Preparation of the Journal Entries
A journal entry, in accounting, is the lumbering of the business deal into account statement journal items. The journal entry could comprise of the various items, each of the which is either the credit or the debit. The total of the debits must equal the total of the credits or the journal entry is assumed to be unbalanced. Journal entries could commemorate unique items or repeating items such as bond amortization. In software developed for accounting purpose, journal entries are by and large, entered by employing the separate mode from accounts payable, which by and large has its own sub ledger that circuitously strikes general ledger, journal entries at once alter the account balances on the general ledger.
Some data normally comprised in journal entries are:
Type of Journal entry: recurring vs. nonrecurring.
Journal entry number
Batch number; Name, date and amount of the money.
In a distinctive manner, accounting software inflicts strict limits on the number of the parts in the description. The limit of about 30 characters is not remarkable. This permits all the data for the particular business deal in the journal entry to be exhibited on one row.
The balance sheet is the statement demonstrating net worth on the peculiar date. Journal entries are hired to record ejections and injections to such net worth. After commemorating the business deal via journal entries the reviewed balance sheet could be developed.
An entry to the journal is defined as Journal entry. Its main features are
Journal is the commemorate that holds accounting deals in chronology.
Ledger is the commemorate that holds accounting deals by accounts.
Account is the unit to commemorate and sum-up accounting deals.
All accounting business deal are commemorated via journal entries that demonstrate account name, amounts,and whether these accounts are commemorated in debit or on the credit side.
Double Entry Recording of the Accounting business deal
To record accounting system and business deal employs dual entry accounting.
Dual entry implies that business deal are invariably registered employing two sides the debit and credit.
Debit comes on the left hand side (LHS)and credit comes on the right hand side(RHS) of the account of the journal entry .
The sum of the debit side amounts ought equal to the sum of the credit side amounts.
A journal entry is referred as balanced when the sum of the sum of the credit side amounts equals to the debit side amounts.
Documentation of Journal Entry
To demonstrate procedures to create, written document, acknowledgment and review journal entries. Documentation is the key element in rendering support to the journal entry and explains the intention of the why the journal entry was created. Journal entry documentation is required for the reviewers and sanctions of the journal entry and most significantly, for CSU's external auditors. In addition, Federal auditors cautiously analyze the transfer of the costs constructed by universities. Comprehensive and complete explanations and documentation is necessary to avert audit comments and potential proscribes.
Forms of the Journal Entries
CIS Journal Entries: Distinctive entries that are produced employing the Campus Information System (CIS) are: correction of accounts, correction of an error, recurring monthly entries, accruals and reversals and redistribution of the revenues and expenses among departments and accounts etc.
1. CJE-correcting journal entry: They are by and large done to correct errors within 90 days time period of the the original error.
2. JE: The journal entry is original entry to record activity. For illustration: interest income
Direct journal entry into FRS:
Direct journal entry into FRS is the entry that could be done if the individual entering the journal entry into FRS has admittance to enter journal entries into FRS. Admittance is restricted to particular areas on campus. In addition,, these types of the entries cannot be attained if the total amount of the entry outperforms $100k which will be blocked from entry in FRS. Confinements, such as this, are in place for internal check intentions.
Characteristics of the Well Documented Entry
A well documented entry renders solutions to the following inquiries:
In the remarks section of the the journal entry, demonstrated completely why the entry is being done and what the journal entry perform. Thus the fairly educated person would be able to interpret the intention of the the entry. If it is the rectifying journal entry, it ought explicate why the error took place in the beginning.
Documentation ought be able to render the reviewer with the clear intention as to why account experts are making the entry. Documentation must also be clearly labeled and ought be understandable to the reviewer or any other person inquiring about the entry. Some of the the common documents employed for support are:
1. FRS reports - such as e-print reports or FRS screen shots.
3. Supporting schedules - such as excel documents and stand-alone reports from independent operating systems (illustration. QuickBooks). These schedules are prepared by the department and ought comprise the name of the the preparer. Supporting schedules are to be reviewed by the individual creating the entry to ensure totals and formulas are accurate. Review marks (discussed later) ought be noted on the schedules to ensure accuracy of the the schedule. All assumptions employed in creating the schedules ought also be noted.
4. Description of the processes - processes or how operations are working ought be documented to give the reader the better understanding of the how the separate system might work. These processes ought be maintained at the college or department and might not be required to be submitted with each journal entry unless the process could render the better understanding of the the entry.
5. Templates- A monthly template might be employed for recurring monthly entries.
6. Downloads/Queries: Queries should be cited to the FRS amounts and also how and what accounts were to be queried.
7. "T"-accounts - Even though the inclusion of the written "T" accounts ought not be the entire support for an entry, it renders the basic understanding of the how an entry ought work. "T" accounts show the flow of the debits and credits and could be significant in helping the reviewer or reader interpret the flow of the the journal entry.
8. Other documents - if particular e-mails or word documents render the better understanding of the the entry, account experts ought attach those documents to the entry. Previous journal entries that were done incorrectly could render support on the corrected journal entry. Information that does not clearly direct the reader to why the entry is being made ought be omitted.
1. The preparer ought review the entry prior to submitting to the approve or next level reviewer. The preparer ought review the entry for:
2. Review the sub code or account control being employed. All sub ledger codes ought be matched with sub ledger accounts and all account control codes ought be matched with the general ledger accounts.
the) Make sure that the debits and credits are not reversed.
b) Original batches and original dates referenced in the journal entry are correct.
c) Amounts are correct
3. Reasonableness: It is significant that the numbers are reasonable and that they reflect the support. Any recurring entries that are made ought be similar to prior month's entry.
4. Completeness: It remarks/comments ought be clear and complete in content and documentation ought fully explain what the journal entry is doing.
5. Reviewer: After completion of the the journal entry, the preparer needs to submit the journal entry to the next level reviewer. A reviewer is one who is empowered to review journal entries in the department. It is expected that CIS entries with supporting documentation over $100k be presented to the assigned Assistant Controller for the area. Randomly, at an approver's request, documentation ought be rendered to support an approver's decision to accept the journal entry. An approver/reviewer signs and dates the journal entry (for CIS-approves the entry) once he or she acknowledges that the entry is:
6. Complete: It is the journal entry is properly referenced and supporting documentation is attached. A reviewer ought also employ tick marks to verify to the possible reader that the reviewer has also verified amounts of the the preparer. Most reviewers employ the various colored pencil or marker to indicate that they have reviewed the underlying documents.
7. Reasonable: It is the amounts are reasonable to the support.
8. Accurate: It amounts and accounts are accurate and tie out to the support.
9. Appropriate: It is the journal entry is appropriate to the particular accounts established upon fund requirements, budget and account activity.
All journal entries and accomplished affirming documentation ought be registered in attributed binders and laid in in attributed areas. Journal entry binders ought be kept complete and current. A good hint is to hold the journal of entries of the current year in the visible red binder. In addition, if account experts are out of the office and the journal entry is requested, all documentation ought be usable at the time of the request. The holding period of a university for journal entries is around 6 years.
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