When money is paid out or received, the amounts are recorded in the general ledger. Likewise for amounts that are owed but not yet paid: payroll timesheets indicate money is owed to employees; payable invoices indicate money is owed to vendors; receivable invoices indicate our clients owe us for the work we’ve done for them.
These amounts are written to transaction records. The amounts on the transaction records are then added to the amounts on the general ledger accounts. In this way, updates to the general ledger can be verified and traced by reviewing the transaction records.
Put another way, each time money, or the promise of money, is recorded, transaction records are created for the general ledger and job costing. The transaction record includes an amount and a target. G/L transactions update the general ledger, and the target is always a general ledger account. Job cost transactions update jobs, and the target is always a job cost centre. Cost centres are categorized within job and area.
In Receivables the utility only creates G/L transactions. Job Cost revenue amounts are updated directly to the job and the job cost centres each time receivable invoices are posted. As well, job cost payments are posted directly to the job when payment is received.
Prior to transacting, you can make any changes you require to the untransacted records. You can tell they aren’t transacted because the costed? field is ‘N’. This payroll timesheet has just been entered.
Until it is transacted, the costed flag will remain ‘N’ and you can change it as required.
Once it is costed, and the amounts posted to the various general ledger accounts, you can no longer change it. At that point you need to reverse it out, by creating a matching timesheet for the same user and date, but with negative amounts such that the two timesheets balance out to zero.
This is the same timesheet, but it has been included in a cheque, the cheque has been approved and queued for printing. The amounts of the cheque have been recorded on transactions, and the transactions have been applied to update the appropriate general ledger accounts.
Abio makes extensive use of control accounts to determine how G/L accounts are updated. They’re described in the next lesson.
The G/L transactions are created by the utility, but aren’t applied to the G/L accounts until the Trial Balance and G/L Update is run.
The G/L transactions give us a powerful reporting and auditing tool. The above timesheet is posted to g/l account 610100. When we examine that account, we see that there have been a number of postings to it.
How can we be sure that the timesheet we entered is posted to that account? Clicking on the hotlink lets us drill down into the transactions that have been applied to that G/L account.
You can review G/L transactions through a number of reports. Navigate to [d] General Ledger, then [i] Transaction Reports to select the transaction report.
When systems are transacted similar records are created to update the job cost centres. We call these j/c transactions. To see an example of j/c transactions, we can look at the costs reported on any job record.
Drilling down on the hotlink shows us a report of the jc transactions.
To select a custom report of the jc transactions, navigate to [e] Job Costing, then [o] Transaction Report.
and enter your criteria.