ACT 301. Understanding Journal Entries

Transcription

1 Finance Certification Training Program ACT 301 Understanding Journal Entries Last updated: January P a g e

2 Contents Fund Accounting A Review... 3 Revenues and Expenditures... 3 The Basics... 3 Debits and Credits... 3 Viewing detail in Banner... 4 The Grey Areas... 4 Electronic Journal Entries... 5 The Procedure... 5 An Example... 6 Useful Banner Query Forms... 7 FGIBDST... 7 FGITBAL... 9 Data Integrity Journal Entry Examples...Attachment 1 2 P a g e

3 Fund Accounting A Review Fund Accounting is used primarily for Governmental and Not-for-Profit entities. A Fund is an accounting entity with a self-balancing set of accounts consisting of a balance sheet and an operating statement. Separate Funds are maintained to ensure observance of limitations and restrictions placed on use of resources. Because there is no profit motive behind Not-for-Profit and governmental entities, accountability is measured instead of profitability. Fund Accounting allows entities to ensure that financial resources are being used according to legal and/or other requirements. A basic knowledge of fund accounting will assist in the preparation and understanding of the journal entry process. Revenues and Expenditures The Basics Revenues are made up of monies received from the sale of goods or services. Expenditures are monies paid for goods or services. Debits and Credits Debits and Credits are used to record accounting transactions and represent account balances in the ledger. Understanding the normal balances of Revenue and Expenditure accounts, as well as how to view detail in Banner, will assist you in preparing Journal Entries. o Expenditures Normal Balance = DEBIT Debits INCREASE Expenditures Credits DECREASE Expenditures o Revenues Normal Balance = CREDIT Credits INCREASE Revenues Debits DECREASE Revenues 3 P a g e

4 Viewing detail in Banner When viewing revenue and expenditure detail in Banner Finance, you will notice that the transactions are not listed with D/C indicators. In order to fully understand the detail, you need to understand the normal balances, and what increases/decreases that balance. In Banner Finance FGITRND, you can deduct the following: o o Expenditure (Normal Balance = Debit) + (plus) on detail screen = Debit (increase) - (minus) on detail screen = Credit (decrease) Revenue (Normal Balance = Credit) + (plus) on detail screen = Credit (increase) - (minus) on detail screen = Debit (decrease) In summary, if you are looking at an expenditure account on FGITRND, and see a transaction with a + (plus) next to it, you know that transaction increases the expenditure balance, and is therefore a Debit. Likewise, if you were looking at a revenue account, that same + (plus) increases the revenue balance and would represent a Credit. More detail on FGITRND and examples of this form are available later in this documentation under the section titled Useful Banner Forms. The Grey Areas Even though the concepts seem simple enough, some transactions will arise where the recording of expenditures and revenues is not black and white. Below are a few examples. Example 1: Department distributes expensed items to another department o Transaction would be an expenditure refund o Credit (reduction) to the original department s expense account o Debit (increase) to the other departments expense account Example 2: Department distributes expensed items to other departments for a fee or additional charge o Transaction may generate revenue o Can be handled multiple ways o Circumstantial depending on nature of department s business o Best to contact General Accounting to determine course of action for this and future transactions of this nature. Complicated transactions will arise especially in departments that deal with revenues, and the sale of goods or services. When in doubt about your transaction and how it should be recorded, please contact General Accounting for direction on how to proceed. 4 P a g e

5 Electronic Journal Entries The Procedure 1. Obtain electronic journal entry template form from Controllers website at: 2. Prepare the entry on the JE feed template and save the file as an excel spreadsheet. All fields are required as designated, and the entry must balance (debits must equal credits). Required Fields: o Explanation o Fund Code o Account Code o Transaction Amount o D/C Indicator o Transaction Description (detailed, however, limited to 35 characters) 3. Your description must be detailed and include the original document number if you are moving or correcting a prior transaction. 4. Prescribed naming convention for the journal entry file name is as follows, with a SPACE between each a-e item: a. Transaction Description b. Dollars (from feed total) c. Cents d. Preparer initials 5. the Excel feed template as an attachment to FinancialAccounting@uncw.edu and immediately send the hard copy to the General Accounting department with the supporting backup documents. Be sure the hard copy is signed by the Budget Authority. 6. If there is a correction on the journal entry once received in General Accounting the preparer will be notified either by or inter-office mail to make the corrections and resubmit both the attachment and a corrected hard copy. 7. After the hard copy has been approved, the journal entry will be submitted to the feed system. In order for journal entries to be processed for the designated month, both the copy and the hard copy must be received in the General Accounting department three working days prior to the end of the month. 5 P a g e

6 An Example The following is an example of a journal entry submitted for an electronic feed. Backup documentation would be any relevant supporting documents that represent the source and need of the transaction. The example shows a feed that is being done to move charges from one fund to another fund. The backup submitted with this, for example, is a report from Banner (FGITRND) with the detail showing where the expense is currently charged. File requirements for uploads: Preparer must be someone other than Budget Authority 1/18/2017 File must be Excel format Save File as: YourDescription_Hash$_HashCents_YourInitials (NovPacsCharge_250_00_JS) Fields must remain in this order No blank fields or columns & DO NOT ADD, DELETE, OR SORT LINES Doc #: Trans Desc in mixed case (NO periods, commas or quotation marks) All numbers are fixed with NO commas and NO dollar signs Debit/Credit Indicators in caps (D or C) D = C = Submit file to: FinancialAccounting@uncw.edu Difference MUST = ZERO 0.00 Hash Total REQUIRED - Explanation: Move Charges to Correct Fund Fund Acct Trans D/C Trans Code Code Amt Ind Desc 21xxxx C mv F00xxxxxx to 27xxxx 27xxxx D mv F00xxxx fr 21xxxx 21xxxx C mv IE00xxxx to13xxxx 13xxxx D mv IE00xxxx fr 21xxxx 6 P a g e

7 Useful Banner Query Forms FGIBDST Shows Budget Availability (Revenues and Expenditures) but also allows you to drill down into individual accounts to look at account activity. This form displays data by account code line item for any combination of fund, organization, account, account type, program or location code. (FOAPAL) Use chart W Enter all or any part of FOAPAL for inquiry. You would enter only fund number to have a high level inquiry of one fund, or fund and account number to be more detailed. Select Next Block You should see something like this: 7 P a g e

8 For transaction detail information for a specific account code you will want to drill down to FGITRND. To do this Highlight the account number you wish to view detail for (in above example account is highlighted) Select Options from the top menu, and then choose Transaction Detail Information You should see something like this: Individual transactions are listed. Note: This is an expenditure account, so the + indicates an increase (debit) and the indicates a decrease (credit) in the normal balance. This screen is what you would print as backup documentation for a journal entry that involved moving one of these expenses. 8 P a g e

9 FGITBAL Trial Balance General Ledger Assets and Liabilities. This form is used to obtain a trial balance for each fund for all accounts, account types, or account codes. An asterisk displays if the account balance shown differs from normal account balance. For example: Cash has a normal DEBIT balance. If balance is a credit, an asterisk will display. To use this form: Use chart W Enter the Fund you wish to query Enter the account type or account code you want to query (you may enter only the fund if you wish to display all) Click Next Block You will see something like this This screen is what you would print as backup documentation for a journal entry that involves moving cash (transfer). Proof of available balance is required. 9 P a g e

10 For transaction detail information on an individual account: Highlight desired account Select Options from the top menu, and then choose Query General Ledger Activity Info You will see detail similar to below Notice that unlike FGITRND which shows expenditure/revenue detail, that the D/C indicators are displayed. If you know this is a cash account, cash is an asset, and a credit decreases an asset account then all the transactions shown are reductions in the cash balance. These detail screens is where you d go to verify that one of your requested entries had posted. 10 P a g e

11 Data Integrity Striving for accuracy on all journal entry transactions is a priority because of many reasons including: They are a record of all the activities of each department. Other Agencies and managers rely on this data. Ensures efficient management of our financial resources. Ensures accurate reporting for annual audited Financial Statements Every detail is important when preparing your entries, especially the account number, description and supporting documents. Supporting documents provide a useful audit trail, allowing anyone to see the source and journey of a transaction or an activity. When preparing journal entries, do not guess about whether or not you are preparing or recording it correctly. Refer to these documents for help, and if you are still in doubt please call General Accounting for assistance. Department Contact Information General Accounting Hoggard Hall, Room 149 Hollie Jernigan General Accounting Specialist Andrew Savage Staff Accountant Becky Heins General Accounting Manager P a g e

12 Additional Examples BACKUP DOCUMENTATION o Copy of FGITRND showing where actual charge is currently in Banner 12 P a g e

13 BACKUP DOCUMENTATION o Copy of FGITRND showing where actual charge is currently in Banner 13 P a g e

14 File requirements for uploads: Preparer must be someone other than Budget Authority 1/18/2017 File must be Excel format Save File as: YourDescription_Hash$_HashCents_YourInitials (NovPacsCharge_250_00_JS) Fields must remain in this order No blank fields or columns & DO NOT ADD, DELETE, OR SORT LINES Doc #: Trans Desc in mixed case (NO periods, commas or quotation marks) All numbers are fixed with NO commas and NO dollar signs Debit/Credit Indicators in caps (D or C) D = C = Submit file to: FinancialAccounting@uncw.edu Difference MUST = ZERO 0.00 Hash Total REQUIRED - Explanation: Transfer Funds from 2xxxxxx to 2xxxxxx to support exhibit Fund Acct Trans D/C Trans Code Code Amt Ind Desc 22xxxx C Transfer funds to 21xxxx 21xxxx D Transfer funds from 22xxx BACKUP DOCUMENTATION Copy of FGITBAL showing there is enough funds (cash) to cover the $ Note: and are transfer accounts o acts like a revenue account (carries a credit balance) o acts like a expenditure account (carries a debit balance) 14 P a g e