General Ledger
The General Ledger is designed to be the focal point of the automated accounting system. It is an easy-to-use system which provides access to data needed for effective decision making. The system can be set up to handle multiple companies, each with its own independent set of files and accounts. If desired, companies can share vendor, customer and account structures, or they can be completely independent. If a common account structure is used, the General Ledgers can be consolidated. Transactions are posted to the General Ledger at the same time they are posted to A/R, A/P and A/T. Thus the designation of "Real Time" Accounting System. There is no need for monthly closings, though accounting periods need to be marked "Open" or "Closed" for control purposes. Reconciliation reports are available which compare the A/R and A/P aging with the G/L account balances day by day. In addition, full featured aging reports are available in the Accounts Receivable and Accounts Payable modules. General Ledger programs are available via the General Ledger Menu. There are two main approaches to accounting functions that we have encountered. Either system will work with the BMS programs. How you set up your Chart of Accounts determines which approach you are using. The "generic" system usually described in bookkeeping manuals consists of some variation of the following account structure:
The system we consider more informative for companies where costs are directly related to revenue is:
For example, with the generic system freight revenue might be credited to account 4100 and freight expense debited to account 5100. Using the second approach the freight revenue would be credited to account 4100 and the freight expense would be debited to the same account. In this way discrepancies are much more noticeable. Profitability is more easily seen and comparisons to previous years or periods are more obvious. The Chart of Accounts file stores both the account data and the department data. Account numbers are four digits while department numbers are two digits. Each entry in the file is assigned a type code:
Since the Ledger is being updated in real time, month-end processing basically amounts to running some reports and marking the past period closed. Year-end processing is accomplished by selecting a menu option which automatically generates a special journal entry closing the revenue and expense accounts to the Retained Earnings account. Starting Balances are also set up for Balance Sheet accounts during this process. If necessary, the year-end processing can be repeated. A General Journal is provided to allow Journal entries. The system requires each Journal entry to be balanced. The Sales Journal is posted to the General Ledger summarized by day. The Voucher Register is posted to the General Ledger in detail. The General Ledger Account Detail report has options which allow it to include all detail available or to summarize all journals by day. This report can be printed for any time period from one day to an entire year. The Trial Balance is printed for one or more accounting periods and shows Starting Balances, Debits, Credits and Ending Balances for each Account/Department combination present. Profit & Loss reports and other financial statements are handled using BMS's Report Generator. This is a flexible system which is full featured and permits account summarization and comparison between periods and between budget and actual data. BMS will provided any special reports needed to analyze inter-company operations. The following accounts are identified in the system file. Accounts marked with (M) are mandatory:
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