Download Financials Module: General Ledger

The Priority™ Enterprise Management System
Financials Module: General Ledger
Contents
Introduction ...............................................................................................................2
Chart of Accounts......................................................................................................2
Entry Journal..............................................................................................................4
Reconciliations ..........................................................................................................7
Financial Statements.................................................................................................9
Cash Flow ..................................................................................................................9
Financial Report Generators ...................................................................................10
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Introduction
Priority's general ledger provides full multi-year account maintenance, enabling you to
perform reconciliations and queries and generate financial statements for transactions
covering more than one fiscal year. Moreover, you can record transactions for a new year
without having to close the old one. When transactions from previous fiscal years are
recorded, the opening balance of the current year is automatically updated.
One of the most important tools available when working with an account ledger is the
Audit Trail. This tool makes it possible to move, with the touch of a key, from any
transaction recorded in the account to the original transaction document (invoice, receipt,
payment, deposit). This feature is a concrete expression of the overall integrative nature
of the Financials module (specifically the general ledger) with the rest of the system.
In the dual-currency package, Priority records each transaction in two currencies (local
and second) according to their exchange rate at the moment the transaction is recorded.
This feature enables the production of reports in two currencies for the sake of
comparison, without the need to carry out additional price adjustments.
In addition, any foreign currency account can be maintained in yet another currency. All
transaction values are then recorded in the appropriate account currency.
It is possible to maintain up to fifteen fiscal periods in each fiscal year. The system
automatically defines twelve periods (one per calendar month), which may be revised.
Additional periods are defined according to user requirements. Each period must be
opened before transactions can be recorded for it and is closed when transaction
recording is completed (although it can be reopened). This helps prevent the posting of
entries to the wrong period.
You can close a fiscal period by transaction date, by reference date, or by both. If you
close a period by reference date, no further journal entries can be posted whose reference
date falls within that period. If you close the period by transaction date, no further journal
entries can be posted whose transaction date falls within that period.
In the dual-currency package, maintenance of price index values allows for the
production of indexed reports and the indexing of transactions.
Chart of Accounts
Priority 's accounts are maintained in three separate charts of accounts: the main Chart
of Accounts (for general ledger accounts), the Chart of Accounts Receivable (for
customer accounts) and the Chart of Accounts Payable (for vendor accounts).
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For each account, it is possible to view, among other things, the following information:

The current balance in the account currency (in the dual-currency package,
account balances are also displayed in the designated second currency).

Ledger transactions for the current year and for multiple years.

Monthly balances for the current year and for multiple years.

Cumulative balances, which are recalculated automatically when the user re-sorts
the displayed record order.

Unreconciled transactions in the account.
General Ledger Accounts
All income, expense and balance sheet accounts appear in the Chart of Accounts, except
for customer and vendor accounts (which are maintained in subsidiary charts of
accounts). All accounts appearing in this form are considered general ledger (GL)
accounts.
When setting up the system you can run an account initialization program that
automatically opens GL accounts based on a list of predefined accounts.
You can define specific accounts as secured, so that only those users who have received
authorization in their Personnel File can view them.
Multi-Company Enterprises
When working in a multi-company enterprise you can designate transfer accounts in the
Chart of Accounts. This enables the automatic transfer of transactions between branch
and parent companies and generates parallel recording of entries in both companies'
ledgers.
Transfer accounts can also be used when you want to distribute expenses over two or
more branch companies. You can record expenses in one company and then transfer a
portion of those expenses to another. For example, payment of a bill at the branch
company will automatically debit an expense account of the parent company.
Priority can automatically update exchange rates in all companies comprising the
multi-company enterprise. Any rates specified in one company are automatically copied
into the others. Moreover, consolidated financial statements, including aging and
customer credit reports, can be produced for such enterprises.
Chart of Accounts – A/R and A/P
All customer and vendor accounts are designated in the Chart of Accounts Receivable or
Chart of Accounts Payable, respectively.
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Customer accounts are normally opened beforehand through the Marketing and Sales
module. When a potential customer is converted to a regular customer, an account is
opened automatically (accounts are not maintained in the Financials module for potential
customers). If a customer account is first opened in the Chart of Accounts Receivable, a
customer record is opened automatically in the Marketing and Sales module.
When a vendor record is added to the Purchasing module, an account is automatically
opened in the Chart of Accounts Payable.
Exchange Rate Adjustments
If you work with foreign currency accounts, fluctuations in exchange rates need to be
taken into account periodically in order to produce more accurate financial statements.
This is accomplished by journal entries, created automatically, which adjust account
balances compensating for the varying exchange rates. Adjustment entries are generally
recorded against a default adjustment account. However, individual contra accounts can
be designated for specific foreign currency accounts.
Index Linkage (dual-currency package)
Linkages to a price index are carried out for accounts that have been flagged as indexed
accounts. The type of indexing that is used with each account is determined by its
balance sheet item. Depreciation transactions are indexed according to the base value of
the index on the day the asset was purchased.
Auxiliary Financial Programs
Combining Accounts: allows two GL accounts to be merged (e.g., when two accounts
were accidentally opened for the same purpose).
Transferring Prepaid Expenses: a mechanism for distributing expenses paid out in one
lump sum (e.g., insurance) over the course of the fiscal year. This is achieved by creating
an interim account that holds the unused portion of the expense. As the year progresses,
sums are gradually transferred from this account to an expense account.
Cash Postdated Checks: in the dual-currency package, a mechanism for dealing with
post-dated payments from customers, by recording journal entries that transfer balances
from post-dated check accounts to the main GL account for each bank.
Entry Journal
Priority 's Entry Journal provides convenient and efficient maintenance of entries
(pending, posted and provisional), as well as on-the-spot traceability to the original
financial transaction (e.g., receipt, invoice, credit memo). With the touch of a button from
the Reference column of the entry, you are able to access the type of financial document
in question and open the appropriate form (dynamic form activation).
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Three distinct dates may be maintained for each entry:

A transaction date (determining the fiscal period to which the transaction belongs)

A due date (e.g., payment date)

A reference date (the original date on which the transaction was recorded).
This distinction is particularly useful when the reference date differs from the transaction
date, such as in a vendor invoice that was received late. In addition, the system
automatically records the last date the transaction was revised (time stamp).
Batch Entries
The system supports the management of journal entries in batches. Working in batches
is particularly convenient for businesses in which different users are responsible for
recording different types of journal entries (for example, one user handles salaries,
another purchasing and a third expenses). Batches are created and closed automatically
by means of programs designed for this purpose. In addition, you can use a separate
form to review and revise batch entries. The system provides two options for posting a
batch of entries to the ledger: the first posts all entries included in the chosen batch,
while the second posts all selected entries, even if they belong to different batches or do
not belong to any batch.
Recording Journal Entries
Every financial transaction (e.g., sales invoice, receipt), once finalized, automatically
opens a journal entry for the monetary amount of the transaction. Furthermore, the entry
is itemized automatically. That is, the entry sum is broken down into amounts that are to
be debited and credited to various accounts, without any limit to the number of entry
lines. There is also an option for recording journal entries manually.
Priority maintains pending journal entries, which are assigned a temporary number (T1,
T2, ..., T100, ...) until they are posted. This number allows for easy identification and
separate handling, as pending and posted entries are recorded and reviewed in the same
form. Once the entry is posted to the ledger, the accounts in question are credited or
debited, and the entry is assigned a unique final number.
The system offers three methods for posting journal entries, among which the user can
choose the one best suited for the organization's needs:
Posting single entries
Posting a batch of entries together
Automatically posting entries as they are opened, i.e., when the original financial
document is finalized (this option only applies to journal entries created on the basis of a
financial document).
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The process of posting includes checks to ensure that the journal entry meets the
following conditions:
It is itemized.
The sum of the credits and debits equals the total sum of the transaction.
The transaction date falls within an open fiscal period.
The entry is not undergoing checks.
The sum of the entry is not zero.
The system allows for certain minor revisions in posted entries (e.g., transaction date,
reference), along with documentation of the change.
A mechanism is also available for reversing posted entries, activated by a single
keystroke. A reversing journal entry is automatically recorded with the same reference
number as the original entry.
Journal Entry Types
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Priority maintains journal entry codes that determine the accounts that are to be
debited and credited in a given type of entry. For example, a sales invoice to a customer
who pays tax will: 1) debit the customer's account; 2) credit the sales tax account; 3)
credit the appropriate income account. (Note that income accounts can be designated
per sold item or group of items.)
You can also define journal types that allow the entry of negative sums (e.g., to record a
credit or debit memo).
The system provides a list of predefined entry codes for each standard financial
document. In some cases, the manner in which the entry is constructed may be modified.
Moreover, completely new entry codes may be defined to meet the specific needs of the
organization. There is no limit to the number of accounts that may be credited or debited
in any one journal-entry code. For example, a special journal entry code may be created
for recording property or municipal taxes, which distributes the debit amongst the
company's various departments.
Every type of financial transaction is assigned a default journal entry code that may be
revised at the time the document is recorded. In the case of a manual entry, the code may
be selected as the entry is recorded.
Provisional Entries
You can record entries for anticipated transactions that are unrelated to a specific order
or invoice (e.g., salaries, loan repayments), as well as for forecasted or fictitious
transactions. These transactions can then be included in the various cash flow forecast
reports without affecting account balances or the general ledger.
Provisional entries receive a unique number prefixed with the letter “A”. They are
maintained in the same form as regular journal entries, where they can be retrieved and
viewed. Subsequently, provisional entries can either be converted to regular journal
entries and posted to the ledger, or deleted.
The Create Provisional Entries program allows data from sales, purchasing and inventory
transactions to be incorporated into cash flow forecasts. The program enables the
automatic creation of provisional journal entries based on: open sales orders, unbilled
customer shipments; open purchase orders and/or unbilled goods receiving vouchers.
Connection to Financial Documents
When working with the Entry Journal, you can take advantage of one of the more
advanced features of the system: dynamic form activation. This utility enables you to drill
down directly from a record displayed in one form to another containing information
relevant to that record. For example, while viewing a journal entry based on a sales
invoice, it is possible, with the touch of a button (from the Reference column), to open the
invoice on which it is based. The system identifies the type of transaction in question and
opens the appropriate form. This drill down feature allows you to view and further
research the source of the journal entry.
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Reconciliations
Priority supports both reconciliations within accounts (between debit and credit entries)
and reconciliations of bank and credit card statements with journal entries. In both cases,
reconciliations can be carried out automatically (according to user-defined reconciliation
methods) or manually. Automatic reconciliations are considered pending until the user
authorizes them. Manual reconciliations are carried out with the help of a worksheet.
Reconciliation Methods and Codes
Automatic reconciliation matches entries using a set of reconciliation methods (e.g., by
reference number, details, sum), which are defined within a reconciliation code. The
reconciliation method determines the basis of comparison; the code defines the
sequence in which comparisons are made. A default code, made up of a predefined set of
methods, is provided for each type of reconciliation (account, bank/credit card); however,
you can revise the defaults and construct new codes of your own.
When constructing or updating a reconciliation code, you can specify:
The permitted range in days (over which to compare due dates)
ly the last five characters
of the reference)
statement item with one journal entry item)
items must be on different sides of the balance sheet (one credit with
one debit).
Take, for example, the method designed for the system's default reconciliation code for
bank statements:
1. Match Reference 1 (e.g., the check number in the statement) with Reference 2 (e.g., the
check number for the entry) for the same date.
2. Match Reference 1 with Reference 2 up to a difference of two days.
3. Compare by details.
4. Compare amounts only for the same date.
5. Compare amounts only up to a difference of one day.
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6. Compare amounts only up to a difference of two days.
Reconciliation Worksheet
All reconciliations — whether automatic or manual, for accounts or for bank/credit card
statements — are carried out with the aid of a worksheet. Once the worksheet is prepared
with a set of unreconciled items (by means of a program), you can activate automatic
reconciliation, view results in the worksheet and make any necessary corrections or
additions. Until results are authorized, the reconciliations will be considered pending.
Account Reconciliation
Account reconciliation is carried out with the aid of a worksheet, which displays all
unreconciled journal entries for the designated account. Reconciliation can also be
carried out for several accounts simultaneously.
Once the worksheet is prepared with a set of unreconciled items, you can activate
automatic reconciliation. The system will reconcile entries according to the selected
reconciliation methods. Results can be viewed in the worksheet, and any necessary
corrections or additions can be made there. Until results are authorized, the
reconciliations will be considered pending.
Alternatively, you can enter the worksheet and reconcile amounts manually. Here, too,
reconciliations are not considered final until they are authorized.
Additional features:
small variance (e.g., one cent) may be permitted.
underpayment of an invoice), the variance can be written to a special adjustment
account. Once the reconciliation is finalized, an adjusting entry will be posted against that
account.
Bank and Credit Card Statement Reconciliations
You can reconcile bank or credit card statements with journal entries once you have
recorded these statements in the system. In credit card statements, you can also
designate the percentage of commission charged by the credit card company.
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Reconciliations are carried out in a manner similar to that of account reconciliation. A
program is activated which loads all unreconciled entries for the designated bank or
credit-card company into a worksheet. Here, too, reconciliations can be performed
automatically or manually.
Financial Statements
Priority provides a broad range of reports that reflect the financial position of your
company.
Financial statements may be accompanied by schedules. The structure of statements is
predefined, but may be revised. For instance, you can change headings and sub-headings
in a balance sheet report or add new ones.
The following list displays the standard reports provided by the system (those with
asterisks are only available in the dual-currency package). All reports can be run by
transaction date or by reference date, and can include pending or provisional journal
entries. Additional reports can be constructed by means of a set of report generators.
Cash Flow
Priority provides two types of cash flow reports. The first documents actual cash flow
into and out of the bank, sorted by cash flow code (different types of expenses and
income). The second type of report is a cash flow forecast.
The Cash Flow Forecast report displays expected cash intake and outflow over a
designated time period. The report is based on recorded financial transactions whose due
dates fall within the specified future period. For example, expected receipts from
customers are based on unpaid invoices, while forecasted payments to vendors are
based on unpaid vendor invoices. You can also run the Create Provisional Entries
program to record temporary journal entries for open orders, unpaid goods receiving
vouchers and unbilled transactions, which can then be included in cash flow forecast
reports. This program allows you to create separate entries for each transaction, include
pre-payments, include or exclude taxes and exclude individual purchase orders. Orders
with the Draft status are automatically excluded.
In addition, you can include anticipated cash flow that is not based on orders and
invoices (e.g., salaries) by recording them in the Cash Flow Forecast Sums form.
Financial Report Generators
In addition to the wide variety of standard financial reports available in the system,
Priority provides a set of report generators that enable you to create reports with an
unlimited number of structures and criteria. These generators are easily operated by the
average user, and are particularly useful for accountants and comptrollers.
Ledger Report Generators
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This pair of generators is used to design reports of transactions recorded against ledger
accounts (GL, A/R and A/P). One generator calculates opening balances and sorts
transactions by their transaction dates (which determine the fiscal period in which they
fall); the other uses their reference dates (the date on which the transaction actually
occurred). The latter is particularly useful when dealing, for instance, with vendor invoices
that were received late.
In both cases, you select the columns to be included in the report, determining the order
in which they appear. Column titles and widths are assigned automatically, but may be
revised.
Transaction Report Generator
This generator can be used to design reports for account transactions based on a variety
of criteria (e.g., budget items). Reports can be detailed (i.e., display information for
individual transactions), or they can summarize financial data. Moreover, consolidated
reports can be produced.
As with the ledger report generator, the user determines the columns to be included in the
report, the order in which they will appear, their titles and widths. You can also select the
columns that will serve as input parameters for the report.
Financial Statement Generator
This generator is used to customize financial statements: balance sheet, profit and loss
reports and trial balances, including schedules.
Priority breaks down each user-designed statement into two main components: a set
structure of rows and a set structure of columns (column bar).
The row design determines the items which will appear (e.g., Fixed Assets, Equity, Current
Liabilities), including sub-totals and/or totals; the groups of accounts attached to each
item; the amount of detail that will be displayed per item (per account versus item total);
and the like.
The column bars determine how the data for each row is presented. For instance, to
compare quarterly figures, you would include data for each quarter in a separate column.
To create a consolidated report, you would need each company's data in a separate
column, followed by a column of totals. Or you can include a percentile column (e.g.,
percentage of income) alongside a column of figures.
Rows and columns are defined separately, affording you the flexibility to mix and match.
For example, you can use the same balance sheet items and present them with monthly
figures (Column Bar A), quarterly figures (Column Bar B) and consolidated figures
(Column Bar C). When running the report, the user selects not only the type of report
desired (e.g., balance sheet, P&L), but also the column bar to use.
Schedules can be attached to any statement. In fact, you can attach more detailed
schedules to less detailed ones in a recursive fashion. More experienced users can create
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complex statements, with a hierarchy of attached schedules (e.g., a factory-wide
summary, a detailed report with department figures, and an even more detailed report
with balances for each account).
Sales
Order
s
Shipping
Document
Accounts Receivable
Invoices
Invoices/
Shipments
Inventory
Balances
General
Ledger
Receipts
Entry
Journal
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