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At the end of the financial year, your accountant might want you to record journal entries for things such as depreciation of your computer or company car. As these are likely to be just “book adjustments” (there’s no cash or other party involved), you would record them as general journal entries.
General journal entries are different to other transactions in AccountRight. In the Record Journal Entry window (Banking command centre > Record Journal Entry) you need to:
specify at least two accounts that require adjusting
enter at least one of the amounts as a “debit” and another as a “credit”
ensure that the total debit and credit amounts in the entry are equal.
Your accountant can help you work all this out, but if you need a quick refresher, here’s a guide to choosing whether an amount is entered as a debit or credit in the Record Journal Entry window:
| For accounts of this type... | Record an increase as a... | Record a decrease as a... |
|---|---|---|
| 1-xxxx Asset | Debit | Credit |
| 2-xxxx Liability | Credit | Debit |
| 3-xxxx Equity | Credit | Debit |
| 4-xxxx Income | Credit | Debit |
| 5-xxxx Cost of Sales | Debit | Credit |
| 6-xxxx Expense | Debit | Credit |
For example, say you want to record depreciation expenses for your company car. The two accounts that are affected are:
| Account | Account type | Increase or decrease? | Debit or credit? |
|---|---|---|---|
6-1140 Depreciation | Expense | Increase | Debit |
| 1-2320 MV - Accum Dep’n | Asset (but it has a negative balance) | Decrease (because it has a negative balance) | Credit |
- Open the Record Journal Entry window (Accounts command centre > Record Journal Entry).
- Enter the date of the entry. Most end-of-financial-year adjustments are recorded as at 30 June (31 March).
- Enter a memo describing the journal entry, for example “Depreciation for the 201x financial year".
- In the Acct No. field, select one of the accounts you want to adjust.
- Enter the amount you want to adjust in the appropriate column—Debit or Credit (see the table above as a reference).
- If the entry relates to a job, enter the job number.
- If you want to record a comment about the account you’ve selected, enter it in the Memo column.
- If the entry affects your BAS (GST) return, select the appropriate tax GST code. Otherwise, leave the Tax (GST) column blank, or select the N-T Not Reportable code.
- On the next row, select another account that you want to adjust and then complete the relevant details for each column.
If the entry involves more than two accounts, continue to add rows for each account. - If you selected codes in the Tax (GST) column other than N-T, select whether the adjustment relates to sales or purchases (what’s the NZ equivalent?).
<screenshot> - Click Record.
What’s a Year-End Adjustment? If you need to record an adjustment as at 30 June (31 March) that relates to the full financial year (depreciation is a good example), you might not want that adjustment to be included in your June (March) financial reports, because it could distort your results. If you select the Year-End Adjustment option in the Record Journal Entry window, you’ll be able to filter it out of reports such as your Profit & Loss Statement when you display the report (to do this, select Exclude Year-End Adjustments from the Display Transactions filter when viewing the report).
<screenshot>
When wouldn’t I use a general journal entry for adjustments? If you need to adjust the balance of banking accounts, inventory items, customers or suppliers, there’s a better way to record the adjustments. Here are some common adjustments you might need to make and suggestions for how to record them in AccountRight:
| Bad debts | Record an adjustment for each customer using the Sales window (Sales command centre > Enter Sales). Enter negative dollar values in the sales to create credit notes that can be used to close the sales you won’t be receiving payment for. Tell me more. |
|---|---|
Stock adjustments | If you’re tracking item quantities and values in AccountRight, go to Inventory command centre > Inventory Adjustment to make any adjustments. Tell me more. If you’re not tracking inventory, you can record a general journal entry. |
Opening balances | Go to Setup menu > Opening Balances to enter amounts for accounts and items you had on hand when first starting to use AccountRight. Tell me more. |
Bank transfers | To record transfers between banking accounts or to petty cash, go to Banking > Transfer Money. Tell me more |
Owner drawings | To record withdrawals, or personal expenses, go to Banking command centre > Spend Money. Tell me more. |
Capital contributions | For cash contributions made by the owners of the business, go to the Banking command centre > Receive Money. Tell me more. For other types of assets, such as a car or furniture, record a general journal entry. |
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