The goal of any accounting system is to provide summarised transaction information that simplifies business management and supports regulatory reporting.

In addition to recording day to day transactions, a business needs to include it’s historic performance by including its assets and liabilities at system take on.

Recording opening balances is an accounting task, best performed by your accountant or bookkeeper.  We can provide guidance on both the system and the details described in this article.

The take on can be performed at any date but some dates are easier than others

Cut off dates in order of difficulty

• Year-end
• 6-month date
• Month end

The business will need to process transactions after cut off using the system.  An adjustment will be required to reflect the business’s historic performance.  The adjustment will vary dependent on the cut-off date selected;

Year-end

Record closing balance sheet balances using Accounting/Add Adjustment.  Select the closed period that contains the year end date.  The data source for the transaction should be a trial balance provided by the accountant.

Other Dates

Record trial balance values at the cut-off date using Accounting/Add Adjustment.  The trial balance will comprise Profit & Loss Headings with a year to date total values and Balance Sheet headings with cumulative values (Closing Balances from last year end plus any current period transactions).

Accruals Accounting

Most users opt for the Cash Method of Accounting whereby day to day transactions are entered based on bank statements.  In this case, transactions are only entered when paid.  Note: Financial Reports can be converted easily to the accruals basis by year-end adjustments

If the Accruals Method is followed (Settings/Company Details)  the system allows recording of unpaid transactions (Invoices and Credit Notes) as well as Paid transactions (Incomes, Expenses) referred to in the Cash Method above. 

Users should avoid recording adjustments to Sales Ledger Control and Purchase Ledger Control.  Instead, actual Invoice transactions should be used to build up the customer and supplier balances.

To build the balances use this approach

• Record the trial balance adjustment putting the sales ledger control and purchase ledger control amounts to suspense accounts
• Record the individual outstanding amounts using Income/Create Invoice and Expense/Create Supplier Invoice. Select the heading for each transaction to match the ones used for the adjustment in 1. 
• When complete, the suspense headings used in 1. and 2. should be equal and opposite leaving just the outstanding transactions and a nil value on the suspense account headings.
  

Independent Financial Advisers

Special care should be taken if dates other than year-end are used for take on. 

Income transactions must be recorded using the correct headings.  The systems IFA report will only include in Section K headings in the Life and Pension and Investment categories.  

In addition to heading selection, treatment in section K depends on the payer type of the income. 

There are 3 payer types; Product Provider, Platform Service Provider and Retail Client.  The system allows the payer type to be set for a journal adjustment. 

Split the revenue adjustment and record an adjustment for each of the payer types.