3. Accounting - Basic Accounting
Basic Terms and Concepts
General Ledger vs. Budgetary Ledgers
Budgetary Ledgers track anticipated expenses
(encumbrances) plus actual expenses against a budget
(spending authority) to prevent over-spending.
The General Ledger tracks actual expenses only (hence
the Ledger name “Actuals”) and is used to prepare the
University’s Financial Statements (annual reports
required by law which disclose how the University
obtained and utilized its financial resources during the
preceding fiscal period i.e., financial year).
4. Accounting - Basic Accounting
Basic Terms and Concepts
What is a Trial Balance? A listing of the
accounts for your dept or project (or the entire
University) General Ledger and their balances as
of a specified date (actual financial
transactions—not budgetary).
Debits and Credits
These are the backbone of any accounting
system. Every accounting entry in the general
ledger contains both a debit and a credit.
Further, all debits must equal all credits .
5. Accounting - Basic Accounting
Basic Terms and Concepts
Figure 1 Debits and Credits vs. Account Types
Account Type Debit Credit
Assets (1 or 2xxxxx) Increases Decreases
Liabilities (3 or 4xxxxx) Decreases Increases
Income (Revenue) (6xxxxx) Decreases Increases
Expenses (7xxxxx) Increases Decreases
INCREASE DECREASE INCREASE DECREASE
DEBIT ASSET LIABILITY DEBIT EXPENSE REVENUE
CREDIT LIABILITY ASSET CREDIT REVENUE EXPENSE
6. Accounting - Basic Accounting
Basic Terms and Concepts
Sample Accounting Entries:
Purchase of office supplies on a vendor account:
– Step 1: Record the purchase (invoice posting):
Expense (Office Supplies) 741101 $1,000.00
Accounts Payable 311000 -$1,.000.00
Step 2: Record the payment( cut check):
Accounts Payable 311000 $1,000.00
Cash 112000 -$1,000.00
7. See how accounts payable is back to zero? The
net result is the same as if the transaction was
conducted in cash:
Cash 112000 -$1,000.00
Office Supplies Expense 74110 $1,000.00
Accounting - Basic Accounting
Basic Terms and Concepts
8. Accounting - Basic Accounting
Basic Terms and Concepts
Other Examples of Typical entries:
– Interdepartmental Requisition: Debit (charge)(+)
expense account (7xxxxx) and credit(-) revenue account
(6xxxxx).
– Expenditure Transfer: Debit (charge)(+) expense
(7xxxxx) for one dept./fund/proj./account and credit(-)
expense (7xxxxx) for another dept/fund/proj./account.
– These entries automatically generate entries to move
the “cash” from one department/fund/project to the
other (Account 112000).
– Revenue Deposited through the Cashier’s Office:
Debit (+) Cash (112000); credit (-) Revenue
(6XXXXX)
9. Accounting - Basic Accounting
Basic Terms and Concepts
Assets: Things of value your dept./project owns.
Liabilities: Things owed to another (debts)
Equity: The difference between the Assets and Liabilities.
Net difference between revenues and expenses from prior
years.
Revenue and Expense accounts keep track of where the
income comes from and where it goes.
At the end of the fiscal (accounting) year, all the income and
expense accounts go to zero—we begin the new year with a
clean slate.
Assets and Liabilities do not get zeroed out—the balances
roll into the next year.
10. REPORTING TOOLS—Using
Ledger Inquiry
Ledger Inquiries through General Ledger>
(good for viewing data; real-time data)
– Review Financial
Information>Ledger>Find or Add Search
Name. Note: need to set up new search
the first time.
– Ledger – mark “Show YTD Balance” to get
YTD totals through identified period as
well as period totals.
– Can view journals by clicking on “Activity”
hyperlink. Then can drill down on the
Journal ID for more detail. Marking
“Show Transaction Detail” will bring
Journals up without having to drill down
on Activity, but can also slow the search
process.
14. REPORTING TOOLS—Using
Report Search Page
Through Monthly Reports
- Reporting Tools >Report Search Page
- Departmental Summary (DLS) provides monthly
and cumulative totals by account number (Excel
based).
- Detail reports are University wide. Use
“Search” feature to get specific department or
project (PDF Reports).
15. GENERAL LEDGER REPORTS
Reports available through the GL module:
Trial Balance—account balances for specified
period
Ledger Summary Report—detailed journal
activity
Ledger Activity Report—contains elements of
both of the above.
17. OPTIONAL CHARTFIELDS
Allows for cost accounting at a more detailed
level
Defined by department, added by General
Accounting.
Chartfield name– maximum 10 characters
Long Description—should begin with first three
digits of department number—cannot exceed 30
characters
Short Description—Maximum of 10 characters