Is there a capability to use a control account established for “Bank and Cash Accounts” in a Journal Entry?
I have tried that but there is no choice of the respective account in a journal entry.
What is your use case for this? I mean why not use Receipts and Payments tab to enter transactions for bank accounts?
As explained in the Guide, “…no transaction involving the actual receipt or payment of funds by a business can be recorded via a journal entry.” The Guide also explains why this is so.
Hi @lubos one use-case for this is supposed i transfer from Bank 1 to Bank 2 with bank charges. Currently I do interfund transfer and make a payment from the bank using the bank charges expense for the amount of bank charge. That’s 2 separate transactions. i think of 2 plausible solutions, one, modify the interfund transfer module to accommodate a field for bank charges or bank credit. Two, allow us to use the Cash Account in the Payment module or journal module to enter transaction.
Transaction Recap
DR Bank 2 ---------------------10,000
DR Bank Charges ----------------200
CR Bank 1 ------------------------------------------------------10,200
I think inter account transfers should support bank charges.
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@lubos Second Use-case is, i supposed i did a cash advance for my employee for a company expense. I used the payment module to handle the transactions.
DR Cash Advance - Employee ----- 10,000
CR Cash in Bank - ------------------------------------------10,000
Here comes the employee liquidating the advance, actual expense is 9,800 with excess cash of 200. So the employee usually journalize this with the proforma entry since that employee does not have access to receipt or payment module;
DR Office Supplies Expense ------9800
DR Cash in Bank ---------------------200
CR Cash Advance- Employee ---------------------------10,000
Currently, I created a suspense “Excess Cash” account to handle the liquidation. then for transferring that excess to the Cash in Bank, i do another transaction a receipt entry to close that suspense account.
Have you tried using the Manager payment or receipt to document these transactions?
You do realise you can have multiple line items and enter negative numbers for line items where required in a payment or a receipt.
Yes that’s an alternative. But these employees should not have access to bank accounts.
@Christopher_Esmeres I don’t think it should be single entry though. Why not enter this transaction as expense claim and then receipt? To me they are two separate transactions anyway.
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Thank you for your interest!
Well, in principle, using Receipts and Payments is ok to manage transactions for bank accounts.
However, for internal and external auditors, comprehensive accounting records (journal entries) shall be prepared and presented: in this case, when we make a payment, the result is:
while, if we would have a journal entry for the same purpose, the result would be (something like that):
Despite the fact that the accounting result is the same in both these cases, the weakness of using Payments instead of Journal Entries is that we have not concecutive and comprehensive journal entries.
Imagine an (external) auditor who wants to see concecutive entries and all debits/credits in a row.
Of course, I understand that “most transactions are entered in other functional tabs, thereby automating many decisions about account posting and reducing errors”. However, I believe that providing alternative option (to include bank accounts in journal entries) would be beneficial.
I am not insisting… only in case it will be deemed efficient and technically possible on your part.
In your example the “Credit” entry would be one of the Bank or Cash accounts. So assume you have 2 bank accounts the auditor would see a list for each of these accounts. This is exactly what you also would get when creating under Reports → Bank Account Summary reports. Your auditors will be happy that it is already pre-sorted.
I am an auditor, so on my part, I am not so “happy” to see only the reports. Of course, it would be possible to check the data through these reports, however having concecutive journal entries (including all debits/credits of all accounting facts) is one of the main points of focus in Internal Audit.
Our auditors require the general ledger transactions report and the bank statements rather than a journal entries report with bank statements.
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I would suggest enabling Bank and Cash accounts in Payment and Receipt which will solve the current issue for ever. it could result in removing Transfer Between Accounts Tab but it will give more options for the user.
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This is an acceptable way to audit an organisation but not a complete one. If an auditor wants to also audit the supporting documentation (easily), this would be feasible through comparing journal entries (meaning, per date accounting records) with general ledger.
Sure, the auditors also want asset reports, etc. But for track and tracing they use the GL transactions and statements. The evidence if uploaded in Manager can be accessed by clinking on the credit/debit amounts in the GL Transactions report which will give a view of such transaction and if you attached, receipts, etc they can open these too.
For organisations which request full internal audit, tracking GL transactions is a huge work.
On my part, as auditor, as the rest auditors of IIA do, I request the supporting documentation (for a full audit) per date - therefore, the entities maintain their records in chronological order to check the respective journal entries and their documents in this order.
Tracking GL transactions is efficient for sample auditing only.
@evans, although I completely agree with your request but I still don’t believe that it’s related to this topic
Please see this topic
I think this is more like what you propose here.
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@evans, you can actually do what you describe in Manager. You need to abandon use of cash and bank accounts and set up your own ordinary accounts in the chart of accounts to represent those. Then, you will be able to make journal entries involving those self-established accounts. The shortcomings are that you give up Bank Account Summaries, Receipts, Payments, Inter Account Transfers, Bank Reconciliations, etc. You would lose the ability to track deposit and withdrawal clearance status. You would also sacrifice almost all user permission granularity.
You would be reverting to very crude accounting practices where everything is entered by journal entry. Most people gave that up decades ago with the introduction of computer-based systems. And you would face the problem that everyone who touched the accounting system would need to become expert at determining which accounts to debit and which to credit.
All that just so you can have all transactions numbered in a single sequence rather than having sequences for separate transaction types? To me, that seems a very poor tradeoff.
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