Quick Guide on Smartbooks (FABM1 Computerized Bookkeeping)

Smartbooks
COMPUTERIZED
BOOKKEEPING
Quick guide on ERP (FABM1)

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Quick Guide on Smartbooks (FABM1 Computerized Bookkeeping)

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................................. 2

Chapter 1: Smartbooks on a Cloud Platform ........................................................................... 5
What is an ERP System? .................................................................................................................5
What is Cloud Computing? .............................................................................................................5
Types of Cloud Deployment .......................................................................................................................... 6
Key Features of Cloud Computing ................................................................................................................ 6
Smartbooks on Cloud Performance .................................................................................................7
Technical Specifications ................................................................................................................................ 7

Chapter 2: Getting Started with Smartbooks .......................................................................... 9

Challenges for SMEs .......................................................................................................................9
Smartbooks Framework ............................................................................................................... 10
Basic Navigation ........................................................................................................................... 11
Logging-in .................................................................................................................................... 11
Smartbooks User Interface ........................................................................................................... 14
Header......................................................................................................................................................... 14
Modules Menu / Main Menu ...................................................................................................................... 14
User Info...................................................................................................................................................... 15
Extension Button......................................................................................................................................... 15
Theme Button ............................................................................................................................................. 15
Logout Button ............................................................................................................................................. 15
Operation Modes in Smartbooks ................................................................................................................ 16
Functions in a Form..................................................................................................................................... 16
Customize User Credentials ........................................................................................................................ 17
Exercises ...................................................................................................................................... 18

Chapter 3: Introduction to Fundamentals of Accounting ....................................................... 20

Accounting Defined ...................................................................................................................... 20
Brief History of Accounting ........................................................................................................... 20
Types of Business Organizations ................................................................................................... 21
Service Business .......................................................................................................................................... 21
Merchandising Business.............................................................................................................................. 21

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Manufacturing Business.............................................................................................................................. 21
Hybrid Business ............................................................................................................................ 22
Double Entry Bookkeeping ........................................................................................................... 22
Basic Accounting Principles ........................................................................................................... 22
Accrual Principle ......................................................................................................................................... 22
Conservatism Principle................................................................................................................................ 22
Cost Principle .............................................................................................................................................. 23
Economic Entity Principle ........................................................................................................................... 23
Full Disclosure Principle .............................................................................................................................. 23
Going Concern Principle.............................................................................................................................. 23
Matching Principle ...................................................................................................................................... 23
Materiality Principle.................................................................................................................................... 23
Monetary Unit Principle.............................................................................................................................. 23
Time Period Principle .................................................................................................................................. 24
Computerized Accounting System ................................................................................................. 24
Special Features of Computerized Accounting ............................................................................... 24
Advantages of Computerized Accounting ...................................................................................... 25
Chart of Accounts ......................................................................................................................... 26
Levels of Chart of Accounts......................................................................................................................... 26
Type of Chart of Accounts........................................................................................................................... 26
Navigation & Viewing.................................................................................................................................. 27
Exercise ....................................................................................................................................... 27

Chapter 4: Subsidiary Ledgers and Special Journals .............................................................. 28

Purpose of Control Accounts......................................................................................................... 28
Purpose of Subsidiary Ledgers ...................................................................................................... 28
Navigation & Viewing ................................................................................................................... 29

Chapter 5: The Accounting Cycle .......................................................................................... 31

A. Journalizing .............................................................................................................................. 31
General Journal ........................................................................................................................................... 31
Special Journal ............................................................................................................................................ 40
Exercise ....................................................................................................................................... 61
B. Ledger ...................................................................................................................................... 62
General Ledger Defined .............................................................................................................................. 62
Subsidiary Ledger Defined .......................................................................................................................... 65
Exercise ....................................................................................................................................... 67

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C. Trial Balance............................................................................................................................. 68
Trial Balance Defined .................................................................................................................................. 68
Navigation & Viewing.................................................................................................................................. 68
Exercise ....................................................................................................................................... 70
D. Adjusting Entries ...................................................................................................................... 71
Adjusting Entries Defined ........................................................................................................................... 71
Accruals ....................................................................................................................................................... 71
Deferrals...................................................................................................................................................... 72
Navigation & Viewing.................................................................................................................................. 72
Exercise ....................................................................................................................................... 76
E. Financials Statements ............................................................................................................... 77
Financial Statements Defined ..................................................................................................................... 77
Types of Financial Statement ...................................................................................................................... 77
Navigation and Viewing .............................................................................................................................. 78
Exercise ....................................................................................................................................... 81
.................................................................................................................................................................... 81
F. Closing Entries: Period-End Closing ............................................................................................ 82
Closing Entry Defined .................................................................................................................................. 82
Temporary Accounts vs. Permanent Accounts ........................................................................................... 82
Navigation & Viewing.................................................................................................................................. 83
Exercise ....................................................................................................................................... 85
G. Reversing Entries ..................................................................................................................... 86
Reversing Entry Defined.............................................................................................................................. 86
Navigation & Viewing.................................................................................................................................. 86
Exercise ....................................................................................................................................... 89

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Chapter 1: Smartbooks on a Cloud Platform

At the end of this chapter, students will be able to:
• Know what is an ERP System
• Understand the difference between on premise and on cloud system experience.
• List the benefits of cloud computing
• Know the Smartbooks on cloud performance

What is an ERP System?

ERP stands for Enterprise Resource Planning, and an ERP system is a type of software that integrates a
variety of business processes and functions into a single system. An ERP system typically includes modules
for areas such as accounting, human resources, customer relationship management, supply chain
management, inventory management, and production planning.

Image from: www.projectline.ca

The primary objective of an ERP system is to provide a single source of truth for all business data, making
it easier for companies to manage their operations more efficiently and effectively. By consolidating data
from different departments, an ERP system can eliminate the need for multiple, disconnected software
applications, and help to streamline business processes, improve collaboration between departments,
and increase data accuracy and consistency.

What is Cloud Computing?

Cloud computing represents a new way to deploy computing technology to give users the ability to access,
work on, share, and store information using the internet. The ideal way to describe Cloud Computing
would be to term it as 'Everything as a Service' (abbreviated as XaaS). The cloud itself is a complex network
of data centers, each composed of thousands of computers working together that can perform and
achieve the functions of a software on a personal or business computer units by providing users access to
a vast number of applications, platforms and services delivered over the Internet.

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Types of Cloud Deployment

PRIVATE CLOUD
Private Cloud, also known as Internal Cloud, is a cloud-based infrastructure operated exclusively for a
single organization with all data protected behind an internal firewall. This is usually physically located at
the company's on-site data center or can also be managed and hosted by a third-party provider.

PUBLIC CLOUD
Public Cloud, also known as External Cloud, is available to the public where data are created and stored
on third-party servers. Service infrastructure belongs to service providers that manage them and
administer pool resources. The need for user companies to buy and maintain their own hardware is
eliminated. It is based on a shared cost model for all the users or in the form of a licensing policy such as
pay per use.

HYBRID CLOUD
Hybrid Cloud encompasses the best features of the above-mentioned cloud computing deployment
models. It allows companies to mix and match the facets of public and private cloud that best suit their
requirements.

Key Features of Cloud Computing

The characteristics of Cloud Computing express its significance in the current business market. It has
already been proven that Cloud Computing is a model for enabling universal, convenient, and on-demand
network access. Below are the key features of Cloud Computing:

• Agility -helps in rapid and inexpensive re-provisioning of resources

• Location Independence - resources can be accessed anywhere (except on limitations set by

company's internal control)

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• Multi-Tenacity - resources are shared amongst a large pool of users

• Reliability - dependable accessibility of resources and computation

• Scalability - dynamic provisioning of data helps in avoiding various bottleneck scenarios

• Ease of Maintenance - users (companies/organizations) have less work in terms of resource

upgrades and management, handled by service providers of cloud computing

Smartbooks on Cloud Performance

Smartbooks is a purely web-based ERP system for small and medium sized enterprises. Smartbooks is a
software easy to use, has deep functionality, is accessible, and is compliant with BIR reporting
requirements. It is best for small- and medium-sized companies with their unique qualities and special
needs.

And because Smartbooks is based in the cloud, other IT costs are eliminated, such as the cost of putting
up and maintaining servers, hiring and maintaining an IT team, and upgrading the software and spending
for other support expenses.

Technical Specifications
Smartbooks has minimal requirements when it comes to technical specifications so it can offer a simpler,
more cost-effective, and more reliable solution for businesses. The following are the technical
specifications needed in order to access Smartbooks:

Can be accessed on various operating systems like:

Through web browsers like:

The optimal performance of the system is on an internet speed of 5 mbps and higher but can be accessed
on a minimum speed of 1 mbps.

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Chapter 2: Getting Started with Smartbooks

At the end of this chapter, students will be able to:

• Learn how to use the various user interface components of Smartbooks
• Familiarize and visualize the illustration to Smartbooks Framework
• Learn to value of information in scaling up businesses
• Identify the basic functionalities inside an ERP System (Interface, Operation
Modes, Functions in a document, Credentials Changing and Master Record) using
Smartbooks.

Challenges for SMEs

SME companies often acquire multiple solutions to meet specific needs as business expands; for example,
an accounting application to manage general ledgers and invoices, or a Storage Location management
solution to keep track of inventory.

Keeping this combination of applications up to date, integrated, and running seamlessly can be
challenging. To get a picture of what is happening in every part of the business, it takes a lot of time and
effort to extract and reconcile data across many solutions. While such applications may be effective for a
time, ultimately your business needs a more flexible and integrated solution.

With SMARTBOOKS, it is now possible to have a complete and real-time picture of your financial position.
Having this information readily available gives you more time to focus on growing your business.

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Smartbooks Framework

Smartbooks Cloud ERP system is composed of multiple modules. The above illustration shows the
structure of the system. Smartbooks accepts data entry, called transactions, which are converted through
various processes into output information that goes out to the users. Sales of products from customers,
purchases of inventory from Suppliers, and cash disbursements and receipts are the common type of
transactions.

Smartbooks is composed of three major units:

1. Transaction Processing
This supports daily business operations with numerous reports, documents, and messages from users
throughout the organization. Transaction processing consists of three different cycles: the revenue, the
expenditure, and the project management. Each cycle captures and processes different types of financial
transactions;

2. General Ledger/Financial Reporting

This produces the traditional Financial Statements, such as Income Statement, Balance Sheet, Statement
of Cash Flow, Tax Returns, Reports / Schedules, and other reports mandated by the government.

3. Management Reporting
This provides internal management reports needed for decision making.

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Basic Navigation
Smartbooks was designed with the most comprehensive User Interface in mind. You don’t need expert’s
technical knowledge to navigate through the portal because it was designed with utmost simplicity.

Logging-in
1. Go to https://portal.fitacademy.ph

2. Click Register > Fill-out the registration form > ”University Code” will be provided by instructor >
Click Register
3. Check your email for account activation and activate your account.

4. Input your credentials (email and password) and login.

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5. Go to Dashboard. “Section Code” will be provided by your instructor.

6. Click Add Code.

7. Once the code has been added, your user ID and password will appear.
8. Click Open Smartbooks URL to access Smartbooks.
9. Click Reset Password should you forgot your password.

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10. Input the User ID and Password provided by the portal on Smartbooks Login Page.

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Smartbooks User Interface

Header
The header of the Smartbooks User Interface contains the name of the company and its logo when
modules menu is unhidden.

Modules Menu / Main Menu

Navigation in Smartbooks is done using the Modules Menu/Main Menu. It arranges the functions of the
individual process and applications in a tree-like structure. This menu contains a list of all modules with
their related options.

The features for this menu:

1. Are arranged accustomed to per user basis and need of access.
2. May be inactive for unauthorized users and will not modify some of the transactions.

The following modules are the primary content of the system:

Financials & Accounting

▪ Generate different financial reports

▪ Inquire about any account over any period
▪ Post transactions automatically without undergoing a separate process
▪ Generate BIR Reports
▪ Other features include: producing journal narratives, posting journals to any number of periods,
reversal of journal entries

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Inventory Management

▪ Maintain unlimited number of warehouses and stock quantities

▪ Set selling prices, even for specific branched or individual customers
▪ Manually maintain standard costs or automatically determine weighted average costs
▪ Other features include: allowing the invoicing, pricing and costing of dummy service or stock
items without recording them, maintaining maximum and minimum stock level quantities and
unlimited user-defined field specific to each inventory category for additional important
information required to be stored item

Sales & Distribution

▪ Enter and maintain customer orders and reference back to the order numbers
▪ Invoice orders directly with little or no additional input
▪ Give the user information and options on inventory location
▪ Present a full analysis of outstanding balance and aging of receivables
▪ Other features include: showing transactions settled at any given month or outstanding
transactions, calculating discounts across a range of products, viewing sequence of invoices,
credit notes & receipts entered in the transaction inquiries & processing collection applied to
specific invoice.

Purchasing

▪ Covers complete procurement cycle from PO generation to goods receiving

▪ Show comprehensive subsidiary ledger on supplier’s account
▪ Show an aged listing of accounts payable balances
▪ Enable payment run to create payment transactions

And other modules for the day-to-day business activities.

User Info
Displays the information of user’s profile (user name and ID, options to change password and logout).

Extension Button
It displays other features of Smartbooks such as theme color, change password, and messages.

Theme Button
Allows the users change the theme color of Smartbooks easily.

Logout Button
Lets the user sign out from Smartbooks.

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Operation Modes in Smartbooks

FIELD USAGE
Copy From Copy records from another module to current module
Preview Preview the record in pdf, excel, or crystal report viewer
First Navigate to first recorded document
Previous Navigate to previously recorded document
Next Navigate to next recorded document
Last Navigate to last recorded document
Add Add a new record / document
New Open a new document to make a new transaction
Update Modify the data of an existing record / document

Functions in a Form
These functions provide you with extensive support in searching for objects.

1. Document Link
This function is normally linked with the master data and documents. Using it will open the
detailed information.

2. Selection List
While entering data into a document, user can easily look-up for customer/supplier data, or
item data using this button, or simply place your cursor on the field which has SL button and
then press Tab key.

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Customize User Credentials
For a more personalized experience when using the system, you can change your user name and
password in Smartbooks.

1. Go to Admin module > Setup > Define Users

2. User Listing will appear on your window. Click edit or double click the assigned student number
to you. User Profile will appear on your window.
3. Take note that User ID is not editable. This is what you use when logging in. On the User Name
field, input your name.
4. On the Password field, input your preferred new password then repeat your new password on
the re-enter password field.
5. On the lower right, click Update.

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Exercises
Refer to Exercise on the workbook provided by your instructor.

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Chapter 3: Introduction to Fundamentals of Accounting

At the end of this chapter, students will be able to:

1. Familiarize to theoretical concepts related to Accounting
2. Manipulate the Chart of Accounts according to the requirement

Accounting Defined
Accounting is a systematic process of identifying, recording, measuring and classifying, verifying,
summarizing, interpreting, and communicating financial information. It provides feedback to
management regarding the financial results and status of an organization. It may be handled by a
bookkeeper or an accountant at small firms or by sizable finance departments.

Brief History of Accounting

The first name that might come to mind when referencing early accounting history is “Luca Pacioli”.

Fra Luca Bartolomeo de Pacioli, an Italian mathematician and a Franciscan friar, described double-entry
bookkeeping in his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita” back in 1494.

The first record of accounting occurred thousands of years ago in Mesopotamia and has evolved into the
intricate element of business and life that it is today. Earliest accounting records were found over 7,000
years ago among the ruins of Ancient Mesopotamia. At the time, people relied on accounting to keep a
record of crop and herd growth. They used accounting techniques that are still used today to determine
if there was a surplus or shortage after crops were harvested each season.*

In Pacioli’s book, he detailed a system of financial recordkeeping in which every “debit” (latin word for
“he owes”) was matched to a “credit” (latin word for “he trusts”). In his system, he included asset, liability,
capital, income and expense accounts—exactly those categories you would find on your own Balance
Sheet and Income Statement.

* https://fremont.edu/history-of-accounting/

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Types of Business Organizations
A business entity is an organization that uses economic resources or inputs to provide goods or services
to customers in exchange for money or other goods and services. Business organizations come in
different types and different forms of ownership.

Three major types of businesses:

Service Business
A service type of business provides intangible products (no physical form). Service type firms offers
professional skills, expertise, advice, and other similar products.
Example(s):
✓ Salon
✓ Repair shops
✓ Schools
✓ Banks
✓ Accounting and law firms

Merchandising Business
This type of business buys products at wholesale price and sells the same at retail price. They are known
as “buy and sell” businesses. They make profit by selling the products at prices higher than their purchase
costs. A merchandising business sells a product without changing its form.
Example(s):
✓ Grocery stores
✓ Convenience stores
✓ Distributors and other resellers

Manufacturing Business
Unlike a merchandising business, a manufacturing business buys products with the intention of using
them as materials in making a new product. Thus, there is a transformation of the products purchased. A
manufacturing business combines raw materials, labor, and factory overhead in its production process.
The manufactured goods will then be sold to customers.
Example(s):
✓ Furniture shops
✓ Gardenia
✓ Car dealers

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Hybrid Business
Hybrid businesses are companies that may be classified in more than one type of business. A restaurant,
for example, combines ingredients in making a fine meal (manufacturing), sells a cold bottle of wine
(merchandising), and fills customer orders (service). Nonetheless, these companies may be classified
according to their major business interest. In that case, restaurants are more of the service type – they
provide dining services.

Double Entry Bookkeeping

Double entry is the fundamental concept underlying present-day bookkeeping and accounting. Double-
entry accounting is based on the fact that every financial transaction has equal and opposite effects in at
least two different accounts, in which each entry is recorded to maintain the relationship.

The fundamental concept of double entry derives from the use of debit and credit to record business
transactions. The total debits always equal the total credits. Customarily, in bookkeeping and accounting,
the asset, expense and loss accounts are listed on the left side of a bookkeeping sheet, and the liability,
equity, revenue and gain accounts are listed on the right side, with the two sides maintaining the same
total balance. A debit to one or more accounts must be accompanied by a credit to at least one account,
equally increasing or decreasing the balance on each side. Other times, a debit to either side is balanced
out by an equal credit to the same side.

Basic Accounting Principles

A number of basic accounting principles have been developed through common usage. They form the
basis upon which modern accounting is based. The best-known of these principles are as follows:

Accrual Principle
This is the concept that accounting transactions should be recorded in the accounting periods when they
actually occur, rather than in the periods when there are cash flows associated with them. This is the
foundation of the accrual basis of accounting. It is important for the construction of financial
statements that show what actually happened in an accounting period, rather than being artificially
delayed or accelerated by the associated cash flows.

Conservatism Principle
This is the concept that you should record expenses and liabilities as soon as possible, but to record
revenues and assets only when you are sure that they will occur. This introduces a conservative slant
to the financial statements that may yield lower reported profits, since revenue and asset recognition
may be delayed for some time. Conversely, this principle tends to encourage the recordation of losses
earlier, rather than later.

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Cost Principle
This is the concept that a business should only record its assets, liabilities, and equity investments at
their original purchase costs. This principle is becoming less valid, as a host of accounting standards
are heading in the direction of adjusting assets and liabilities to their fair values.

Economic Entity Principle

This is the concept that the transactions of a business should be kept separate from those of its owners
and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which
can cause considerable difficulties when the financial statements of a fledgling business are first audited.

Full Disclosure Principle

This is the concept that you should include in or alongside the f inancial statements of a business all of
the information that may impact a reader's understanding of those financial statements. The
accounting standards have greatly amplified upon this concept in specifying an enormous number of
informational disclosures.

Going Concern Principle

This is the concept that a business will remain in operation for the foreseeable future. This means
that you would be justified in deferring the recognition of some expenses, such as depreciation, until
later periods. Otherwise, you would have to recognize all expenses at once and not defer any of them.

Matching Principle
This is the concept that, when you record revenue, you should record all related expenses at the same
time. Thus, you charge inventory to the cost of goods sold at the same time that you record revenue
from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting. The cash
basis of accounting does not use the matching the principle.

Materiality Principle
This is the concept that you should record a transaction in the accounting records if not, doing so might
have altered the decision making process of someone reading the company's financial statements. This
is quite a vague concept that is difficult to quantify, which has led some of the more picayune controllers
to record even the smallest transactions.

Monetary Unit Principle

This is the concept that a business should only record transactions that can be stated in terms of a unit
of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a
specific price, whereas the value of the quality control system of a business is not recorded. This concept
keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and
liabilities.

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Time Period Principle
This is the concept that a business should report the results of its operations over a standard period
of time. This may qualify as the most glaringly obvious of all accounting principles, but is intended to
create a standard set of comparable periods, which is useful for trend analysis.

Computerized Accounting System

While some firms still do their bookkeeping by hand, most firms generally have too many transactions to
sustain a manual accounting system. The more complicated the financial activities of your business are,
the more likely it is that you'll need a computerized accounting system to ensure effective financial
reporting. Computerized accounting systems are software programs that are stored on a company's
computer, network server, or remotely accessed via the Internet.

Computerized accounting systems allow you to set up income and expense accounts, such as rental or
sales income, salaries, advertising expenses, and material costs. They also can be used to manage bank
accounts, pay bills, and prepare budgets. Depending upon the program, some accounting systems also
allow you to prepare tax documents, handle payroll, and manage project costing. You can generally
customize the software to meet the needs of your business. It's important to make sure that your staff are
trained and understand how to use the system correctly so that your company can successfully use your
accounting program.

Special Features of Computerized Accounting

1. It leads to quick preparation of accounts and makes the accounting statements and records available on
time.
2. It ensures control over accounting work and records.
3. Errors and mistakes would be at minimum in computerized accounting.
4. Maintenance of uniform accounting statements and records is possible.
5. Easy access and reference of accounting information is possible.
6. Flexibility in maintaining accounts is possible.
7. It involves less clerical work and is very neat and more accurate.
8. It adapts to the current and future needs of the business.
9. It generates real-time comprehensive MIS reports and ensures access to complete and critical
information instantly.

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Advantages of Computerized Accounting
1. Better Quality Work
The accounts prepared with the use of computers are usually uniform, neat, accurate, and more legible
than manual job.

2. Lower Operating Costs

Computer is a labor and time saving devise. Hence, the volume of job handled with the help of computers
results in economy and lower operating costs.

3. Improved Efficiency
Computer brings speed and accuracy in preparing the records and accounts and thus, increases the
efficiency of employees.

4. Facilitates Better Control

From the management point of view, greater control is possible and more information may be available
with the use of computer in accounting. It ensures efficient performance in accounting work.

5. Greater Accuracy
Computerized accounting ensures accuracy in accounting records and statements. It prevents clerical
errors and omissions.

6. Relieve Monotony
Computerized accounting reduces the monotony of doing repetitive accounting jobs, which are tiresome
and time consuming.

7. Facilitates Standardization
Computerized accounting facilitates standardization of accounting routines and procedures. Therefore,
standardization in accounting is ensured.

8. Minimizing Mathematical Errors

While doing mathematics with computers, errors are virtually eliminated unless the data is entered
improperly in the first instance.

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Chart of Accounts
The organization of the Chart of Accounts follows a separate “category” for accounts representing Assets,
Liabilities, Capital, Revenues, Cost of Sales, Expenses and Other Income and Expenses. These accounts are
arranged in a logical fashion appropriate to user’s financial accounting and reporting processes.

Levels of Chart of Accounts

Type of Chart of Accounts

1. Title Account

Also called as parent account, this account serves as a grouping of active accounts. In reports, a title
account summarizes all the balances of each active account below it.

2. Active Account

Also called as postable account, this account are the source on entries and transactions, because these
accounts are the one that can be only posted in Smartbooks. And as a practice, it is good to keep all the
accounts at the same level as possible.

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Navigation & Viewing
To view the system’s Chart of Accounts:

1. Go to Financials > Chart of Accounts.

2. You will be shown the first level of account which are the parent accounts. If you wish to view the
postable accounts inside the system, you can click the expand button on the left side of each parent
account.

3. After clicking expand on the parent account, you can also click an expand button again to the postable
accounts to show more the accounts Smartbooks have.

Exercise
Please refer to the exercise 2 (2.1, 2.2) of the workbook provided by your instructor.

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Chapter 4: Subsidiary Ledgers and Special Journals

At the end of this chapter, students will be able to:

1. Determine and familiarize to the purpose of Control Accounts and Subsidiary
Ledgers

Purpose of Control Accounts

The purpose of the control account is to keep the general ledger free of details, yet have the correct
balance for the financial statements. For example, the Accounts Receivable account in the general ledger
could be a control account. If it were a control account, the company would merely update
the account with a few amounts, such as total collections for the day, total sales on account for the day,
total returns and allowances for the day, etc.

Purpose of Subsidiary Ledgers

A subsidiary ledger is a ledger designed for the storage of specific types of accounting transactions. Once
information has been recorded in a subsidiary ledger, it is periodically summarized and posted to an
account in the general ledger, which in turn is used to construct the financial statements of a company.

By having the details of the accounts receivable activity in a subsidiary ledger, a company can better
control its financial information. For example, the credit manager and others in the credit department of
a company will have access to any and all of the credit sales information through the subsidiary ledger
without having access to any other account in the company’s general ledger.

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Navigation & Viewing
To show you more a detailed process how a subsidiary ledger works, the ff. steps will be a good help to
you:
1. Go to Financials > Reports > Subsidiary Ledger.

2. In the S/L Type field, you can select what type of business partner you are trying to generate a report
with.

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3. After selection of S/L Type, click the selection list to either S/L Account No. or S/L Account Name. Select
the business partner by performing double click or clicking the “OK” button at the below portion.

4. For the reference date, you can set the period in which you can generate the details of the report. In
the Reference Date field, click the calendar icon to set the period.

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Chapter 5: The Accounting Cycle

At the end of this chapter, students will be able to:

1. Understand the theories and concepts related to Journals and Special Journals
2. Perform draft entries and manual journal entries in Smartbooks
3. Obtain a clear view of the transactions made based on a generated report inside
Smartbooks
4. Familiarize to the banking process related to incoming and outgoing payments in
Smartbooks
5. Perform disbursement and collection transactions using Smartbooks
6. Understand the theories and concepts related to Subsidiary Ledgers
7. Generate an automated ledger report for transactions posted
8. Understand the theories and concepts related to a trial balance report
9. Know how to use and generate a trial balance report in Smartbooks
10. Understand the theories and concepts related to what adjusting entries are
11. Create and perform adjusting entries using Smartbooks
12. Generate financial reports for presentation using Smartbooks
13. Analyze reports generated through Smartbooks
14. Understand the theories and concepts related to what closing entries are
15. Create and process closing entries using Smartbooks
16. Understand the theories and concepts related to what reversing entries are
17. Create and perform reversing entries using Smartbooks

A. Journalizing
In accounting and bookkeeping, a journal is a record of financial transactions in order by date. A journal
is often defined as the “book of original entry”. The definition was more appropriate when transactions
were written in a journal prior to manually posting them to the accounts in the general ledger or subsidiary
ledger.

General Journal
General Journal is the master journal that all company transactions or journal entries are recorded in. A
typical general journal has at least five columns:

✓ One for the date

✓ Account title
✓ Posting reference
✓ Debit column
✓ Credit column

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The majority of journal entries in Smartbooks comes from one of the other modules: Sales, Purchasing,
Treasury and Inventory documents post transaction automatically to the G/L. However, in GAAP accrual-
based accounting, you sometimes need to make manual journal entries for certain transactions such as
depreciation, accruals, correcting entries, and the like.

When a journal entry is added manually, it is recorded immediately and cannot be deleted- only reversed.

The purpose of manual journal entries is to record transactions that are not automatically initiated from
a sub-ledger or from another process within Smartbooks.

Creating/Posting Manual Journal Voucher

1. Go to Financials > Journal Voucher.

2. In the Journal Date and Creation Date field, enter the period you are going to post the voucher. As
standard, the date will be shown in those fields as to date of the system, also known as date today.

3. In the Type column of the General tab, click the dropdown list and select the G/L Account option.

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4. After selecting the type, click the selection list in the G/L Account No. column, a list of accounts you
can will appear. You can choose it by performing double-click or clicking the “ENTER’ button.

5. Once account has been selected, you may now enter an amount on either Debit or Credit column to
reflect the amount to be posted on the created transaction.

6. After which, you need to click Add to save entry for each line created.

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7. Please take note that there should be an equal amount that will represent the Debit and Credit column
in order for you to save the whole document. Once done and complete, click “Save” in the lower portion
of the document.

8. A system message will appear to confirmation of the entry to be included in the system. Click “OK”, to
confirm.

9. You will know that it has been saved when there is a “POSTED” status at the top right most of the screen
and;

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Saving Journal Voucher as a Draft

1. Following the steps 1 up to 6 above, you may now create entries for each transaction.

2. One good thing about Journal Voucher Draft is that you can save it without even considering the
balance/variance as per the Debit and Credit column. Just click “Save As Draft” and then it will be saved
in the system as a draft record of entry.

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3. The system will enter it with the status “Operation completed successfully”. After which, you may now
have the choice to update or remove the said draft.

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Making Recurring Entry

Some transactions recur monthly or weekly. Most often, this document is used for recording recurring
transactions such as depreciation expense, equipment lease payments, payroll, office rent and utility
expenses.

1. Go to Financials > Recurring Postings

2. Set the entry that will be used as a recurring entry, by selecting G/L Account on the Type column; and

3. By clicking the selection list on the G/L Account/BP column and selecting the appropriate entry. You
can select it by performing double click or clicking the “OK” button.

4. Once account has been selected, you may now enter an amount on either Debit or Credit column to
reflect the amount to be posted on the created transaction.

5. After which, you need to click Add to save entry for each line created.

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6. Please take note that there should be an equal amount that will represent the Debit and Credit column
in order for you to save the whole document. You can check the total amount per column in the Total
Debit and Total Credit field.

7. The next step will be the setup of time being for the transaction. In the Frequency field, you can set the
manner of recurrence of entry. (ex. Monthly every 1st)

8. In the Start/End Date, you can set the time of start and if there’s an end to the recurring entry, if there’s
any.

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9. Once time period is completed, you need to put details in the Code and Description field to finally save
it. These will be depending on the given exercises to you by your instructor.

10. Click “Save” to finalize the entry.

11. A message of “Operation ended successfully” will appear after saving it.

The system will duplicate the original posting each time the date arrives, and will allow you to either add
the posting as is, or modify it before the final posting to the general ledger.

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Special Journal

Special Journals Defined

Special journals are all accounting journals except for the general journal. These journals are used to
record specific types of high-volume information that would otherwise be recorded in and overwhelm the
general ledger. The total amounts in these journals are periodically transferred to the general ledger in
summary form. Transactions are recorded in special in chronological order, making it easier to research
transactions.

Examples of special journals are:

✓ Purchases Journal
✓ Cash Disbursements Journal
✓ Sales Journal
✓ Cash Receipts Journal

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Document Structure
Each purchasing document in Smartbooks has nearly identical header and footer areas and tabs named
Details and Journal. This structure helps to ensure that all relevant data are captured as the A/P Process
initiated.

1. Header Area
The upper area of a purchasing document. You enter supplier data and delivery dates here, if Smartbooks
does not fill it in automatically as part of the process flow.

2. Footer Area
The lower area of a payable document and contains the calculated totals for the purchase, including tax.

3. Details tab
The part where all the specific information about the ordered items or services entered such as quantity,
price, item number and item name.

4. Journal tab
Contains the relevant general ledger (G/L) account information for the purchase pulled from the
financial accounting master data

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Navigation & Viewing

Purchases Journal
The purchases journal lists all credit purchases of merchandise. Entries in this journal usually include the
date of the entry, the name of the supplier, and the amount of the transaction. Some companies include
columns to identify the invoice date and credit terms, thereby making the purchases journal a tool that
helps the companies takes advantage of discounts just before they expire. The purchases journal to the
right has only one column for recording transaction amounts. Each entry increases (debits) purchases and
increases (credits) accounts payable.

Each day, individual entries are posted to the accounts payable subsidiary ledger accounts. Creditor
account numbers (or check marks if the creditor accounts are not numbered) are placed in the purchases
journal’s reference column to indicate that the entries have been posted. At the end of the accounting
period, the column total is posted to purchases and accounts payable in the general ledger.

To access:

1. Go to Purchases > AP Voucher

2. In the Supplier No/Supplier Name field, click the selection list to view the list of supplier to select with
and address the transaction with.

3. In the Journal Date, Due Date, and Creation Date, the user can change the date based on the specified
date.

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4. In the CONTENTS tab, select the item by clicking the selection list the Item Code/Item Name column,
then performing double click on the item or selecting it then click the “OK” button.

5. After selecting the item, price per quantity will reflect. Adjust the quantity in the Quantity column

6. Once you are done, click the “Add” button

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7. Final amount subject for payment are reflected in the Balance Due field. Upon finalizing all the details,
click the “Save” button at the right-most portion of the system.

8. A system message will appear, click “OK”

9. You can verify if the process was completed successfully if the document status changed from Open
into “Posted”.

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Cash Disbursements Journal
Cash disbursements occur in business when a company makes a payment. A number of different
transactions can incur a cash disbursement. Companies record these transactions, as every disbursement
results in a lower cash balance. Disbursements will either result in a use or exchange of assets. Many
companies report disbursements in a separate accounting journal.

Companies usually will maintain a cash disbursement journal as part of their general ledger. Frequent cash
disbursements can quickly fill the general journal, resulting in this subunit of the overall accounting ledger.
Only cash disbursements go in this journal. Companies that initially purchase goods on credit will record
the entry into the purchases journal. Once the payable is due, the company must disburse cash. This entry
is part of the cash disbursements journal.

To access:

1. Go to Treasury > Cash Outflows > Cash Outflows- Supplier

2. In the Supplier No, field, click the selection list to view all list of suppliers for processing of payment.
Select one by performing double-click on the supplier or clicking the “OK” button.

3. You can see all open invoices in the Documents for Payment tab. Select the invoice you are about to
process for payment by clicking the checkbox (this will highlight the said invoice for processing).

4. After selecting the invoice, setup payment means by clicking one of these tabs:
Cash/Check/Bank/Deposits

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5. Input amount due in the Amount Collected and Amount Received field. This is eventually reflect the
variance of whatever amount in the Change field. As the main reference for the collection, you can check
the Amount Due and Amount Paid in the right portion of the document.

6. You can also put some remarks in the document which will reflect both in the system, through the
Notes or Journal Entry field.

7. Once done, click now the “Save” button.

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8. A system message will appear, click “OK”

9. You can verify if the process was completed successfully if the document status changed from Open
into “Posted”, and (10) the confirmation message at the left-most portion of the system.

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Sales Journal
The sales journal lists all credit sales made to customers. Sales returns and cash sales are not recorded in
this journal. Entries in the sales journal typically include the date, invoice number, customer name, and
amount. Invoices are the source documents that provide this information. In its most basic form, a sales
journal has only one column for recording transaction amounts. Each entry increases (debits) accounts
receivable and increases (credits) sales.

Notice the dates and posting references applied to each entry in the illustration to the right. Each day,
individual sales journal entries are posted to the accounts receivable subsidiary ledger accounts so that
customer balances remain current. Customer account numbers (or check marks if customer accounts are
simply kept in alphabetical order) are placed in the sales journal's reference column to indicate that the
entries have been posted. At the end of the accounting period, the column total is posted to the accounts
receivable and sales accounts in the general ledger. Account numbers are placed in parentheses below
the column to indicate that the total has been posted.

Many companies use a multi-column (columnar) sales journal that provides separate columns for specific
sales accounts and for sales tax payable. Each line in a multi-column journal must contain equal debits
and credits. For example, the entries in the sales journal to the right appear below in a multi-column sales
journal that tracks hardware sales, plumbing sales, wire sales, and sales tax payable. Individual entries are
still posted daily to the accounts receivable subsidiary ledger accounts, and each column total is posted
at the end of the accounting period to the appropriate general ledger account.

To access:

1. Go to Sales > Invoice.

2. In the Customer No/Customer Name field, click the selection list to view the list of customer to select
with and address the transaction with.

3. In the Journal Date, Due Date, and Creation Date, the user can change the date based on the specified
date.

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4. In the Details tab, select the item by clicking the selection list the Item Code/Item Name column then
performing double click on the item or selecting it then click the “OK” button.

5. After selecting the item, price per quantity will reflect. Adjust the quantity in the Quantity column

6. Once you are done, click the “Add” button

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7. Final amount subject for payment are reflected in the Balance Due field. Upon finalizing all the details,
click the “Save” button at the right-most portion of the system.

8. A system message will appear, click “OK”

9. You can verify if the process was completed successfully if the document status changed from Open
into “Posted”.

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Cash Receipts Journal
A cash receipts journal is a special record used in accounting, usually by retailers. It involves recording the
details of sales in a specific manner. In turn, the cash receipts journal gathers together the relevant
information in a way that makes it easier to copy across, in aggregate, to traditional double-entry
accounts.

To access:
1. Go to Treasury > Cash Inflows > Cash Inflows- Customer

2. In the Customer No, field, click the selection list to view all list of suppliers for processing of payment.
Select one by performing double-click on the supplier or clicking the “OK” button.

3. You can see all open invoices in the Documents for Payment tab. Select the invoice you are about to
process for payment by clicking the checkbox (this will highlight the said invoice for processing).

4. After selecting the invoice, setup payment means by clicking one of these tabs:
Cash/Check/Bank/Deposits

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5. Make sure to input amount due in the Amount field which is reflected also in the Total Amount Due
field.

6. You can also put some remarks in the document which will reflect both in the system, through the
Notes or Journal Entry field.

7. Once done, click now the “Save” button.

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8. A system message will appear, click “OK”

9. You can verify if the process was completed successfully if the document status changed from Open
into “Posted”, and (10) the confirmation message at the left-most portion of the system.

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Report Generation

Purchases Journal Report

1. Go to Purchases > Reports > AP Invoice Reports

2. In the Branch field, click the dropdown list and then select the assigned branch to your account. This
will be further discussed with you by your instructor.

3. Once branch has been selected, click the calendar icon in the From and To field then input desired range
of date to be generated with.

4. You are now ready to view the report:

a) click the Preview button to have a crystallize view of the report just before you download it or;
b) click the Arrow button to show the list of export to files to download it directly.

Note:
You can choose either of the two options: (a) or (b). To check what option you are performing, you can verify it when
the highlight per button will be color white as illustrated in the photo below.

5. You will now have the copy of the report. Click download to generate outside the system.

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Cash Disbursement Journal Report

1. Go to Treasury > Reports > Cash Disbursement Report

2. Click the calendar icon in the From and To field then input desired range of date to be generated with.

3. You are now ready to view the report:

a) click the Preview button to have a crystallize view of the report just before you download it or;
b) click the Arrow button to show the list of export to files to download it directly.

Note:
You can choose either of the two options: (a) or (b). To check what option you are performing, you can verify it when
the highlight per button will be color white as illustrated in the photo below.

4. You will now have the copy of the report. Click download to generate outside the system.

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Sales Journal Report

1. Go to Sales > Reports > Account Receivable Report

2. In the Branch field, click the dropdown list and then select the assigned branch to your account. This
will be further discussed with you by your instructor.

3. Once branch has been selected, click the calendar icon in the From and To field then input desired range
of date to be generated with.

4. You are now ready to view the report:

a) click the Preview button to have a crystallize view of the report just before you download it or;
b) click the Arrow button to show the list of export to files to download it directly.

5. You will now have the copy of the report. Click download to generate outside the system.

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Cash Receipts Journal Report

1. Go to Treasury > Reports > Cash Receipts Book

2. Click the calendar icon in the From and To field then input desired range of date to be generated with.

3. You are now ready to view the report:

a) click the Preview button to have a crystallize view of the report just before you download it or;
b) click the Arrow button to show the list of export to files to download it directly.

4. You will now have the copy of the report. Click download to generate outside the system.

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Exercise
Please refer to the exercise 3 (3.1, 3.2), 4 (4.1, 4.2, 4.3, 4.4) and 5 (5.1) of the workbook provided by your
instructor.

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B. Ledger
General Ledger Defined
A general ledger is the master set of accounts that summarize all transactions occurring within an entity.
There may be a subsidiary set of ledgers that summarize into the general ledger. The general ledger, in
turn, is used to aggregate information into the financial statements of a business; this can be done
automatically with accounting software.*

The general ledger contains a debit and credit entry for every transaction recorded within it, so that the
total of all debit balances in the general ledger should always match the total of all credit balances. If they
do not match, the general ledger is said to be “out of balance” and must be corrected before reliable
financial statements can be compiled from it.*

*https://www.accountingtools.com/articles/2017/5/9/general-ledger

Navigation & Viewing

1. Go to Financials > Reports > General Ledger

2. In the Branch field, click the dropdown list to show the option as to what branch are you specifically
trying to generate to.

Note:
Being a super-user type of account allows you to view reports as per branch or as per consolidated portion.

3. After selecting the branch you wish to generate the report, click the selection list in the GL Account
Code. You can choose the specific account you wish to view by performing double-click on the amount or
clicking the “OK” button.

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4. Next is setting up the period as to date the report will reflect. Click the calendar icon to both From and
To field and the select the time period.

5. You are now ready to view and generate the general ledger.

a) click the Preview button to have a crystallize view of the report just before you download it or;
b) click the Arrow button to show the list of export to files to download it directly.
Note:
You can choose either of the two options: (a) or (b). To check what option you are performing, you can verify it when
the highlight per button will be color white as illustrated in the photo below.

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Subsidiary Ledger Defined
A subsidiary ledger stored the details for a general ledger control account. Once information has been
recorded in a subsidiary ledger, it is periodically summarized and posted to a control account in the
general ledger, which in turn is used to construct the financial statements of a company.

Most accounts in the general ledger are “not” control accounts; instead, individual transactions are
recorded directly into them. Subsidiary ledgers are used when there is a large amount of transaction
information that would clutter up the general ledger. This situation typically arises in companies with
significant sales volume. Thus, there is no need for a subsidiary ledger in a small company.*

*https://www.accountingtools.com/articles/what-is-a-subsidiary-ledger.html

Navigation & Viewing

1. Go to Financials > Reports > Subsidiary Ledger

2. In the S/L Type field, click the dropdown list and select the type of business partner you want to see
the account.

3. After selecting the business partner type, select the specific business partner by clicking the selection
list in the S/L Account No. or S/L Account Name field. Highlight it then double-click or click “OK” button
to proceed with the business partner selection.

4. Once specific customer/supplier has been selected, click the calendar icon in the Reference Date field
then input desired range of date to be generated with.

5. After the data, choose now the account you wish to see by clicking the selection list in the G/L Account
No. or G/L Account Name field. Highlight it then double-click or click “OK” button to proceed with the G/L
Account selection.

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6. Finalizing all details needed, click now the “Search” button.

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Exercise
Please refer to exercise 6.1 and 6.2 of the workbook provided by your instructor.

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C. Trial Balance
Trial Balance Defined
A trial balance is a bookkeeping or accounting report that lists the balances in each of an
organization's general ledger accounts. (Accounts with zero balances will likely be omitted.) The debit
balance amounts are listed in a column with the heading "Debit balances" and the credit balance amounts
are listed in another column with the heading "Credit balances." The total of each of these two columns
should be identical.

In a manual system a trial balance was commonly prepared by the bookkeeper in order to discover
whether math errors and/or some posting errors were made. Today, bookkeeping and accounting
software has eliminated those clerical errors. This means that the trial balance is less important for
bookkeeping purposes since it is almost certain that the total of the debit and credit columns will be equal.

However, the trial balance continues to be useful for auditors and accountants who wish to show
1. the general ledger account balances prior to their proposed adjustments;
2. their proposed adjustments, and
3. all of the account balances after the proposed adjustments.

These final balances are known as the adjusted trial balance, and these amounts will be used in the
organization's financial statements.

Navigation & Viewing

1. Go to Financials > Reports > Trial Balance

2. In the Branch field, click the dropdown list to show the option as to what branch are you specifically
trying to generate to.

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Note:
Being a super-user type of account allows you to view reports as per branch or as per consolidated portion.

3. After selecting the branch you wish to generate the report, next is setting up the period as to date the
report will reflect. Click the calendar icon in the As Of field to select the time period.

4. You are now ready to view and generate the general ledger.

c) click the Preview button to have a crystallize view of the report just before you download it or;
d) click the Arrow button to show the list of export to files to download it directly.
Note:
You can choose either of the two options: (a) or (b). To check what option you are performing, you can verify it when
the highlight per button will be color white as illustrated in the photo below.

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Exercise
Please refer to exercise 9.1 of the workbook provided by your instructor.

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D. Adjusting Entries
Adjusting Entries Defined
Adjusting entries are journal entries made at the end of an accounting cycle to update certain revenue
and expense accounts and to make sure you comply with the matching principle. The matching
principle states that expenses have to be matched to the accounting period in which the revenue paying
for them is earned. There are four main types of accounts that need to be adjusted: prepaid expenses,
accrued expenses, unearned revenues, and accrued revenues.

The two major types of adjusting entries are:

a. Accruals are for revenues and expenses that are matched to dates before the transaction has been
recorded.

b. Deferrals are for revenues and expenses that are matched to dates after the transaction has been
recorded.

Accruals
Accruals are adjustments for 1) revenues that have been earned but are not yet recorded in the accounts,
and 2) expenses that have been incurred but are not yet recorded in the accounts. The accruals need to
be added via adjusting entries so that the financial statements report these amounts.

Some accrued items for which adjusting entries may be made include:
• Salaries
• Past-due expenses
• Income tax expenses
• Interest income
• Unbilled revenue

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Deferrals
In accounting, this means to defer or to delay recognizing certain revenues or expenses on the income
statement until a later, more appropriate time. Revenues are deferred to a balance sheet liability account
until they are earned in a later period. When the revenues are earned they will be moved from the balance
sheet account to revenues on the income statement.

Some deferred items for which adjusting entries would be made include:

• Prepaid insurance
• Prepaid rent
• Office supplies
• Depreciation
• Unearned revenue

Navigation & Viewing

1. Go to Financials > Journal Voucher

2. In the Journal Date and Creation Date field, enter the period you are going to post the adjusting
voucher. As standard, the date will be shown in those fields as to date of the system, also known as date
today.

3. Now click the selection list in the G/L Account No. column, a list of accounts will appear. You can choose
it by performing double-click or clicking the “OK’ button.

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4. Once account has been selected, you may now enter an amount on either Debit or Credit column to
reflect the amount to be posted on the created transaction.

5. As a default, a normal journal voucher will be categorized with a “No” in the Adjusting Entry column.
But since this is a process of classifying an adjusting entry, we need to use the Adjusting Entry column.

6. In the Adjusting Entry column, click the dropdown list and then select Adjusting transaction period 13

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7. Now, click Add button to reflect the entry inside the document.

8. [Optional] You may add some remarks in the Note field

9. Please take note that there should be an equal amount that will represent the Debit and Credit column
in order for you to save the whole document. Once done and complete, click “Save” in the lower portion
of the document.

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10. A system message will appear to confirm the entry to be included in the system. Click “OK”, to
confirm.

11.You will know that it has been saved when there is a “POSTED” status at the top right most of the
screen and;

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Exercise
Please refer to exercise 7 (7.1, 7.2, 7.3, 7.4) and 8 (8.1, 8.2) of the workbook provided by your instructor.

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E. Financials Statements
Financial Statements Defined
Financial Statements are reports that summarize important financial accounting information about your
business. There are three main types of financial statement: the balance sheet, profit and loss
statement, and cash flow statement.

Together they give you and outside people like investors, a clear picture of your company’s financial
position.*

Types of Financial Statement

Balance Sheet
A balance sheet shows the financial position of a business as of the report date (so it covers a specific
point in time). The information is aggregated into the general classifications of assets, liabilities and
capital/equity. Line items within the asset and liability classification are presented in their order of
liquidity, so that the most liquid items are stated first. This is a key document, and so is included in most
issuances of financial statements.

Profit and Loss Statement

Also known as Income Statement, a profit and loss statement reveals the financial performance of an
organization for the entire reporting period. It begins with sales, and then subtracts out all expenses
incurred during the period to arrive at a net profit or loss. This is usually considered the most important
financial statement, since it describes performance.

Statement of Cash Flows

This report reveals the cash inflows and outflows experienced by an organization during the reporting
period. These cash flows are broken down into three classifications: operating activities, investing
activities, and financing activities. This document can be difficult to assemble and so is more commonly
issued only to outside parties.

Statement of Changes in Equity

This report documents all changes in equity during the reporting period. These changes include the
issuance or purchase of shares, dividends issued and profits/losses. This document is not usually
included when the financial statements are issued internally, as the information in it is not overly useful
to the management team.

*https://www.accountingtools.com/articles/types-of-financial-statements.html

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Navigation and Viewing
1. Go to Financials > Reports > select report on the list

2.
For Balance Sheet
a. In the Branch field, click the dropdown list to select your option as to what branch you are generating
the report (specific or as a whole)

b. In the As of field, click the calendar icon to put the desired date range to the report you are generating
with

c. Click preview button to view a crystallized report of the Balance Sheet, or click the arrow to select list
of report formats to export with.

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For Profit or Loss Statement
d. In the Branch field, click the dropdown list to select your option as to what branch you are generating
the report (specific or as a whole)

e. In the Profit Center field, click the dropdown list and select “All”

f. Click the calendar icon to put the desired date range to the report you are generating with, in the From
and To field.

g. Click preview button to view a crystallized report of the Balance Sheet, or click the arrow to select list
of report formats to export with.

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For Statement of Cash Flows
h. In the Branch field, click the dropdown list to select your option as to what branch you are generating
the report (specific or as a whole)

i. Click the calendar icon to put the desired date range to the report you are generating with, in the
From and To field.

j. Click preview button to view a crystallized report of the Balance Sheet, or click the arrow to select list
of report formats to export with.

Exercise
Please refer to exercise 10 (10.1, 10.2) of the workbook provided by your instructor.

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F. Closing Entries: Period-End Closing
Closing Entry Defined
A closing entry is a journal entry made at the end of an accounting period to transfer balances from a
temporary account to a permanent account.

Companies use closing entries to reset the balances of temporary accounts—accounts that show balances
over a single accounting period—to zero. By doing so, the company moves these balances into permanent
accounts on the balance sheet. These permanent accounts show a company’s long-standing financials.*

Temporary Accounts vs. Permanent Accounts

Temporary Accounts
Temporary accounts are accounts in the general ledger that are used to accumulate transactions over a
single accounting period. The balances of these accounts are eventually used to construct the income
statement at the end of the fiscal year.

When the income statement is published at the end of the year, the balances of these accounts are
transferred to the income summary, which is also a temporary account.

The income summary is used to transfer the balances of temporary accounts to capital/retained earnings,
which is a permanent account on the balance sheet.©

Permanent Accounts
Permanent Accounts are accounts that show the long-standing financial position of a company. Balance
sheet accounts are permanent accounts. These accounts carry forward their balances throughout multiple
accounting periods.©

*https://corporatefinanceinstitute.com/resources/knowledge/accounting/closing-entry/

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Navigation & Viewing
1. Go to Financials > Closing Period

2. Click the selection list in the Period field, then a list of periods will appear. You can choose a period by
performing double-click or clicking the “OK’ button.

3. Accounts that are subject for closing will appear, for your viewing and checking.

4. In the Remarks field, you can edit details or additional notes on the closing entry document.

5. The Closing Balance field will let you see the final balance for closing, which will be reflected and closed
to the Retained Earnings account in the system.

6. After checking and updating remarks, you may now close the accounts by clicking the “Save” button at
the right-most portion of the document.

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7. A system message will appear, click “OK”

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Exercise
Please refer to exercise 11.1 of the workbook provided by your instructor.

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G. Reversing Entries
Reversing Entry Defined
A reversing entry is a journal entry made in an accounting period, which reverses selected entries made
in the immediately preceding period. The reversing entry typically occurs at the beginning of an
accounting period. It is commonly used in situations, when either revenue or expenses were accrued in
the preceding period, and the accountant does not want the accruals to remain in the accounting system
for another period.*

*https://www.accountingtools.com/articles/what-is-a-reversing-entry.html

Navigation & Viewing

1. Go to Financials > Journal Voucher

2. In the Journal Date and Creation Date field, enter the period you are going to post the adjusting
voucher. As standard, the date will be shown in those fields as to date of the system, also known as date
today.

3. In the Notes field, enter a remark to take note of the reversing entry

4. In the Type column of the General tab, click the dropdown list and select the G/L Account option.

5. After selecting the type, click the selection list in the G/L Account No. column, a list of accounts will
appear. You can choose it by performing double-click or clicking the “OK’ button.

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6. Once account has been selected, you may now enter an amount on either Debit or Credit column to
reflect the amount to be posted on the created transaction.

7. After which, you need to click Add to save entry for each line created.

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8. Please take note that there should be an equal amount that will represent the Debit and Credit column
in order for you to save the whole document. Once done and complete, click “Save” in the lower portion
of the document.

9. A system message will appear to confirmation of the entry to be included in the system. Click “OK”, to
confirm.

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10. You will know that it has been saved when there is a “POSTED” status at the top right most of the
screen and;

11. The process of adding was successfully, confirming message at the right most bottom portion of the
system.

Exercise
Please refer to exercise 12.1 of the workbook provided by your instructor.

<<<Nothing Follows>>>

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