Journals - Nominal

Although you almost certainly update your nominal ledger automatically from your sales and purchase ledgers and maybe from other systems such as payroll and fixed assets too, there are many other transactions that you must enter directly into the nominal ledger. These are usually called "journal entries”.

There are several ways in which you can post journal entries. These include multiple entry journals which allow you to enter a list of debit and credit transactions provided that the total of the debit entries agrees with the total of the credit entries; and provisional entries which may be reversed in a following period.

In addition, a powerful facility exists to pre-define up to 40 user-defined journal formats, such as payroll entries, expense forms, depreciation values, accruals and prepayments.Once defined, you can post these to the ledger whenever they are due. A final option provides you with a simple way to reverse any journal. If an incorrect journal is posted then this facility lets you cancel it and enter a correct journal.

The entry of standard and provisional journals is discussed here. User Defined Journals, the reversal of provisional and standard journals, and the revaluation of currency journals are discussed in the Other Journal Options section later.

Provisional Journals

Datafile Software provisional journals are a special form of journal transaction. They are designed for you to reverse at a later time, typically after the end of the period. You use them in cases such as:

You are expecting an invoice from a supplier which hasn’t yet been received, but its value affects the current month’s trading results

You pay commission monthly in arrears, but you want to take account of the future commission in the current month, to which it applies

You are expecting some interest on a deposit account, but it won’t show up until next month even though it applies to this month

In such cases you need to have an entry in this period’s figures which takes account of these events, but then must make sure the true transaction isn’t double counted. In the first case, the invoice will arrive, and so will get posted into the purchase ledger, and from there to the nominal. In the second, the commission value will be part of next month’s payroll. In the third, the interest presumably will show on a future statement, and so be posted via the cash book or direct through the nominal.

You can enter a transaction in advance of the true transaction so that your figures are OK, but you must reverse this transaction before the true transaction hits the ledger.In effect the reversed transaction counteracts the real transaction so that it has zero effect in the period it is entered. The effect has occurred in the earlier period.

The Datafile Software provisional journal is just like any other journal, except that it is marked as provisional and you can reverse it later. Reversing provisional transactions is an automatic process which scours the ledger under your direction and reverses any it finds.

Journal Transaction Entry

Journal transactions generally consist of some header details which are written to every entry created by the journal, the journal entries themselves, and some optional information which may be requested for each line of the journal.

For most transactions you must enter a set of initial information which is common to all the journal entries in this journal:

Journal

The next journal number in sequence is displayed and you can accept this by keying <Enter> or over-type it with another number. It can only be numeric. Diamond and Premier users can set the journal number so that it cannot be amended.

Period

The current period number displays here, and you can accept it by keying <Enter>. You can enter a journal transaction into any period of the current year by changing this to a value between 1 and the number of periods defined for your company (typically 12 or 13). You have some other options too:

If last year is closed to posting (Year End Procedures later) then you can choose to post to period zero. This effectively posts to the opening balances for the current year, and is the way you would enter your auditor’s adjustments

If last year is still open for posting, you can post to any period last year by prefixing the period number with P — for example, a period of P10 posts this journal to the tenth period of last year

The Security and User Manager (available for non-Compact users) allows you to set an authority level against the period number so that only appropriate operators can enter a journal outside of the current default period.

Date

The date must lie within the company calendar date range for the period given above. If the date you enter is outside this range, you are warned:

The date range shown is that for the period number you entered above. Return to correct either the period number or the transaction date.

Note

Provisional Reversal Date

If entering a provisional journal then, after entering the transaction date, you are asked for the reversal date. The entry of a date controls whether the reversal is generated via one of two ‘reverse provisional’ options – reverse provisionals or reverse dated provisionals. Both would reverse the effect of the provisional journal but if you enter a date to reverse you can start a procedure at the beginning of the month to automatically reverse any journals due this period.

Description

You may type in a narrative description for this transaction. The number of characters you can enter here depends on the way your system is configured.

Note — Datafile Diamond and Premier only

Currency

Journal entries are entered in the currency of the account selected with an exchange rate prompted to the base currency when appropriate. Entering a currency within the journal ‘header’ restricts the accounts selected to those for a matching currency.

Journal Memo

This, Diamond and Premier only, option allows entry of three lines of memo text against each journal

Journal Memo

Journals in Previous Year

If you post a journal to a previous year, the treatment differs according to whether each nominal account is a profit and loss, or balance sheet account.

Balance sheet account. The journal entry value is posted to the previous year period balance, the closing balance of the year and also to the opening year balance for the account

Profit and loss account. The journal entry value is posted to the previous year period balance and closing year balance for the account, but also to the opening year balance of the profit and loss control account (see nominal System Profiles) not to the account itself