In the lesson on Corporate Oversight, we look at how information moves from the subsystems to the General Ledger. Basically, Abio processes the different subsystems that receive and pay money, and creates G/L transaction records. These records can be reviewed, and you can then choose to move the amounts to the respective G/L accounts.
In this lesson, we’ll look at how g/l transactions are created from accounts payable cheques and invoices.
To cost amounts from accounts payable, navigate to [a] Payables, then [p] Post to J/C and G/L.
Abio looks for the oldest uncosted cheque or invoice and prompts you to transact accounts payable for that G/L period.
To the uninitiated, there’s not a lot of information on this screen. If you’re not sure what it intends to do, you can click on the ‘show help v’ button for more information.
You’ll notice that when we transact accounts payable, the GST/HST is directed to its own G/L account. Under the Excise Tax Act, the input tax credit (ITC) mechanism allows most businesses to recover the GST / HST paid or payable on eligible purchases and expenses related to their commercial activities. To support this revenue stream, Abio isolates GST from your purchases. It does the same for payroll subsistence amounts. This simplifies calculating your input tax credits for your GST rebate.
Chronologically, you created invoices first, so we’ll look at that first. Abio process all the uncosted invoices in the selected G/L period. Each invoice is posted to a G/L account.
If the invoice is also posted to a job, then the G/L account is the control account associated with the invoice’s cost type. In the above example the cost type is material, so the G/L account is the Job Costing Materials Costing account.
For each invoice being transacted, the amount of the invoice, including any holdback, and less any GST/HST, will be posted to the cheque’s G/L account. GST/HST is recorded separately to assist in claiming GST tax credits.
The total amount of the invoices, including GST/HST, will be deducted from the accounts payable net payable control account.
And then the GST/HST is posted separately to the GST or HST recovery accounts.
Invoices are next organized by cost centre and the total invoice amount, including holdback, but excluding GST/HST, are added to the transaction that will update the cost centre. The invoice amounts are posted according to the cost centre of the invoice.
You can set your company to automatically update the job costs each time A/P and payroll are transacted.
Otherwise the transactions can be updated manually. If this is the case, navigate to [e] Job Costing, then [p] Update.
Clicking <Apply> will post the job cost transactions to the cost centres.
You’ve generated cheques to pay vendors. For each uncosted cheque in the selected G/L period, Abio creates a transaction record that reduces the bank account by the amount of the cheque. Abio knows which G/L account is associated with the bank account because there’s a control account for that. To review which G/L account tracks bank balances, navigate to [d] General Ledger, then [u] Set Up, then [f] Control Account Entry.
Accounts Payable control accounts are on the second tab.
When all cheques are processed, the total amount taken from the bank account is added to the A/P net payable G/L account.
Transacting Accounts Payable
When you select Apply, Abio creates the G/L and job cost transactions. A report of the G/L transactions is displayed.
You can double-click on any line and see the source record for the G/L transaction.
At this point, the G/L transactions have been created but not applied to the G/L accounts.
To apply the G/L transactions, you need to run the Trial Balance & Update utility. Navigate to [d] General Ledger, then [e] Trial Balance & Update.
Select to update G/L accounts.
Now when you review the G/L accounts, you’ll see that the amounts we’ve transacted are reflected in the balances.