Accounting 101 - How to do a Journal Entry in GP

The owners of successful small businesses aren't usually accountants. Occasionally, they need a lesson in Accounting 101. Here are the basic steps to do the most important function in GP.

Start in Financial->Transactions->General

Fill in the Batch ID field. This way you can save the batch for verification or approval later. Cuts down on errors.

Add the batch

Save the batch

Adding a simple reference is mandatory. Optionally, add a long memo. You can also attach a file into the note field. This way you can attach an Excel file that might explain the details of the journal entry. I have seen accountants do multi-million dollar journal entries, without any supporting file or even a memo.

After filling in the header of the form, add the journal lines. The magnifying glass will pull up a list of accounts to choose from.

Pick the account, enter the amount, and decide if debit or credit. Generally speaking the rule in accounting is "value to the company is a Debit"; "value away from the company is a Credit". So money received to your bank account would be a Debit (Value To). Money spent from your checking account would be a "Credit" (Value From). A Sale would be a Credit, because it requires that you owe one or more items or services to a customer, so the Value of those services would be Value From the company. Just so, a vendor bill is also a credit, because it commits your company to a payment, which would represent Value From your company.

You can add additional information for each detail journal entry line

Then enter the next line. The principal of a Double-Entry system is that each transaction must contain more than one entry, with the sum of debits and credits being zero. If it were only a 2-line entry, such as a vendor bill to repair your car, then the bill for repair cost would be a Debit to the Auto Expense account (Value To or Received), while the balancing entry would be the same amount to Accounts Payable as a Credit (Value From or a debt owed). The total would be zero. The debits are subtracted from the credits or vice versa. The balance is always zero.

In the journal entry below, the Debit equals the Credit.

Another set of balanced transactions

Save the record to the batch.

Always review or print and then review the Batch Edit list. This tells you what is really in the batch. The printer icon is in the upper right corner. Print to screen always, first.

If there are no error messages in the Batch Edit list, then you can post the batch. Otherwise fix the errors first.

You can use Cards or Inquiry to drill down into the batch value. Just filter for a date range that most likely contains that transaction. First go to the account and then set the date.