited (COLLEGIATE), our sample company.

Click.Click.

COLLEGIATE utilizes the accrual basis of accounting. Study the difference between accrual and cash basis accounting at the right.

Click.Click.

COLLEGIATE consists of three departments and it uses the Department feature of ACCPAC. This means that you can produce both departmental income statements and a consolidated income statement. Study the descriptions at the right.

Click.Click.

COLLEGIATE utilizes three ACCPAC modules: G/L, A/P and A/R. When used with other modules, the G/L is first set up, as it contains the Chart of Accounts.

Click to continue.Click to continue.

Collegiate Computer Systems Limited Collegiate Computer Systems Limited (COLLEGIATE)(COLLEGIATE)

Department 10 – ServicePurchases and resells computer hardware and software; maintains an inventory of hardware and software.

Department 20 – ProductDeals mainly with service contracts and repair orders.

Department 30 – OfficeProvides administrative and general office support to the Sales and Service Departments.

Accrual vs. Cash Basis AccountingAccrual vs. Cash Basis Accounting

Accrual Basis accountingGenerally Accepted Accounting Principles (GAAP) stipulate that revenue should be recognized and recorded when a service has been provided or a product has been delivered (for cash or on credit). Expenses should be recognized and recorded when a service has been provided or products have been delivered (for cash or on credit). This is the main premise of the accrual method.

Cash Basis accountingRevenue is recognized and recorded when cash is received, and expenses are recognized and recorded when paid. This method is contrary to the accrual method and not consistent with GAAP.

Setting Up the Company Files

There are 3 basic steps in setting up a company file:

Click.Click.

Step 1: Create the Database FoldersStep 1: Create the Database Folders

You need two folders: one for the SYSTEM files (COLSYS in the example at the right) and another for the DATA files (COLDAT). It is important that the Company data be in a different folder from the System data.



Step 2: Create Datasource Names Step 2: Create Datasource Names (DSN)(DSN)

This process sets up your databases and creates the required database tables. The steps are:

1. Go to the Pervasive SQL Control Center.

Click Pervasive SQL Control Center now.Click Pervasive SQL Control Center now.

2. Select New Database.

Click New Database.Click New Database.

3. Click Next when the Server window appears.

Click Next.Click Next.

4. You would then enter the specifics of the database name and database location, select the DBName Options and select the DSN Options.

This in effect enters the new database in the System Data Sources. Read the explanation at the bottom of the OBDC Data Source Administrator window.



Step 3: Set Up the DatabasesStep 3: Set Up the Databases

Database Setup creates your database, registers it for use by Sage Accpac ERP, and creates the database tables that Sage Accpac ERP requires. You need to created DSNs before setting up the system and company databases.

1.To start, you may use the Database Setup Shortcut (see right). The default password for ACCPAC is ADMIN.

ClickClick

2.The Database Setup window displays all the databases existing in your computer. They will not affect your databases. If you are setting up a new database, you would click NEW.

If you are not able to use the same computer in your lab and you need to set up your company files at a new computer, you would still select NEW, since your database would be new to the computer.



3. Always set up your SYSTEM file first.

The Database ID should be the same as the name you used when setting up DSNs. Be sure to select the proper Database Format.

Click.Click.

4.When setting up the COMPANY database, be sure to select the proper SYSTEM database. The Database Format should be the same as the SYSTEM database.

Click.Click.

What you enter in the Description in the Database Profile window (bottom) is what will appear on the opening screen. Be sure to enter your own name, as it is what will make it different from the rest of your class.

Click.Click.

Once the databases have been created, the COLLEGIATE databases would appear in the Database Setup window.


COLLEGIATE Databases

Activating Activating Administrative and Administrative and Common ServicesCommon Services

After setting up the databases, you can activate the Adminis-trative and Common Services for the company.

Click and study the functions Click and study the functions managed by Administrative Services.managed by Administrative Services.

Click again and study the functions Click again and study the functions of the Common Services.of the Common Services.

Verifying the Fiscal Verifying the Fiscal Year Starting DateYear Starting DateClick.Click.

When activating the Common Services be sure to change the date to the first day of the company’s fiscal year, then click the Proceed button.


Administrative ServicesAdministrative Services

• User IDs, Security, and User Authorizations, which determine who can access the company data and what tasks are they permitted to do;

• User Interfaces, which determine the fields users are allowed to view in the application windows;

• Data Integrity, which checks the company data for errors;

• Data Activation, which activates other ACCPAC modules, such as G/L, or services, such as Bank Services; and

• Restart Maintenance, which is used if a batch fails during posting.

Common ServicesCommon Services

Hold and maintain data such as:

• Company Profile including name, address, telephone, e-mail, contact, and so forth;

• Fiscal Calendar, which is the calendar for the current and previous fiscal years;

• Currency, which determines the currency or currencies used for transactions;

• Optional Tables, which provides for customizable additional data; and

• Scheduling, which established times in the month or year when certain tasks are to be done.

Creating the Company Profile

You would then fill in the Common Services Activation ADDRESS page.

Click.Click.

By checking the Format Phone Number box, you can enter phone/fax numbers in the whole company file by entering the numbers without spacing or any formatting. ACCPAC will automatically format them.

Click the OPTIONS tab.Click the OPTIONS tab.

You would normally select 12 for number of fiscal periods. The other option is 13, which is used in certain industries which require periods of equal length; i.e., 13 periods of 4 weeks each instead of 12 months of unequal number of weeks.

ClickClick

If a company uses more than one currency, the home or local currency is usually selected as the Functional Currency.

Click to continueClick to continue

Activating the GENERAL LEDGER

It is very important to backup your data before activating G/L (see Appendix A).

If you are not entering historical information from a previous fiscal year, the Oldest Fiscal Year Starting Date would be the current fiscal year, which in our example, is 01/01/2009.

It is important that the correct date is entered; otherwise the G/L will be set up incorrectly and you will either have to start over, or correcting the dates would be a difficult process.

Click .Click .

You have successfully activated G/L when you see the icon on the tree diagram (left pane).


Verifying the Fiscal Calendar

Before proceeding, you should ensure that the dates and settings in the fiscal calendar are correct.

Click. Click.

Active must be checked; otherwise, you will be unable to post entries for 2009.

In this example, COLLEGIATE’s fiscal year starts from January 1 and ends December 31. Any fiscal year start/end dates may be used. However, once the fiscal calendar is set, it cannot be changed without the permission of the Canada Revenue Agency.

Click.Click.

The status in all these fields must be left Unlocked; otherwise, attempting to post entries to a Locked period will create an error. You would Lock the period in order to disallow further entry to that period; e.g., at year-end.


Setting up the GENERAL LEDGER

There are 4 steps in setting up the General Ledger. Study them at the right.

At the bottom are the icons on the G/L Setup. It shows the icons that you will be using (numbered in order of use) to set up the General Ledger.


Steps in Setting Up the General LedgerSteps in Setting Up the General Ledger

Step 1: Define Options – options define how the G/L functions, the default retained earnings account and account lengths and segments.

Step 2: Define Account Structures – define how account segments are used in account numbers.

Step 3: Specify Source Codes – set up codes for transactions from different sources.

Step 4: Create Source Journal Profiles – customize journal reports.

1 23 4

Step 1: Define Options

Study the Company page in the G/L Options window, then click the various tabs and study the relevant information on each page.

Be sure to click the tabs from left to right consecutively.

Click the ACCOUNT tab now.Click the ACCOUNT tab now.

Click POSTING next.Click POSTING next.

The General Ledger uses 17 standard account groups to select related accounts for reporting. If you use account groups, you must assign every account to a group, or the system will leave the account group as blank (Unclassified).

Step 1: Define Options (continued)

The Posting Statistics information is only for display. Ignore it.

Click.Click.

Provisional Posting allows you to post a batch temporarily to test the effect of the entries on the financial statements before permanently posting them. This is particularly useful at year-end, especially when there are many adjustment entries.

Click.Click.

Checking Force Listing of Batches would require that you print the batch to any print destination before posting. This allows greater control over processing.

Click.Click.

Entries can be imported into the ACCPAC G/L from other programs; e.g., MS Excel. Click to study the other options.Click to study the other options.

Click the SEGMENTS tab.Click the SEGMENTS tab.

These fields define how long ACCPAC would retain company data files. Keeping 2 years of fiscal sets will allow you to produce prior year comparisons for income statements and balance sheets

Step 1: Define Options (continued)

Defining Account Segments allows you to create account numbers most suitable to your accounting system. For example, if you are using the Department feature, you will be able to include a segment in the account number that refers to each department, thus making it easy to identify corresponding accounts.

Click and study examples of account Click and study examples of account numbering systems using Account numbering systems using Account Segments.Segments.

Click and study how to define the Click and study how to define the segments according to the desired segments according to the desired account numbering system. account numbering system.

Click again.Click again.

Selecting Yes for Use in Closing allows you in the future to use different closing accounts for different departments.


Account Numbering Using SegmentsAccount Numbering Using Segments

Example:Example:

10-325-500

Division Department Account

BC/Yukon Administration Salary Expense

COLLEGIATE Numbering SystemCOLLEGIATE Numbering System

6010-10Account Department

Salary Expense Service

COLLEGIATE’s Account Numbering COLLEGIATE’s Account Numbering StructuresStructures

• ACC (Single-segment account) consisting of 4 digits;

e.g., 1000 for CASH.

• DEPT – (Two-segment account) consisting of 6 digits;

e.g., 4000-10 for SERVICE REVENUE; 4000 for the account, and 10 identifying the department (Service Department).

Step 2: Define Account Structures

Account structures let you use different sets of account segments in different account numbers. They specify which segments appear in the account number and the order in which the segments appear.

COLLEGIATE utilizes two different account structures:Click and study COLLEGIATE’s account Click and study COLLEGIATE’s account numbering structures.numbering structures.

By using the two-segment account structure, you will be able to use the same account number for related entries for all departments. For example, you can use 4000 for all revenue accounts: 4000-10 for the Product Department, 4000-20 for the Service Department.

Click .Click .

When you open the G/L Account Structures window, the two account segments that you have defined earlier would appear.

Study the completed windows.


Step 3: Specify G/L Source Codes

Source codes are useful in producing reports for similar transactions. For example, you will be able to produce a report for all reallocations if you attach a code (e.g., GL-RT) to all reallocation transactions.

Click and study the pre-set Source Click and study the pre-set Source Ledger codes.Ledger codes.

These pre-defined Source Ledger codes cannot be changed, deleted or added to.

Click.Click.

You can then add a second part, referred to as Source Type code, which identifies the transaction type.

Click to view examples of Source Click to view examples of Source Type codes.Type codes.

There are pre-defined source codes to which you can add your own.


Source Ledger CodesSource Ledger Codes

GL – General Ledger

AP – Accounts Payable

AR – Accounts Receivable

BK – Bank Services

Source Type CodesSource Type Codes

JE – Journal Entry

IN – Invoice

PY – Payment

AD – Adjustment

Step 4: Create Source Journal Profiles

Source journal profiles are reports you can define to meet a variety of transaction reporting requirements. Source journals group and list posted transaction details (single debit or credit entries) according to their source codes.

Common examples of source journals are cash receipts journals, cash disbursements journals, or a check register.

You are not required to define source journals. You can define an unlimited number of source journals to meet your transaction reporting needs.

Study the sample Source Journal Profile at the right.


GAAPGAAP

A set of policies, procedures and guidelines that direct accounting practitioners to record and report financial information.

GAAP is published in a handbook by GAAP is published in a handbook by the Canadian Institute of Chartered the Canadian Institute of Chartered Accountants (CICA).Accountants (CICA).

Generally Accepted Generally Accepted Accounting Principles Accounting Principles (GAAP)(GAAP)

How would you know how to interpret a transaction and how to record it? Processing transactions in ACCPAC is no different from what you have already learned in your Accounting course. You simply follow Generally Accepted Accounting Principles (GAAP).

Click and study the definition.Click and study the definition.

GAAP not only guides you in determining how to treat transactions and communicate financial information but it can also help interpret financial statements between companies.


Cost PrincipleCost Principle

All assets purchased must be recorded in the company accounting records at their purchase price (historical cost).

GAAP:GAAP: Cost PrincipleCost Principle

You will apply GAAP when you complete the exercises in the various modules. The slides that follow discuss the principles that apply to ALL types of transactions.

First is the Cost Principle.

Click and study the principle, then Click and study the principle, then read the example below. read the example below.

Example: A computer bought for $3,000 is recorded as an asset at the time of purchase. If the value of that same computer decreased in price to $2,500 shortly after purchasing it, the value in the accounting records remains the same. Any change in the market value of the asset does not get reflected in the accounting records.

This principle is followed even when the value of the asset increases.


Full Disclosure Full Disclosure PrinciplePrinciple

Full disclosure requires that all relevant information pertaining to the firm that may be important to the users of the information must be revealed on the financial statements.

GAAP: GAAP:

Full Disclosure Full Disclosure PrinciplePrinciple

Next is the Full Disclosure Principle.

Click.Click.

Example: A firm may report an unusually high amount of a particular expense on the Income Statement. To avoid confusion or misunderstanding, the entry should include a note explaining the high expenditure item, thus following the Full Disclosure Principle.


Objectivity PrincipleObjectivity Principle

The Objectivity Principle requires that all information reflected in the accounting records and financial statements is gathered, analyzed, recorded and communicated using only independent and verifiable data separate from any influences of the gatherer and recorder.

GAAP:GAAP: Objectivity PrincipleObjectivity Principle

Click and study the Objectivity Click and study the Objectivity Principle, then read the example Principle, then read the example below.below.

Example: A company should use and file relevant source documents (invoices, cheques, memos, etc.) that can be verified and are free of any personal bias and judgment. These source documents should be part of the audit trail.


Business Entity Business Entity ConceptConcept

A company’s financial information is recorded and reported separately from the owner’s personal financial information.

GAAP: GAAP:

Business Entity Business Entity ConceptConcept

Click and study the concept of Click and study the concept of Business Entity, then read the Business Entity, then read the example below.example below.

Example: The company’s financial records should not include information about the owner’s personal belongings, such as a house or a personal car. The owner should also have his or her own bank account separate from the company’s bank account.

If the owner wants to invest more money into the business, a cheque or money transfer should be made to the company and recorded in the company books as additional investment.


The economic life of a businesscan be divided into time periods.

Time Period PrincipleTime Period Principle

GAAP:GAAP:

Time Period PrincipleTime Period Principle

Click and study the principle.Click and study the principle.

According to this principle, an organization’s activities are identified with specific time periods; e.g., a month, three-month quarters, or a year.

Most companies prepare monthly (month-end) reports and use one year (year-end) as their primary accounting period.

The annual reporting period (referred to as fiscal year) is not always the same as the calendar year ending December 31. A fiscal year can consist of any 12 consecutive months.


Consistent Reporting Consistent Reporting PrinciplePrinciple

In the preparation of financial statements, the same accounting concepts are applied in the same way in each accounting period.

GAAP: GAAP:

Consistent ReportingConsistent Reporting

Click and study the Consistent Click and study the Consistent Reporting Principle, then read the Reporting Principle, then read the example below.example below.

Example: Owners and managers use information reported on financial statements when making decisions. Information from one year is often compared to previous years’. If accounting information is recorded and reported differently from one year to the next, the information cannot be compared.


EXIT

More…More…

Go back to your text and proceed from where you have left off.Press ESC now, then click the EXIT button.

slideshow 1a the general ledger. list of topics slide no. collegiate: sample company 3 setting up...

Documents

company data

company filesstep

company profile

company filesthere

new database

accrual basis of accounting

accrual method

cash basis accountingrevenue