In this part of the documentation, we will provide you with a detailed definition of what is a journal entries menu in the EasyERP accounting software and will give you examples of the typical entries that you will see, during the course of your workflow.
First, let us explain what data is stored in this menu, and why it is the most important part of the accounting module. Journal entries menu is a kind of general ledger of your business, it is a company's set of numbered accounts for its accounting records. If you are not familiar with the term, here’s a quick definition, general ledger is - the master set of accounts that summarize all transactions occurring within a company.
Each financial transaction affects at least two general ledger accounts and each entry has a debit and a credit transaction. Double-entry transactions are posted in two columns, with debit postings on the left and credit entries on the right, and the total of all debit and credit entries must balance.
This menu provides a complete record of all financial transactions over the life of the company. It holds account information that is needed to prepare financial statements and includes accounts for assets, liabilities, owners' equity, revenues, and expenses.
So, to summarize, journal entries menu is the list of all accounting transactions that represent every action of your company, that has to be mentioned in the financial statements.
To enter the journal entries menu in the EasyERP accounting software all you have to do is tap on the corresponding button in the Accounting menu:
Like we have mentioned before, EasyERP accounting software will display you all of the accounting transactions that have been done to this moment. They all will be shown in a chronological order, newer are on top, oldest - at the bottom. To give you an idea of how it will look like, here’s an example:
As you can see, and as we have stated before here is a list of accounting transactions. Every transaction has a set of parameters that are presented in a table, they define and describe the entry, here is an explanation of them:
- Number - every journal entry has a unique number, it is generated automatically and cannot be changed
- Accounting date - the exact date and time when did the operation was done
- Source document - as you can guess from the title here you can see an identification name of the document, that served as a source of this journal entry
- Account - in this column, you can see an account which was used in the transaction
- Debit/Credit - this column must be crystal clear to you, depending on the nature of the transaction, the account can be debited or credited
Like we have mentioned, in the Manual entry chapter, every transaction must have at least one debit and a credit account. Same goes for every other accounting transaction that is mentioned in the Journal Entries menu.
We know, sometimes it can be hard to find the right entry in here, that’s why EasyERP accounting module has the calendar and the search instruments, that can help you a lot in this task.
Calendar tool is intuitive to use and the same as the one in other menus of the EasyERP, to use it simply tap on it, and selected from one of default time periods. You can also use the custom dates button to select any time period you like. After that just press update to display entries for the selected time period.
The search tool is simple to use as well. But it has more capabilities. Like it is common in the EasyERP, search module is located in the top right corner. You can search by these parameters:
- Journal - as we have mentioned in the previous chapter, a journal is a kind of a template of the accounting transaction. So when you will click on this filter, you will get the list of all journals that have been used in the current time period, and thus you can view journal entries that were made from them.
- Source document - most of the operations have the source document, there may be a situation when you know the identifier of the document and need to find the journal entries that are made because of this document. In this case, simply input the number in the search field using this filter;
- Debit or Credit Amount - if you know the exact sum of the transaction, but the date and source document are unknown to you, then you might use this filter, simply select the needed sum from the list of all sums, or type it into the search bar. This will display all of the accounts that have received this amount, afterward, type on the account to see the seeking entry;
- Account - using this search filter you can display all of the transactions that have been done with the selected account, there are actually two ways how to achieve this, another way is to simply tap on it, in the journal entries menu. Which one to use is up to you.
The journal entries menu in the EasyERP accounting software contains a debit and credit entry for every transaction recorded within it so that the total of all debit balances should always match the total of all credit balances. If they do not match, the journal entries table or general ledger is said to be out of balance and must be corrected before reliable financial statements can be compiled from it. You don’t have to do it manually, every accounting transaction is balanced out automatically, in other words, the transaction cannot be created with uneven debit and credit parts.
Reconcile button is used to revalidate all of the journal entries. This is used when you have done some changes to the transactions, that have already been done or you have created a new transaction in the past using a foreign currency. The last example is really tricky, because it requires the currency rates be downloaded, for the date of your transaction. Either way, we recommend pressing this button before you wish to create or review some financial reports. When you do tap on it this message will be shown:
And in a few moments later, the duration of the reconcile process depends on the number of transactions that have to be changed, the message about the completion of the procedure will be shown:
As you may notice, there are buttons for exporting the journal entries table to the *.csv or *.xlsx formats. You can use them if you wish to display the general ledger in some other program, or simply back up the entries. When you press them, the file of selected format containing the whole journal entry table will be downloaded automatically.
For a better understanding of the accounting process in the EasyERP accounting software, we provide you a set of examples, that will show, how some standard activities are presented in the journal entries menu. It is not a complete list of all possible operations in EasyERP accounting module, there are just too many to show. These examples will be presented to you in the following form, at first we will describe the action, and then give you the screenshot of journal entries that meet that action.
Let us start with one of the fundamental actions for almost any business - selling a product. So this will be as simple as it can be, there is one product in the order, we sell it for $100, plus 20% tax. We have bought it for $50, without any taxes. Also, we have shipped the package the same day. So, the journal entries for this action will be:
Now you may be curious about, what journal entries were made when we have bought the product. This will be our next example, we will buy an item for $50, but now we will have a tax, same 20%, in this case, $10. We will accept the item to the warehouse too. So the journal entries will be:
We hope that next operation will not be done often, but you have to know how it is done if it is required. We are talking about refunds, they are sometimes unpleasant, but you have to provide them to satisfy the needs of your customers. So, in order to create a refund, you will need to press the corresponding buttons in the edit invoice menu, or in the edit order menu. In our example, a customer has returned our previous sale, and we have refunded him with full sum. After that following journal entries will be created:
Another frequently occurring operation is a financial transaction when you move your cash from one account to another. In EasyERP accounting software, it is done using the Cash transfer menu. We will send a $1000 from Cash USD account to a Cash2 USD account, sounds easy. It is easy to write down in the accounting journal. It will be only one, following, journal entry.
At the end of each month, you will have to do a procedure called “closing the month”. It is a process when you close all transit accounts and acknowledge all profits and loss. For a more detailed overview about this action, please read the corresponding chapter of the documentation, you can find it here. The number of journal entries that will be done by this actions may vary, this depends on the balance on the accounts that will be involved and on the operations that have been done during the month. So, here’s an example of what kind of entries could be done at the end of the month.
Let us break it down for you, so it will be easier to understand. Starting from the top following operations have been done:
- We deduct $152515.50 - cost of goods sold from our income;
- Redirecting all expenses that we have accumulated over month on the following accounts to total expenses account: administrative salary expenses, total expenses, idle time expenses, vacation and holiday expenses;
- To finish, we acknowledge our product sales amount, $232 992 over the current month as an income summary.