Preparing Journal Entries at
York University
Presented by: Finance Department
April 2013
1
Agenda
 Basic accounting
 Understanding the Chart of Accounts
 How to prepare journal entries
 Examples of journal entries
 Viewing journal entries from eReports
 Confidentiality of information
 Common mistakes
 Contact information
2
What is a general ledger?
A general ledger is a primary accounting record used to
keep track of all the financial transactions the organization
makes. All financial transactions, debits and credits, are
posted in the general ledger. It is the fundamental building
block for all reporting.
Journal
Entries
General
Ledger
Financial
Statements
Various
Reports
3
What is a journal entry?
Journal entries are used to record transactions in the accounting
system.
Common use of journal entries:
 Record revenues received
 Charge other departments for goods and/or services
 Correct errors in chartfields (account, fund, cost centre, activity,
time, and location codes)
 Transfer funding support within and between departments and/or
faculties
 Reallocate revenues, expenses, assets and/or liabilities
4
Account Type Definition
(Pg. 2 – Training Manual)
Revenues are the dollars received for goods and services provided by
the university such as:
•
•
•
•
•
•
•
•
5
Tuition
Grants and donations
Investment income
Other revenues
External cost recoveries
Internal cost recoveries (internal reporting only)
Central allocations (internal reporting only)
Interfund transactions (internal reporting only)
Account Type Definition
(Pg. 2 – Training Manual)
Expenses are the cost of resources used up or spent in the process of
earning revenues such as:
•
•
•
•
•
•
•
6
Salaries and benefits
Operating expenses
Cost of sales
Taxes and utilities
Scholarships and bursaries
Interest on long-term debt
Interfund transactions
Account Type Definition
(Pg. 2 – Training Manual)
Assets are the resources of a department or organization such as:
•
•
•
•
•
7
Cash
Receivables
Prepaids
Inventories
Capital Assets
Account Type Definition
(Pg. 2 – Training Manual)
Liabilities are the debts of a department or organization such as:
•
•
•
•
•
•
8
Accounts payable
Accrued liabilities
Deferred revenues and contributions
Deferred capital contributions
Long-term debt
Long-term liabilities
Chart of Accounts
 Describes every financial transaction at York
 Used to segregate University activity
 Facilitates internal and external reporting
 Used to track specific projects/activities
9
Chart of Account Structure
Fund
(How money is spent)
Accounts
(Increases/Decreases in
revenues, expenses, assets,
liabilities & net assets
Activities
(Type of activity)
10
Cost Centre
(Responsible Area)
Time
Locations
(When transaction
takes place)
(Where transaction
takes place)
Chart of Account Structure
Accounts are used to record and summarize the increases and decreases in revenues,
expenses, assets, liabilities and net assets.
Fund Code is used to differentiate how resources are grouped, reported and spent for
specific purposes (i.e. restricted, unrestricted, operating, ancillary, capital, research,
trust & endowments).
Cost Centres identify an area of responsibility whether it is a department, unit,
organization, project, grant, course, or program.
Activity codes are used to track courses, seminars, projects, scholarships or to identify
specific transactions within a cost centre or an account.
Time codes describe when an activity is held or revenues/expenses were incurred. It
can be a day, month, session, calendar year or fiscal year.
Location codes refer to a place either internal to the university (or its satellites) or an
external location. It will describe where an activity is held or revenues or expenses were
incurred.
11
Journal Process Summary
(Pg. 2 – Training Manual)
Prepare Journal
Preparer creates journal with supporting documents
Approval & E-Mail
Approver reviews the journal and e-mail both the journal and back-up documentation to Finance with a not stating his/her approval
Finance Reviews and Posts
Finance reviews and posts the journal in the finance system
eReports
View transactions posted the following day on eReports
NO JOURNAL CONFIRMATION VIA E-MAIL
12
Debit/Credit Tip Sheet
(Pg. 28 – Training Manual)
Account Type
Account Series
To Increase
Amount
To Decrease
Amount
Revenue
020000-099999
Credit
(Negative number)
Debit
(Positive number)
Expense
100000-999999
Debit
(Positive number)
Credit
(Negative number)
Asset
000100-009999
Debit
(Positive number)
Credit
(Negative number)
Liability
010000-014099
Credit
(Negative number)
Debit
(Positive number)
Detailed account listing available at
http://www.yorku.ca/finance/coa.htm
13
How to prepare a journal?
(Pgs. 24 to 27 – Training Manual)
1.
2.
3.
4.
5.
6.
7.
Enter the journal date in the format MMDDYYYY
Fill in the chartfields (Acct, Fund, CC, & ATL)
Enter the amount
Enter the source code
Enter a journal line reference (10 characters)
Enter a journal line description (30 characters)
Enter the journal header description (30 characters)
Credit
s
Debits
Equal
Total amount should equal to $0.00
14
How to prepare a Journal?
(Pgs. 24 to 27 – Training Manual)
15
Credit
s
Debits
Equal
Journal Approver
(Pg. 22 – Training Manual)
Research journals (Fund 400 & 500 cost centres)
Journals containing Fund 400 and/or 500 cost centres can only be approved by:
1. Cost Centre Manager or
2. Delegate Signee
Note: Approval from the cost centre manager/delegated signee for each cost centre
being charged on a journal should be obtained and attached to the email sent to finance.
Other journals including budget allocation journals
The approver can be:
1. Cost Centre Manager or
2. Delegated Signee or
3. Executive Officer* or equivalent or
4. Financial Officer* or equivalent of one of the cost centres that is included in the journal.
Approvers cannot authorize someone else to approve on his/her behalf.
16
Journal Approver – cont…
(Pg. 55 – Training Manual)
The Signing Authority report available via eReports lists all authorized signees
by cost centre:
17
Where to send the journal?
(Pg. 23 – Training Manual)
Type of Journal
Email to:
Budget Allocation journals
[email protected]
(Contain 099xxx accounts)
Research journals
[email protected]
(Contain Fund 400 and/or Fund 500 entries)
Credit Card journals
[email protected]
Other journals
[email protected]
Subject line of e-mail = Faculty’s name + Description of Journal
18
Subject Line of Journal E-mail
• The subject line of the e-mail should include the faculty
name, as well as the description of the journal:
19
Viewing Journal Entries via Transaction
Details (Pg. 44 - Training Manual)
• The Transaction Details report lists transactions in a
particular cost centre.
20
Transaction Details – a deeper look
(Pg. 49 – Training Manual)
• Click on the hyperlinked Journal ID or Voucher ID to see
the back-up.
21
Transaction Details – a deeper look
(Pg. 46 – Training Manual)
• The source code identifies the unit responsible for
inputting the data.
22
Journals that will be Available for
Viewing
• All journals that have been prepared by the community
will be available for viewing
• There are certain system generated journals that will not
be available for viewing – for example:
Source Codes
PAY – Payroll charges
TEL – Telecom charges
STR – Student Accounts Receivable
PRT – Printing Charges
BKS – Bookstore Charges
23
Who can view posted journals?
(Pg. 35 – Training Manual)
• A posted journal can be viewed by all individuals who
have eReports access to one of the cost centres
included in that journal.
• If you have access to one of the cost centres
included in a journal, you can view the entire
journal.
24
How to maintain confidential
information? (Pg. 35 – Training Manual)
If an entry is entered to a specific cost centre that is
confidential in nature and thus should not be viewed by
individuals who have access to the other cost centres
included in a journal, that entry should be done in a
separate journal.
25
How to maintain confidential
information? (Pg. 35 – Training Manual)
Example:
Professor A has access to Cost centre xxxxx1 and Professor B has
access to cost centre xxxxx2. You want to transfer salary amount of
$3000 to cost centre xxxxx1 for Professor A and $6000 to cost centre
xxxxx2 for Professor B.
If both entries are included in one single journal, Professor A will be
able to see Professor B’s salary and Professor B will be able to see
Professor A’s salary. To ensure that each Professor can only see their
own salary transfer, split the entries into two journals where each
journal will be sent in a separate email to Finance.
26
Example of Journal Entries
#1 Record external revenue - (Pg. 31 – Training
Manual)
• External Cost Recovery (ECR) accounts should be used
to report revenue the University has received from an
external organization or cost centre (Fund 900 only)
Example: Bookstore sells $100 office supplies to YFS
DR 301000-Office Supplies
CR 073220-ECR Bookstore-Stationery
27
$100
$100
Example of Journal Entries
#2 – Record internal revenue/chrg another dept.
• Internal Cost Recovery (ICR) accounts should be used
to report revenue from a faculty/department/area/unit
internal to the University
Example: Bookstore sells $100 office supplies to Finance
department
DR 301000-Office Supplies
CR 0032620-ICR Bookstore-Stationery
28
$100
$100
Example of Journal Entries
#3 – Prepare correction journals (Pg. 33 –
Training Manual)
• Example: Finance wants to move charges from cost
centre 111111 to cost centre 222222
29
TIP! Using the same chartfield combination that
appears in Transaction Detail, enter the opposite sign
for the amount to cancel or move the journal line.
Common Mistakes
Oops
(Pg. 34 – Training Manual)
#1 – Salary amount transferred to another cost centre
without transferring the corresponding benefit amount
30
Entered:
DR 101000 200 2xxxxx
CR 101000 200 21xxxx
Salary expense (in)
Salary expense (out)
Correct:
DR 101000 200 2xxxxx
CR 101000 200 21xxxx
Salary expense (in)
Salary expense (out)
DR 201000 200 2xxxxx
CR 201000 200 21xxxx
Benefits expense (in)
Benefits expense (out)
Transfer of Salary & Benefit
Expenses (Pg. 31 – Training Manual)
• Salary and benefits expenses should normally not be
transferred on a regular basis from one cost centre to
another.
• The individual should be set up correctly in Payroll so
that his/her salary charges get charged to the correct
cost centre.
• There are some rare circumstances when salary and
benefit expenses do need to be transferred. These
transfers should be non-recurring and one time only.
31
Transfer of Salary & Benefit
Expenses (Pg. 31, 32 – Training Manual)
Salary and benefits expenses can be transferred OTO
using the (1) same expense and benefit accounts or (2) an
Internal Cost Recovery (ICR) account
Example using same expense and benefit accounts:
DR 101000 200 2xxxxx
Salary expense (in)
CR 101000 200 21xxxx
Salary expense (out)
32
DR 201000 200 2xxxxx
CR 201000 200 21xxxx
Benefits expense (in)
Benefits expense (out)
Example using ICR account:
DR 101000 200 2xxxxx
CR 032800 200 21xxxx
Salary expense
ICR academic salaries
DR 201000 200 2xxxxx
CR 033200 200 21xxxx
Benefits expense
ICR Benefits - academic
Common Mistakes
Oops
(Pg. 34 – Training Manual)
#2 – Transfer charges to another cost centre without
moving the HST rebate.
33
Entered:
DR 301000 200 2xxxxx
CR 301000 200 2xxxxx
Expense (in)
Expense (out)
Correct:
DR 301000 200 2xxxxx
CR 301000 200 2xxxxx
Expense (in)
Expense (out)
DR 301000 200 2xxxxx
CR 301000 200 2xxxxx
HST Rebate (in)
HST Rebate (out)
Common Mistakes
Oops
(Pg. 34 – Training Manual)
#3 – Interfund transfer accounts used in combination with
regular accounts.
Entered:
DR 922000 100 1xxxxx
CR 034630 200 2xxxxx
Expense (increase)
Revenue (increase)
Correct entries:
DR 922000 100 1xxxxx
CR 091900 200 2xxxxx
Expense (increase)
Revenue (increase)
TIP! Accounts starting with 9xxxxx should always be used in
combination with accounts that start with 09xxxxx and vice-versa.
34
Interfund Transfers
(Pg. 18 – Training Manual)
• Interfund transfer accounts cannot be used with Fund
400, Fund 500, & Fund 900. Regular revenue and
expense accounts must be used.
• Transfers to Endowment can only be done with prior
approval/authorization from the Assistant Vice-President
Finance & CFO.
• Using interfund transfer accounts, the entry should be:
DR 9xxxxx
CR 09xxxxx
35
Common Mistakes
Oops
(Pg. 34 – Training Manual)
• Insufficient backup attached
• Journal is out of balance
• Missing or insufficient journal line reference and
journal line description
36
Important Points to Remember
• Refer to the Finance website to follow the journal entry
cut-off dates http://www.yorku.ca/finance/calendar.htm
• All formulas should be removed from the journal entry
excel file before submitting to Finance (use copy and
paste special values)
• Source codes are used to identify the type of entry and
the unit responsible for inputting the data (Pg. 58 –
Training Manual)
37
Contact Information
38
Information About
Contact Department
E-mail Address
Research Journals
(i.e. journals with fund
400/fund 500 entries)
Research Accounting
Ext. 20232
[email protected]
Budget Allocation
Journals
Budgets and Planning
Victoria Abaca
Ext. 22014
[email protected]
Other Journals
Financial Reporting
[email protected]