User manual
Introduction
Manual Accounting System
In a manual accounting system, a General Ledger is kept that contains all the accounts that the company deals with. There are too many transactions coming from too many sources to enter everything in the General Ledger. Separate Journals and subsidiary ledgers are kept so that each department or division can enter its transactions into them. At specified periods, the transactions in the sub ledgers are totaled and entered as one entry for each sub ledger into the General Ledger accounts.
Like the General Ledger, the sub ledgers have accounts of their own. These subsidiary ledger accounts or sub accounts are used to keep more detail in the sub ledgers about transactions.
Ruppert Accounting System
In a computerized accounting system, data is updated much more quickly and automatically. When a transaction is entered into a Journal, it is labeled with the correct departments, accounts, and sub accounts and is automatically posted. This system refers to the General Ledger by the term Ledger. The accounts (sometimes used as subsidiary ledgers) in the General Ledger are called Accounts and the division in the accounts are called Sub Accounts.
Double Entry Accounting
This system uses double entry accounting. This is the only effective way to handle the complex tasks of payroll, inventory, liabilities, etc In double entry accounting there are at least two entries for every transaction: debit and credit. WARNING: Debit and credit do not mean withdrawal and deposit. Debit and credit simply mean left and right. debit = left, credit = right. The type of account determines whether or not to increase or decrease the balance. (Yes, its really annoying at first, but you will get used to it.) A chart of rules is provided in Appendix A.
System Structure
Ledger
A ledger is really a database containing all the information for a companys or a tax IDs books. It is recommended that sole proprietors who own multiple businesses place them in the same ledger labeling them as sub entities.
Sub Entities
The system allows the individual accounts to be linked to a sub entity so as to break the company into sections or departments.
Accounts
All financial transactions occur in accounts. This is how the transactions are labeled and the system knows where the company stands financially. There is a chart of accounts that lists all of the accounts that ledger uses.
All ledgers use the same global account list. Each ledger has a local account list that filters the accounts that it uses out of the global. Any account can be added from the global to the local list. When a new account is created it is placed in the global list.
An account can be added to the list of ledgers or a ledger can be given a list of accounts to choose from.
Sub Accounts
Each sub account has a parent account from the global accounts list. The sub accounts can be duplicated and placed under more than one parent. This allows the same label to be used for a dividend as a capital gain or purchase of stock when dealing with the same security in multiple accounts.
Modules
Setup
Ledger options
A ledger must be setup before it can be used. When a new ledger is created you will be asked to set these options. The ledger options screen is where you would change these settings. The name and code are to identify this ledger and the transactions belonging to it. The color is available to help this ledger stand out from others. If your bank account has blue checks then you may want to choose the color Blue. The radio button next to cash and accrual is to inform the program of when to post revenues and expenses. On the cash basis, an entity reports revenues and expenses as cash flows in and out of pocket. On the accrual basis, revenues and expenses are posted as they incur. For example, a company on an accrual basis would report money that customers owe them for goods and services even though they have not collected it yet. This is because the money was earned and belongs to the company even though the customer still holds it. The business type is letting the program know if the entity is a sole proprietor, partnership, corporation, or limited liability company. Lastly, the program needs to know the last date in the entities year. If you are on a normal calendar year, use 12 for the month and 31 for the day, otherwise enter the correct month and day into the fields.
Journals
New journals can be created in addition to the defaults. The journals must be given a name and a code that will be used in the data entry screens.
Level of detail
There are only four levels of detail in this system. The top level is the ledger itself, which by itself in a report makes no sense. There has to be some activity in accounts for reports to have something to report. The next level of detail is the subsidiary entities (sub entities). Thirdly, the accounts themselves are where activity takes place and gives the system its data. Lastly, the accounts can be broken up into subsidiary accounts (sub accounts) to divide the activities and store more information.
Sub entities
The ledger does not have to use sub entities. If the ledger needs to be separated into sections, departments, etc. then sub entities should be used. To label a transaction as belonging to a sub entity enter the sub entity code into the appropriate location in the transaction entry dialog.
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Accounts
Accounts can be created so long as there are numbers left to create them. The program uses 5 digit account numbers. Since accounts are labeled based on their type this allows for 9999 of each type. Asset accounts start with 1, liability accounts with 2, equity accounts with 3, revenue accounts with 4, and expense accounts with 5. This system breaks some of these account types down even further in order to differentiate on reports and in automated modules.
The cash and bank accounts are labeled separately so as to enable the bank reconciliation feature of the system for that account. The current assets are labeled separately from the long term (LT) assets. Investments are labeled separately from other long term assets so that the investments module can easily find the data it needs. Contra assets are also special accounts because they offset an asset account to obtain the assets book value. An example of a contra asset would be accumulated depreciation. In order to successfully pair a contra asset with its companion asset account they should use the same name, i.e Furniture and Acc Depr-Furniture. Also the expense account where depreciation is recorded should be labeled with the same name: Depr Exp-Furniture. Likewise, with sub accounts that are used in these accounts, they should use the same names and go so far as to use the same numbers. If you create a depreciation schedule for an asset account and/or sub account the system will automatically create these other accounts for you.
Current liabilities are separated from long term liabilities. Equity is broken down into Equity, Capital Gain/Loss as well as revenue and expense accounts. The types of revenue accounts are Revenue, Sales Rev, Dividend Rev, and Interest Rev. The types of expenses are Expense, Cost of Goods Sold (GoGS) Exp, Dividend Exp, Interest Exp, Tax Exp, and Depreciation Exp.
Sub accounts
Each account can have up to 1000 (0-999) sub accounts. Sub accounts divide accounts into groups of like activity. For example, a sub account for each company that pays dividend revenue will divide the dividends by company. Using this, the amount of dividends received can be check against 1099s at the end of the year. This is a helpful tool in subdividing any account needed.
Journals
Most data entry is done through the journals. In addition to the default journals that start in the system, more can be added. To add a journal, go to the journals screen, type in the name of the journal and its code, and click add new.
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The journal structure is as follows: Reference #, Date, Payer Payee, Memo, Account names, account codes, debit, credit.
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Data Entry
The reference number is a unique number that differentiates every transaction in the ledger. This number is not editable and is mostly used by the accounting system. In computerized systems the user usually does not need to work with this number. The date is where you enter the date of the transaction. Since most transactions in a small business or sole proprietorship will be dealing with another party, the Payer Payee field is where you would enter the name of the person you are paying or receiving money from. As you enter this data, the program should show you the entry for the last time you dealt with this party. The item in a popup list that matches what you has typed so far should be selected and displayed while still allowing you to continue typing. As you tab off of the entry field, if you have typed something different than what is in the list, nothing happens, but if the item in the field matches a remembered transaction, then all data from that transaction will be filled into the entry fields with the exception of the Reference number and date. You can change any of the fields or add more to the transaction if you wish. Note: You remember a transaction by going to the remember screen and choosing that transaction number.
Similar to the above feature, you should also be less burdened when entering account information. Both the account name and account number entry locations will be displayed. Both will contain a listing of the possible entries to lookup and match as you enter into one of them. As you enter either the name or the number, the item in the list that matches what you have typed so far will be selected and displayed, still allowing you to type. As you tab off of the entry field, if you have typed something different than what is in the list, the program should ask about creating a new account. When the item in the field matches an existing account, the other account entry field, whether name or number should be updated to the same account. One more thing, if you chooses a bank account, then the sub account name is skipped and in the sub account number box you should put a c for check, d for deposit, e for electronic transfer or bank charge and then type the number. The appropriate debit or credit column should be disallowed since deposits can only be debited and checks can only be credited. The sub accounts should be filled the same way as the accounts, with a list that you can choose from.
The system does not restrict you from putting any transaction you want into any journal you wish. This gives you the freedom to put things anywhere you like and also gives you the freedom to lose transactions if you are not careful. Make sure you are putting the transactions into the correct journal. (Note: you can be viewing one journal and entering data for another journal. The default journal code on the data entry field will be the journal you are in but you can change it if you wish.)
View and Use
The system not only allows you to look at one journal at a time but also allows you to look at all journals at the same time. (Note: due to the special nature of the investment journal, not all information will be displayed for those transactions in the All Journals View.) The journals group like transactions together. For example, the investment journal shows buys and sells of stock and the payroll journal shows the payments made to employees and the government for payroll.
Banking
In the double entry accounting system the bank accounts are just one of the accounts that the system uses. Unlike other accounting systems, this is not the main controlling point in your finances. Transactions can happen that affect your tax status without touching your bank account. This is a powerful feature that allows the system to account for many real world situations.
In spite of this, the bank accounts are specialized because they are actually controlled by a different entity (a bank) and you must reconcile your records to theirs. There is a bank register that can be used for reconciliation that looks like this
Figure 1
In order to mark a transaction as cleared an x is placed in the check mark column. After reconciling an = is placed instead of an x.
Reports
Bookkeeping
Income Statement
There are three types of income statements in this system because of the division between tax/non tax income and expenses. The Gross Income Statement shows all revenues and expenses whether or not they are tax related. The Tax Only Income Statement shows only those revenues that have been labeled as being taxable and expenses that have been labeled as being tax deductible. The tax/non tax income statement shows all of the tax related in the first column, all the non tax related in the second column, and the total in the last column.
The options to create the report start with name and date range. The default date range will be the current year but you can select from a list of ranges or type in a custom range. Next is the level of detail desired. If you want to see sub account activity in addition to the account activity you must select the level of detail to be sub account. The default setting will only show account activity. If you do not want to see sub totals for the sub entities you must hide sub entity divisions. Choose to show calculated taxes on this report, actual paid taxes, or both. You can choose to include transactions from specific journals, bank accounts, accounts, and sub entities.
Cash Flow
The Cash Flow shows all flows in and out of every account, whether or not they are tax related. The options to create the report start with title and date range. The default date range will be the current year but you can select from a list of ranges or type in a custom range. Next is the level of detail desired. If you want to see sub account activity in addition to the account activity you must select the level of detail to be sub account. The default setting will only show account activity. If you do not want to see sub totals for the sub entities you must hide sub entity divisions.
Balance Sheet
The balance Sheet shows the balances of all accounts that the ledger contains. This is a good way to view your entitys net worth and evaluate liquidity.
Missing Checks
This report simply searches the bank accounts looking for gaps in the sequence of numbers for checks.
Comparisons
This report takes one of the others and runs it with two different time frames.
Bank Reconciliation
This report lists all debits and credits for an account that have cleared and calculates the bank statement balance based on the statement date and the non cleared entries.
Taxes Paid
This report simply looks for all taxes paid for a specified year and/or during a specified time.
Payroll
FUTA
This report calculates the Federal Unemployment Tax based on user input into the tax tables and the number of employees
Federal 941 Withheld Taxes
This report displays the amount of tax withheld from employees pay and does the correct calculations for the federal deposit and form.
MO unemployment
This report displays the amount of tax withheld from employees pay and does the correct calculations for the state deposit and form.
Missouri 941 Withheld Taxes
This report displays the amount of tax withheld from employees pay and does the correct calculations for the state deposit and form.
Asset
Asset Valuation
This report looks for an asset and shows its cost, book value, life, and other attributes pertaining to it.
Investment
Capital Gains
This report shows all capital gains for a specified period. Capital gains are gains or losses on the sale of assets (investments are assets).
Portfolio valuation
This report gives the market value of the portfolio at specified dates.
Stock price report
This report will show the price of any chosen number of stocks on any chosen number of dates if they are stored in the system.
Custom
Grid
The ability to customize a report to a certain extent is contained here. The report can layout specified fields in columns and rows.
Search
This report is used to search the database for information
Taxes
The program will do some simple tax calculations. Since it keeps track of revenues, expenses, depreciation, and capital gains/losses, then these can be accounted for. Any other tax items will have to be done manually. The program will give you an income statement, balance sheet, and cash flow to use.
Payroll taxes are calculated by the payroll module and the 941 reports show what taxes are to be paid. Note: the reports will show the correct amounts of taxes to be paid if they have been entered correctly.
Do not put self employment taxes or self income taxes under the Employee FITW Pay. If these taxes are to be put in a payable account, put them in Fed Inc Tax Pay and State Inc Tax Pay.
Payroll
The payroll entries should set payer payee to the employee name and then list the Salary Exp account with the sub acct as the sub acct for that employee. The debit amount should be the employees gross pay. Next, list the withholding accounts and their corresponding credits. (i.e Employee FITW Pay) If you are on a cash basis put the employer fica and medicare matching entries on the federal tax payments made later. If you are on an accrual basis then place the employer entries here in the same transaction as the employees pay. FICA Exp is debited as well as Mcare Exp with the sub accounts of the employee. Lastly, credit Employee Mcare Pay and Employee FICA pay with the sub account as nothing. This means that the employer is paying into the employee accounts.
Do not put employee taxes under the normal tax accounts like Fed Inc Tax Pay. Put employee taxes in accounts that begin with Employee, i.e. Employee FITW Pay and Employee FICA Pay. The best solution is to keep separate accounts payable for employee taxes and employer taxes since they are paid at separate times of the year.
If you want to break employees into groups, use sub entities. Consultants and Programmers, etc.
Investments
The investment journal is where the data is actually stored for portfolio information. When a buy is transacted it is placed in an investment account with the sub account labeled as the stock being bought (Likewise with a sell). Make sure the item you are selling is in the same account as you are selling it from.
When on a cash basis and a sell of shares is transacted and the money is not received for a length of time, put the date of the sale in for the sell event. When the system enters the journal entry you can change the date to the actual date that you received the money if you like. On an accrual basis the date of sale would be the date for the revenue and account receivable.
You are not required to place the dividend income entries in the investment journal. They can simply be posted to any journal you like. The entry would be the same as a normal deposit using the dividend income account and the correct sub account corresponding to that particular company. If you wish to place the dividends in the investment journal, use the ticker instead of the sub account and label the event as div.
FAQ
Q. Did I make a payment for liability XXXX?
A. To find this, run a cash flow report with only that account selected
Or
A. Go to the chart of accounts and select the account you are interested in. Click Show all transactions.
Appendix A
Debit and Credit Table of Rules
Assets |
= |
Liabilities |
+ |
Equity |
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Debit |
Credit |
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Debit |
Credit |
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Common Stock |
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+ |
- |
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- |
+ |
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Debit |
Credit |
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- |
+ |
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Retained Earnings |
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Debit |
Credit |
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- |
+ |
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Dividends |
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Debit |
Credit |
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+ |
- |
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Revenues |
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Debit |
Credit |
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- |
+ |
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Expenses |
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Debit |
Credit |
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+ |
- |
Whis Is A?
Account
Account Name
Account Type
Ledger
Ledger Code
Ledger Menu
Main Menu
Reset Button
Sub Account
Sub Account Name
Sub Account Number
Sub Entity
How Do I?
Install
Setup
Create a Ledger
Goto the Main Menu
Enter a Name for the ledger in the box to the left of the Add New button.
Click this button and fill in the options.
Ledger Code
Color
Cash or Accrual Basis
Business Type
Fiscal Year
First Year to Open Books - is the first year for which data will be entered into the system.
Create a Sub Entity
Open the Ledger that will contain the sub entity from the Main Menu.
Choose Sub Entities from the Ledger Menu at the top of the screen.
Type in the Sub Entity Name and Sub Entity Code
Click Create
Create an Account
From the Main Menu Choose Account Configuration.
Choose Create new Account
Enter the Account Name and Account Number. Note: the number must start with 1-4 depending on the Account Type.
Choose the Account Type.
Click Create Account
Create a Sub Account
From the Main Menu Choose Account Configuration.
Choose Work with Sub Accounts
Select the Account that the Sub Account will belong to
A list of the current sub accounts will be displayed.
Create New Sub Account
Enter the Sub Account Name and Sub Account Number
Click Create Sub Account
Edit Ledger Options
From the Main Menu Choose the Ledger to modify
Click Edit and fill in the options
Ledger Code
Color
Business Type
Edit a Sub Entity
Open the Ledger that will contain the sub entity from the Main Menu.
Choose Sub Entities from the Ledger Menu at the top of the screen.
Choose the Sub Entity to be edited.
Type in the Sub Entity Name and Sub Entity Code
Click Update
Edit an Account
From the Main Menu Choose Account Configuration.
Choose Create new Account
Enter the Account Name and Account Number. Note: the number must start with 1-4 depending on the Account Type.
Choose the Account Type.
Click Create Account
Edit a Sub Account
From the Main Menu Choose Account Configuration.
Choose Work with Sub Accounts
Select the Account that the Sub Account belongs to
A list of the current sub accounts will be displayed.
Click on the radio button to the left of the sub account name
Click Edit
Enter the Sub Account Name and Sub Account Number
Click Update Database
Delete a Ledger
From the Main Menu Choose the Ledger to delete
Click Delete
Click Yes for Are you Sure?
Delete a Sub Entity
Open the Ledger that will contain the sub entity from the Main Menu.
Choose Sub Entities from the Ledger Menu at the top of the screen.
Choose the Sub Entity to be deleted.
Click Delete
Delete an Account
Accounts cannot be deleted in the system once created. The account should not be deleted anyway, if it is being used anywhere in the system. Deleting a used account will cause errors in the system. A better idea is to change the name of the account and reuse it for something else.
The accounts can be deleted by an experienced user of PostGreSQL if he/she accesses the database through the PSQL interface. This is not reccommended. We will take no responsibility for any errors caused through users affecting the system this way!
Accounts can be set inactive but what does that do REALLY?
Delete a Sub Account
From the Main Menu Choose Account Configuration.
Choose Work with Sub Accounts
Select the Account that the Sub Account belongs to
A list of the current sub accounts will be displayed.
Click on the check box to the right of the sub account name
Click Delete
Assign an Account to a Ledger
From the Main Menu Choose Account Configuration.
Choose Assign Accounts to Ledgers
Select an account or a Ledger
Select Account will show a list of the available ledgers followed by Yes and No.
Select Ledger will show a list of the available accounts followed by Yes and No.
Turn assignments on and off by choosing Yes and No.
Set an Account to be Taxable or Not Taxable (Deductible or not Deductible)
Open the Ledger that will contain the sub entity from the Main Menu.
Choose Chart of Accounts from the Ledger Menu at the top of the screen.
Choose the Account to be edited.
Click on Yes or No for the default and for each sub entity
Update
Use
Open a Ledger
Open a Journal and Enter Data
Journal Code
Reference Number
Date
Payee/Payer
Memo
Sub Entity
Account
Sub Account
Debit and Credit
Checks and Depsits
Open a Bank Register
Chart of Accounts
Run a Report
Balance Sheet
Income Statement
Cash Flow Statement
Copyright (c) 2001 HLR
Permission is granted to copy, distribute and/or modify this document
under the terms of the GNU Free Documentation License, Version 1.1;
A copy of the license is available at
http://www.gnu.org/licenses/licenses.html#FDL.
Updated: $Id: index.html,v 1.1.1.1 2001/08/09 19:02:43 moreejt Exp $