CONTENT
Introduction
Journal entries will allow you to make multiple accounting operations in the system. Although a majority of the work can be done with the tools of the system, certain operations will require a manual intervention, and the journal entries can help you with that.
Requirements
Make sure you are familiar with the journal entries and their requirements.
Location
1) Go in your property’s portal
2) Under FINANCES, go in the JOURNAL ENTRIES tab.
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Operations
Year end entry – Accrued liabilities
In short, entering the accrued liabilities allows you to assign an expense treated next year into the current year. This can be used if, for example, a project planned during this fiscal year will only be completed and paid for in the next. To make sure that the expense appears in the right financial year, we will use the accrued liabilities to assign the expense in the correct year and avoid having expenses that belong in a previous year in another.
1) Make a list of the invoices that will be paid or received in the next fiscal year for which the expenses are to be attributed in the current year.
2) In your journal entry, along with the required information, make sure that the following is added:
A | Add the transaction date. |
B | Add the first day of the following fiscal year under AUTO REVERSING DATE. You can also click on YEAR END ENTRY to automatically fill the field with the correct date. |
C | Add the expense account and debit the amount to be paid in the future. If need be, you can make one journal entry with all the accrued liabilities and add multiple expense accounts. |
D | Credit your Accrued Liabilities account for the total debited in the expense accounts |
Once the entry is configured and saved, the upcoming invoices will be accounted for in the current financial year, and the entry will be reversed in the next financial year, as a mean to cancel their impact on that financial period.
Year end entry – Prepaid expenses
At the opposite of the accrued liabilities is the prepaid expenses, which can be defined as expenses treated in the current fiscal year, but report to the next. As an example, if you paid your insurances in full, but a portion covers months of the next fiscal year, you can reassign that portion of the expenses in the next fiscal year with a prepaid expenses journal entry.
1) Make a list of your prepaid expenses and the accounts to which they are associated.
2) In the journal entry, in addition to the required information, make sure that the following is added:
A | Add the transaction date. |
B | Add the first day of the following fiscal year under AUTO REVERSING DATE. You can also click on YEAR END ENTRY to automatically fill the field with the correct date. |
C | Add the expense account and credit the amount to report to the next fiscal year. If need be, you can make one journal entry with all the prepaid expenses and add multiple expense accounts. |
D | Debit your Prepaid Expenses account for the total credited in the expense accounts |
Once the entry is configured and saved, the amounts will be credited in the current fiscal year, and the reversion will associate the expenses to those same expense accounts in the following fiscal year.
Managing payables of the opening balance sheet
If you entered payables in the opening balance sheet, it is imperative that the invoices are paid, but also important that the impact of said invoice is not applied twice in your accounting. This journal entry will allow you to enter your invoices and immediately cancel its impact in your financial statement.
1) Add the invoices and note the amounts and expense accounts to which they are associated.
2) In your journal entry, credit the expense account, and debit the supplier’s payables account for the invoice’s amount.
That way, you will be able to process the invoice normally while cancelling its impact in the financial statement, avoiding situations where it is counted twice in the income statement.
Publishing income statements during integrations in the middle of a fiscal year
If your transition to UpperBee is done in the middle of a fiscal year, you can do your finances one of two ways. You can either start at the beginning of the fiscal year and enter your payables and receivables up to date, or you can choose to start at a specific moment and add the income statement up to that point by journal entry. If you choose the second method, a journal entry will be required to ensure that your financial statements cover the entire fiscal year.
Note: Before you proceed, make sure your chart of accounts has been created.
1) In a new journal entry, click on ADD A NEW LINE as much as necessary, and then add the accounts figuring on your income statement as well as your net assets account (typically #3000 if you are using UpperBee’s standard chart of accounts)
2) Enter your debits and credits in the appropriate accounts.
3) Once all the amounts appear in the entry, enter the difference in the debit or credit section of your net assets. The column with the lowest amount is the one in which you must add the amount.
When the entry is saved and published, your results up to your first day of accounting in UpperBee will eb included in your income statement. The surplus or deficit will cancel the debit or credit done in the net asset account and the amount entered initially for that account through the opening balance sheet will remain unchanged.
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