Back to F050: Basic Financial Configuration

Lesson 2: Configuration of the General Ledger

In Acumatica ERP, you have to define the general ledger to store the financial records of the company. You also configure the related general ledger functionality to make it possible for users to record and track GL transactions in the system. This lesson describes how to create an actual ledger, how to create the chart of accounts, how to set up general ledger preferences, and how to define a financial year and open financial periods.

General Ledger: Actual Ledger

In Acumatica ERP, a ledger of the Actual type is at the core of your company’s financial records. The records in the actual ledger make up the history of all financial transactions of your organization. The system updates the actual ledger every time you release and post a financial transaction in the system. In this topic, you will read about creating actual ledgers in the system.

Creation of an Actual Ledger

You can specify only one ledger of the Actual type for each company. You add a new actual ledger in either of the following ways:

To first add a new ledger and then associate it with existing companies and branches, you use the Ledgers (GL201500) form. Aer you create the actual ledger, you can associate it with existing companies in the system.
To first create a new company and then add a new ledger, you use the Companies (CS101500) form. (You create the ledger directly on this form.) If you have multiple companies, they can use the same ledger of the Actual type, or they can use diﬀerent ledgers, depending on the transaction processing requirements of your organization and its organizational structure.
```
        You cannot delete a ledger or change its currency or type if the ledger has any journal entries or other
        records.
```

General Ledger: To Create an Actual Ledger

In this activity, you will learn how to create an actual ledger for a company in Acumatica ERP.

Story

Suppose that as an administrator, you need to create an actual ledger that will hold the history of all financial transactions of the SweetLife Fruits & Jams company.

Process Overview

In this activity, on the Companies (CS101500) form, you will create an actual ledger for a new company.

Step: Creating an Actual Ledger Perform the following instructions to create the actual ledger to be used by the company:

Sign in to the company you have prepared with the admin username. Lesson 2: Configuration of the General Ledger | 15
Open the Companies (CS101500) form.
In the Company ID box, select SWEETLIFE.
On the form toolbar, click Create Ledger.
In the Create Ledger dialog box, which opens, in the Ledger ID box, type ACTUAL.
Click Create. The system creates and saves the ledger and closes the dialog box.
On the Ledgers tab, verify that the ledger you have created is listed in the table.

Activity Recap

In this activity, we have illustrated how to create a ledger with the Actual type for a new company.

General Ledger: Chart of Accounts

Each company has its own structured list of general ledger accounts. Acumatica ERP provides you with the ability to define a chart of accounts that suits your company's needs. To define the chart of accounts in the system, you have to perform the following tasks:

Plan account identifiers if they have not yet been defined for the configured company
Modify the ACCOUNT segmented key based on your planned structure, if necessary
Add accounts to the chart of accounts (including the Retained Earnings and YTD Net Income accounts)
Optional: Restrict user access to accounts

Account Classes

For convenient grouping, sorting, and filtering of information associated with GL accounts in reports and inquiries, you can assign accounts to account classes on the Chart of Accounts (GL202500) form. Acumatica ERP provides predefined account classes, which can be modified if needed, and you can add new account classes on the Account Classes (GL202000) form. For details on how to create an account class in the system, see To Create an Account Class.

Before you add accounts to the chart of accounts, you should review the predefined account classes and learn about the capabilities of account classes so that you can determine which classes to assign to accounts.

Entry of Chart of Accounts

In Acumatica ERP, you define the chart of accounts on the Chart of Accounts (GL202500) form. When you define the chart of accounts, you assign to each account a name, a unique identifier, and an account type. You can prepare the chart of accounts in an .xlsx or .csv file and upload the file to the system. Alternatively, you can add accounts individually.

Mandatory Accounts

In Acumatica ERP, you must create two system-maintained accounts of the Liability type: YTD (Year-to-Date) Net Income and Retained Earnings. Once you have created these accounts, you need to specify them on the General Ledger Preferences (GL102000) form.

The YTD Net Income account tracks the net income that has been accumulated since the beginning of the financial year—that is, the diﬀerence between the amounts that have been posted to all income accounts and the amounts that have been posted to all expense accounts. The system updates this account for every transaction posted to an Lesson 2: Configuration of the General Ledger | 16

income or expense account. For a new financial year, the system resets the balance of the YTD Net Income account to zero.

          Users cannot post transactions directly to the YTD Net Income account. Aer any transaction has been
          posted to an income or expense account, the selected YTD Net Income account cannot be changed in
          the YTD Net Income Account box on the General Ledger Preferences form.

When the system updates the balance of the YTD Net Income account, it also updates the beginning balance of the Retained Earnings account in the next financial year for which financial periods are defined. The Retained Earnings account accumulates the net income or loss that is retained by the company. Retained earnings are summarized over all years, starting with the first year of company operations in Acumatica ERP. Users can also post direct transactions to this account, such as dividends paid to shareholders. This account is normally reported in the Shareholders' Equity section of the balance sheet.

General Ledger: To Create a Chart of Accounts

In this activity, you will learn how to modify the ACCOUNT segmented key. You will also define the chart of accounts by uploading a list of GL accounts to the system.

Story

Suppose that as an administrator, you need to add the chart of accounts of the SweetLife Fruits & Jams company to Acumatica ERP. Further suppose that an accountant of the company has provided a file that lists the GL accounts to be used and their settings (including the account classes; you will use the predefined classes). You will review the list of accounts, modify the ACCOUNT segmented key, and create the chart of accounts by uploading the file provided by the accountant.

Process Overview

In this activity, you will modify the length of the ACCOUNT segmented key on the Segmented Keys (CS202000) form. On the Chart of Accounts (GL202500) form, you will upload the chart of accounts from an Excel file.

Step 1: Modifying the ACCOUNT Segmented Key To modify the ACCOUNT segmented key, do the following:

Sign in to the company you have prepared with the admin username.
Review the Basic_Company_COA file that you have downloaded. Notice that the account identifiers consist of only one segment of five characters.
Open the Segmented Keys (CS202000) form.
In the Segmented Key ID box, select ACCOUNT.
For the only row in the table, in the Length column, specify 5.
On the form toolbar, click Save. Users can use account identifiers whose length is less than or equal to the specified length for the segmented key. Lesson 2: Configuration of the General Ledger | 17

Step 2: Uploading the Company's GL Accounts You can create the chart of GL accounts in the system by entering the accounts manually or by uploading a file that lists them. In this activity, you will upload the file that SweetLife's accountant has provided. Do the following to upload the chart of accounts:

Open the Chart of Accounts (GL202500) form.
On the form toolbar, click Load Records from File.
In the File Upload dialog box, which opens, select the file path to the Basic_Company_COA file, and click Upload.
In the Common Settings dialog box, which opens, leave the default settings, and click OK.
In the Columns dialog box, leave the current mapping, and click OK.
On the form toolbar, click Save.
You should review the chart of accounts, which now includes all the necessary accounts, including two accounts that are required for Acumatica ERP: Net Income (33000) and Retained Earnings (32000). The other necessary accounts are the following:

20000: The account to be used to record amounts owed to vendors for items and services purchased on credit. This account will later be specified as the AP account.
11000: The account to be used to record amounts owed by customers for services provided to them on credit. This account will later be specified as the AR account.
10500: The account to be used as the intermediate account for funds transfers. This account will later be specified as the cash-in-transit account.

Activity Recap

In this activity, we have illustrated the following:

The system administrator modified the ACCOUNT segmented key so that its length is five characters, which matches the length of accounts in the Basic_Company_COA file.
The system administrator uploaded the chart of accounts from the Basic_Company_COA file to the system.

General Ledger: To Specify General Ledger Preferences

In this activity, you will learn how to specify the basic settings to be used for the general ledger functionality.

Story

Suppose that a company with an actual ledger has been created and a chart of accounts has been defined in Acumatica ERP. Acting as an administrator, you need to specify the preference settings related to the general ledger functionality. You will specify the accounts that are mandatory for the system and other settings that make it easier for users to create entities in the system.

Process Overview

In this activity, you will configure general ledger preferences on the General Ledger Preferences (GL102000) form. Lesson 2: Configuration of the General Ledger | 18

Step: Specifying the General Ledger Preferences You specify the basic settings related to processing GL transactions as follows:

Sign in to the company you have prepared with the admin username.
Open the General Ledger Preferences (GL102000) form.
In the YTD Net Income Account box in the Chart of Accounts Settings section, select 33000 - Net Income. This is a required setting for a company.

In the Retained Earnings Account box, select 32000 - Retained Earnings. This setting is also required for a company.

              You can select only an account with the Liability type in the Retained Earnings Account box. If
              you enter an account with another type, the system displays an error message.

On the form toolbar, click Save.
In the Posting Settings section, make sure the Automatically Post on Release check box is selected. All batches will be automatically posted to the general ledger aer release. This setting simplifies batch processing, because no batches with the Unposted status will be generated.
In the Data Entry Settings section, clear the Hold Batches on Entry check box. When new batches are saved, they will have the Balanced status. This setting also simplifies the processing of batches.
On the form toolbar, click Save.

Activity Recap

In this activity, we have illustrated how to configure general ledger preferences—the settings that aﬀect data entry and the posting of transactions.

General Ledger: Financial Years

In Acumatica ERP, transactions are posted to the financial periods that have been defined in the system. Thus, before any transactions are posted, you have to define the structure of the financial year in the system. Based on this structure of the financial year, you can generate periods for any number of financial years and then open the periods.

Financial Year Setup

You define the financial year on the Financial Year (GL101000) form by doing the following:

You decide which year should be the first year, and specify it in the system. The first financial year usually designates the year when the company starts processing its operations in Acumatica ERP. However, we recommend that you define the first financial year so that it includes the last period before the company started to use Acumatica ERP, even if this means defining an extra financial year. You can upload the ending balances of accounts to that period later, aer periods have been defined.
You define the structure of the financial year that your company will use—that is, you define the periods of the year in the system.
If it is necessary to have a special period for posting adjustments at the end of the year, you add an adjustment period. Lesson 2: Configuration of the General Ledger | 19
Aer you have set up the financial year, you need to generate a master calendar.

Master Calendar Generation

You generate a master financial calendar on the Master Financial Calendar (GL201000) form for any number of
financial years by clicking Generate Calendar on the form toolbar.
Aer periods have been generated, you can modify them before any transactions have been made. To do so, you
select the User-Defined Periods check box.
Aer you have generated the master calendar, you open any number of periods for posting.

Period Opening

You have to open the periods to which users will post transactions and documents. To open periods, on the Master
Financial Calendar (GL201000) form, you first make sure the necessary year is selected in the Financial Year box,
and then on the More menu, click Open Periods.
Aer you have opened periods, they can be used in transactions and documents. At any time, you can have
multiple open periods; opening one period does not require you to close the previous one.

General Ledger: To Define a Financial Year

In this activity, you will learn how to set up a financial year, generate periods for the first year, and open the
generated periods.

Story

Suppose that the SweetLife company starts its operations in January 2025, each of its financial periods lasts one
month, and an additional period for posting adjustments is necessary. Acting as an administrator, you need to set
up the financial year that meets these criteria, generate periods for the financial year, and open them.

Process Activity

In this activity, you will configure the structure of the financial year on the Financial Year (GL101000) form. On
the Master Financial Calendar (GL201000) form, you will generate periods of the first financial year. Finally, on the
Manage Financial Periods (GL503000) form, you will open the financial periods.

Step 1: Setting Up a Financial Year To set up the first financial year, do the following:

Sign in to the company you have prepared with the admin username.
Open the Financial Year (GL101000) form.
In the Financial Year Starts On box of the Summary area, select 1/1/2025.
In the Period Type box, make sure that Month is selected.
Select the Has Adjustment Period check box.
On the form toolbar, click Create Periods.
Click Save to save the settings of the financial year. Lesson 2: Configuration of the General Ledger | 20

Step 2: Generating Periods for the First Financial Year To generate the financial periods for the first financial year, do the following:

Open the Master Financial Calendar (GL201000) form.
In the Financial Year box of the Summary area, make sure that 2025 is selected.
On the form toolbar, click Generate Calendar.

In the Generate GL Calendar dialog box, which opens, make sure that 2025 is selected in the From Year and To Year boxes, and click OK. The system generates periods for the 2025 financial year.

                We do not recommend generating financial periods in the distant future, because doing so
                would limit and complicate any changes to the configuration of the financial year that may be
                needed because of organizational changes.

Step 3: Opening the Periods To open the periods you have generated, do the following:

While you are still on the Master Financial Calendar (GL201000) form, on the More menu, click Open Periods. The Manage Financial Periods (GL503000) form opens with the Open option selected in the Action box of the Summary area.
On the form toolbar, click Process All. The system opens the Processing dialog box and runs the process of opening periods.
Close the Processing dialog box.

Activity Recap

In this activity, we have illustrated the following:

The system administrator configured the structure of the financial year that the new company uses.
The system administrator created the first financial year in the system and generated financial periods for this year.
The system administrator opened all the financial periods to make it possible for users to select them in documents and to post transactions to them. Lesson 3: Configuration of Cash Management | 21