Use journal entries to transact against selected General Ledger accounts: in other words, to adjust amounts in the Chart of Accounts without adding a receipt or disbursement. A journal entry must have at least one debit and at least one balancing credit, and the total debits must equal the total credits entered. If you have the appropriate security permissions, you can reopen previous accounting months and enter adjusting journal entries, or you can backpost journal entries into a closed/posted accounting month. You can also enter a journal entry that will automatically reverse at a specified time. You might wish to do this, for example, if you were entering estimated interest figures for reporting purposes and wanted the entry to reverse so that you could post the actual interest figure upon receiving it. If you are using the Journal Entry Approval Process, the journal entry's Approval Status may limit the actions you can perform on it.
If you select a required account when adding a journal entry, you receive the warning message, "Posting to a system required account may cause balancing issues." In particular, it is inadvisable to use journal entries to offset Accounts Receivable. Doing so creates an out-of-balance situation when comparing the General Ledger Accounts Receivable and the Aged Receivables at the client level, which makes auditing difficult.
Enter default/recurring journal entries in Configure > Accounting > Default/Recurring Entries. Set up a default journal entry if you would like to be able to fill in the information for a particular journal entry automatically. Set up a recurring journal entry if you would like this particular journal entry to automatically be entered at regular intervals (an example of this would be monthly depreciation). You can inactivate or reactivate default/recurring journal entries through the Inactivate/Reactivate action available in this area.
If a journal entry is in an open accounting month, it is fully editable (meaning that you can add, edit, and delete detail rows) if you are not using the Journal Entry Approval Process. If the approval process is enabled, only journal entries with a Working or Rejected status are fully editable. You can also edit certain fields on System Approved journal entries if necessary.
If the journal entry is in a closed accounting month, revisions are much more limited. Only fields that have no impact on the General Ledger (such as the Description and GL Schedule associated to a journal entry detail row) can be modified. Therefore, if a journal entry in a closed accounting month contains erroneous information and needs to be corrected, the best practice is to void and re-enter the journal entry (see below).
Voiding a journal entry creates an equal but opposite journal entry that offsets the original, restoring General Ledger account balances to their values before the original journal entry was created.
If you are using the Journal Entry Approval process, you can only void journal entries with an Approved or System Approved status. Although you cannot void journal entries with a Working or Rejected status, the Delete button on the Journal Entries list allows users with the required security permissions to delete them if necessary. This button only displays if the approval process is enabled and you have rights to delete journal entries.
The Journal Entry Approval Process provides an additional layer of oversight and control for manually entered journal entries by requiring them to be reviewed before they affect General Ledger balances. If you do not enable the approval process, all manually created journal entries are applied to General Ledger balances immediately, meaning that any errors could result in incorrect balances.
The approval process is not enabled by default. Your organization can enable it system-wide in Configure > Accounting > System Settings. Enabling the process assigns a System Approved status to all existing journal entries, which means that they do not require approval to be applied to General Ledger balances. All journal entries that are manually added after the process is enabled will require approval.
When the approval process is enabled, all journal entries have one of the following statuses:
Enabling the approval process does not change the workflow for adding a journal entry. However, each journal entry must be submitted for approval using the Actions > Submit for Approval option. Submitting a journal entry assigns it a Working status. Anyone with permission to Add journal entries also has permission to submit them for approval. All submitted journal entries must be approved or rejected by someone other than their submitter, even if an Enterprise Admin submits them.
When you review a submitted journal entry, you can approve it from its Detail screen if it contains no errors. Approving it updates its status and applies it to General Ledger balances. If the journal entry contains an automatic reversal, the entry for the reversal is created and automatically approved by the system once you approve the original journal entry. If the journal entry needs corrections, you can reject it from the Detail screen so that the submitter can resolve the issue and resubmit it for review.
Only journal entries with an Approved status can display on Bank Reconciliation statements; be associated to other reconciliation statement types; and affect balances on the Balance Sheet, Income Statement, and Trial Balance reports. You cannot close an accounting month if it contains any journal entries with a Working or Rejected status.
Applied recommends using activities to facilitate the approval process. Before you enable the process, set up activities to use the Journal Entry – Reject and Journal Entry – Submit for Review events in System Event Configuration and Activity Code Configuration to notify individual users or work groups when a journal entry needs their attention. Otherwise, you must monitor the Journal Entries list or generate reports to view information about journal entries’ approval statuses.