Bank Matching

Certain general ledger accounts can be defined as bank accounts - as many bank accounts as
needed can be defined. The following screen is accessed from the Setup->General TAB->Bank
Accounts

General ledger accounts defined as bank accounts can be reconciled to bank statements using the
matching facilities. Entries made to bank accounts using receipts or payments also create a total
receipt or payment, which is retained for the purposes of matching off the bank statements.

Using the bank payments page, general ledger payments can be analyzed to any number of other
general ledger accounts, but only one entry to the bank account is made. This page also allows
payments to supplier accounts to be created. Similarly, using the receipt entry page, a series of
receipts from customers which may all have been banked together can be deposited as one
amount to a bank account. There is only one amount appearing on the statement as the total of all
these receipts, this bank account transaction is created and available for matching deposits off the
bank statements. To match payments for example the user clicks on General Ledger TAB of the
main menu -> under the transactions TAB of the general ledger menu click on the Bank
Payments Matching:
Once all receipts and payments are matched to bank statements, the bank reconciliation
statement can be printed which should show how the current general ledger balance reconciles to
the bank statement for this account.

Bank accounts are defined from the setup tab from the link to Bank Accounts Maintenance.
There is facility to enter the name of the account, the bank account number and the address of the
bank if required, as well as selecting the general ledger account to which it refers. There are links
to edit existing bank account records and to delete them. However, once defined as referring to a
particular general ledger code it is not possible to change the general ledger code of the bank
account. This is because there would be entries made to this account. Similarly, if bank
transactions have been created using this bank account it is not possible to delete it. The bank
account transactions must be purged first (but currently no facility exists to purge bank
transactions).
Bank Account Payments

From the general ledger tab, the first link under transactions is Bank Account Payments.

The following data is required:

* The bank account from which the payment has been (or is to be) made. A select box allows this
to be selected from the list of defined bank accounts.
* The date on which it was paid. This is important since the accounting period in which the
payment is entered is determined from the date. The system will default to today's date - this
must be changed where bank payments are being entered retrospectively.
* The currency which is being paid. The entries to all bank accounts are made in local currency,
but payment to suppliers may be made in foreign currency being purchased in local currency at
the exchange rate entered. All bank accounts are recorded in local currency (there is no facility
for foreign currency bank accounts). By default the system will use the functional currency of the
business as defined in the company preferences page.
* The exchange rate - if the functional currency of the business is being used this should be 1. If
another currency is being purchased with the payment then the rate at which it is being purchased
should be entered.
* Narrative - applicable to the whole payment. Narrative applicable to individual general ledger
entries can be entered separately.

Payments can take two forms - either it is a general ledger payment or it is a payment to a
supplier. General ledger payments require an analysis of how the payment should be posted to
the general ledger. General ledger accounts can be specified either as the account code directly
(if the account code is known) or by selecting from the select box. Any narrative applicable to
the general ledger amount can be entered too - and the amount to be posted to the
selected/entered account. The total payment is taken as being the sum of all the entries made. If
the total of all entries made is negative then this is entered as a negative payment - these are
accepted to allow for correction of data entry errors.

Bank Account Receipts

The following data is required:

* The bank account to which the payment has been (or is to be) made. A select box allows this to
be selected from the list of defined bank accounts.
* The date on which it was paid. This is important since the accounting period in which the
payment is entered is determined from the date. The system will default to today's date - this
must be changed where bank payments are being entered retrospectively.
* The currency which is being paid. The entries to all bank accounts are made in local currency,
but payment to suppliers may be made in foreign currency being purchased in local currency at
the exchange rate entered. All bank accounts are recorded in local currency (there is no facility
for foreign currency bank accounts). By default the system will use the functional currency of the
business as defined in the company preferences page.
* The exchange rate - if the functional currency of the business is being used this should be 1. If
another currency is being purchased with the payment then the rate at which it is being purchased
should be entered.
* The receipt type, this can be chosen from a drop-down list.
* Narrative - applicable to the whole payment. Narrative applicable to individual general ledger
entries can be entered separately.
Bank Accounts
Certain general ledger accounts can be defined as bank accounts - as many bank accounts as
needed can be defined. At the time of defining a general ledger account as bank account the
currency of the bank account must also be specified. General ledger accounts defined as bank
accounts can be reconciled to bank statements using the matching facilities - all receipts and
payments show in the currency of the bank account for easy matching off statements. Entries
made to bank accounts using receipts or payments also create a total receipt or payment, which is
retained for the purposes of matching off the bank statements. Using the bank payments page,
general ledger payments can be analyzed to any number of other general ledger accounts, but
only one entry to the bank account is made. This page also allows payments to supplier accounts
to be created. Similarly, using the receipt entry page, a series of receipts from customers which
may all have been banked together can be deposited as one amount to a bank account. There is
only one amount appearing on the statement as the total of all these receipts, this bank account
transaction is created and available for matching deposits off the bank statements.

Bank accounts are defined from the setup tab from the link to Bank Accounts Maintenance.
There is facility to enter the name of the account, the currency of the account, the bank account
number and the address of the bank if required, as well as selecting the general ledger account to
which it refers. There are links to edit existing bank account records and to delete them.
However, once defined as referring to a particular general ledger code it is not possible to change
the general ledger code of the bank account. This is because there would be entries made to this
account. Similarly, if bank transactions have been created using this bank account it is not
possible to delete it. The bank account transactions must be purged first (but currently no facility
exists to purge bank transactions). It is not possible to change the currency of a bank account
once there are transactions against it.

Once all receipts and payments are matched to bank statements, the bank reconciliation
statement can be printed which should show how the current general ledger balance reconciles to
the bank statement for this account. The reconciliation also has an option available for bank
accounts set up in other than the functional currency of the business (local currency), to post
differences in exchange. The balance of the account is maintained in local currency in the
general ledger and for the purposes of the bank reconciliation this is converted to the bank
account currency at the exchange rate in the currencies table (see Setup -> Currency
Maintenance) - this rate can be changed manually to the rate of the day and the foreign currency
balance on the account will change - to correct this balance an exchange difference needs to be
recorded. Having worked through the matching of receipts and payments to the bank statements -
the bank statement balance can be entered to compare against the system balance - a correcting
entry is then made to the GL to post the difference on exchange. The posting to the general
ledger is back dated to the end of the preceding month - since it is assumed that the reconciliation
may be a few days or a week behind the current date.
Bank Account Payments

From the general ledger tab, the first link under transactions is Bank Account Payments.

The following data is required:

 The bank account from which the payment has been (or is to be) made. A select box
allows this to be selected from the list of defined bank accounts.
 The date on which it was paid. This is important since the accounting period in which the
payment is entered is determined from the date. The system will default to today's date -
this must be changed where bank payments are being entered retrospectively.
 The currency which is being paid. Payment to suppliers may be made in foreign currency
being purchased in the currency of the bank account at the exchange rate entered - see
below.
 The exchange rate - this is the exchange rate between the currency being paid and the
currency of the bank account. If the currency being paid is the same as the currency of the
bank account then this rate should be 1. If another currency is being purchased with the
payment then the rate at which it is being purchased should be entered.
 The functional exchange rate - this the exchange rate between the currency of the bank
account and the functional currency of the business as defined in the company
preferences (ie the reporting currency of the business). Where the bank account is in the
same currency as the functional (reporting) currency of the business then this value
should be 1. The functional currency entry will only be required when the bank account
currency is different to the the functional currency and will default to 1 automatically if
they are the same.
 Narrative - applicable to the whole payment. Narrative applicable to individual general
ledger entries can be entered separately.

Payments can take two forms - either it is a general ledger payment or it is a payment to a
supplier. General ledger payments require an analysis of how the payment should be posted to
the general ledger. General ledger accounts can be specified either as the account code directly
(if the account code is known) or by selecting from the select box. Any narrative applicable to
the general ledger amount can be entered too - and the amount to be posted to the
selected/entered account. The total payment is taken as being the sum of all the entries made. If
the total of all entries made is negative then this is entered as a negative payment - these are
accepted to allow for correction of data entry errors. Payments are always entered in the currency
of the payment - the conversions are handled by the system for general ledger postings etc.

General Ledger Integration Setup

Bank Accounts are automatically integrated with the general ledger and cannot exist separately
without the GL being used. Every transaction is recorded in two places (double entry) eg. A bank
account payment reflects in the bank account and also in the expense account that is was paid for
- eg. Stationery, fuel, entertaining, advertising or whatever. One entry goes as a debit on the left
and the other as a credit on the right - when you look at the trial balance the debits should tie up
with the credits ie the trial balance - a list of the general ledger balances should have balancing
debit total and credit totals.

With respect to the sales (AR) and purchase (AP) ledgers, general ledger postings can be turned
off in the company preferences screen by setting each of the flags to No.

Integrated general ledger postings do provide a good way of building up the business's accounts
from activity in these sub ledgers.

You can choose between two levels of integration:

1. Integrate GL at the debtors and sales level only

This creates general ledger journals for each sale as follows:

DR the debtors control account - defined in the company preferences screen

CR the sales account - defined with reference to the customer sales area, stock category of the
item being sold and the sales type (price list) of the customer. This provides great flexibility as to
how sales should be posted
CR the tax to the taxgl account defined in the tax authorities (ie the general ledger code of the tax
authority of the customer branch). It is also possible to have just one general ledger account for
all sales by defaulting ANY sales area, ANY stock category and ANY sales type with a single
general ledger code - see later section on sales general ledger codes.
the reverse takes place for a credit note.
When cash is received:
CR the debtors control - defined in company preferences DR the bank account - defined in the
bank account setup.
There are also general ledger entries for discounts and differences on exchange which have been
ignored for the purposes of this introduction.
This level of integration ensures that the list of balances of all customer accounts (in local
currency) always ties up with the general ledger debtors control account.

2. Integrate GL at the stock level as well

For every sale:

CR stock value at the standard cost of each item sold - the stock GL account being defined in the
stock categories record.
DR Cost of Goods Sales (COGS - or COS) with the same cost. - the COGS GL accounts are
defined with similar flexibility as descibed for the Sales GL accounts under the setup menu
under AR/AP options

the reverse happens for credits.

This enables the stock value to be continuously updated in the general ledger and always be
equal to the stock valuation at standard cost.
This level of integration also has ramifications for stock adjustments, stock deliveries and stock
cost changes.

For stock adjustments the quantity adjusted is extended by the standard cost and it is written on
(CR) or off (DR) to the stock adjustment GL account as specified in the stock category record for
that item.

For receipts of stock - the stock coming in is extended by the standard cost and the entry is to:

DR stock at standard cost x number received - the stock account being defined in the stock
category record for the item being received.
CR GRN suspense at standard cost x number received - this account is specified again in the
company preferences screen.

The two levels of general ledger integration are:

 Sales journals that post a credit to a sales general ledger account, a debit to a discount
account, a credit to a tax account, a credit to a freight recovery account and a debit to a
debtor account. This level of integration also reverses the posting described here for sales
credit notes. This level also triggers the general ledger journals for banking of cash
against debtor accounts. Debiting a bank account and crediting the debtors account.
 Stock journals that post a debit to a cost of sales account and a credit to a stock account -
and the reverse entries for sales credit notes.

The level of general ledger integration is determined by reference to the flags in the company
preferences page.

Sales Journals

The general ledger accounts that are used in this level of integration are determined from several
inputs.

 Sales Area of the customer being invoiced/credited

 Sales Type (or price list) of the customer being invoiced/credited.
 Stock Category of the item being invoiced/credited.

A table of sales general ledger accounts is maintained and can be modified from the setup tab.
When an invoice is created from the ConfirmDispatch_Invoice.php script the system uses a
function defined in GetSalesTransGLCode.inc to look up the general ledger codes that are
appropriate. By default this function uses the following logic:
  If there is a record in the SalesGLPostings table that has a matching Area, SalesType and
Stock Category then the function returns the sales account and the discount account
applicable.
 If there is a match for the Area and SalesType using the default Stock Category (ANY)
then the codes applicable to this record are returned.
 Then if there is a matching Sales type, stock category with default (AN) area this is used.
 Then if there is a matching stock category record using the default area (AN) and the
default salestype (AN) this is used - finally
 If there is no record is found after trying the above combinations then the GL Code for
the default area, sales type and default stock category is used - this is GL code 1. If GL
Code 1 is not defined, then it will be created.

Since the logic of how the general ledger account is determined is defined in this function it is
relatively simple to change this to what is most appropriate for the business.

The freight recovery and the debtors control account used are those defined in the company
preferences page.

The tax account used is the account defined in the tax authorities definition used for the customer
being invoiced.

Stock Journals

The general ledger accounts that are used for posting sales transactions are determined using the
sales area, the sales type of the customer being invoiced/credited and the stock category of the
item being invoiced/credited. A table of general ledger accounts is maintained and can be
modified from the set up tab from the link "COGS GL Interface Postings". The same logic as
above is applied and the function is defined in the same GetSalesTransGLCode.inc script to look
up the appropriate GL codes. Again, since the logic of how the general ledger account is
determined is defined in the function GetCOGSGLAccount, it is relatively simple to change this
to suit the business.

The account to credit stock with for the cost of goods sold is determined by reference to the stock
item being sold. The stock category of the item is retrieved and the general ledger codes
applicable to the stock category are used.

The profit and loss accounts used for stock adjustments are also determined by reference to the
stock category record.

The profit and loss account used for posting the variance between standard cost of a purchased
item and its actual cost as invoiced is also determined from the stock category record.