Reverse Transactions for Income Statement G/L Accounts

According to Romanian legislation, transactions for:

  • expense G/L accounts must be posted on the debit side;
  • income G/L accounts must be posted on the credit side.

Using standard Business Central, it is possible to post transactions on the credit side for expense accounts or debit side for income accounts, either from manually posted transactions or from automatically posted entries. For instance, cost adjustment and adjustment exchange rate routines can generate transactions for expense accounts on the credit side.
For these cases, a functionality was developed to reverse amounts. There are two types of corrections that have to be run:

  • reverse amounts in inventory transaction entries;
  • generate correction journal lines for non-inventory transactions. These general journal lines will correct amounts after posting.
Note

This functionality does not apply to transactions posted from the close income statement routine.
It is necessary to post transactions for expense accounts on the credit side and transactions for income accounts on the debit side. In General Ledger Setup, the General Journal Template, General Journal Batch, and an intermediate account must be selected. These values are used when generating General Journal Lines for amount correction.

First, the initial setup must be made. Then, several transactions must be posted:

  • expense amounts on credit – posted from inventory transactions and general journal lines;

  • income amounts on debit – posted from general journal lines.

The functionality must correct these transactions so that, at a given time interval, all expenses must be on the debit side and all incomes on the credit side. Closing entries are not affected by this functionality.

Functionality Setup

  1. Open General Ledger Setup using Tell me icon;
  2. In ARGGO Localization tab fields Inverted Gen. Template, Inverted Gen., Batch and Inverted Bal. Account No. must be filled in.

Generate G/L Entries from inventory transactions

  1. Open Chart of accounts using Tell me icon;
  2. In Chart of Accounts verify that the expense accounts which will be used in transactions have Debit/Credit field Debit;
  3. In General Posting Setup (open General Posting Setup by using Tell me icon) the expense accounts which will be used in transactions must be selected as inventory accounts in Inventory Adjmt. Account field for Gen. Bus. Posting Group and Gen. Prod. Posting Group combinations.
  4. In Item Journals (open Item Journals by using Tell me icon) new lines must be inserted for positive adjustment of items. Gen. Bus. Posting Group and Gen. Prod. Posting Group combinations for which you have selected the expense accounts must exist on lines so that BC can create expense entries on the credit side.
  5. After posting, in General Ledger Entries (open General Ledger Entries by using Tell me icon) expenses on the credit side, were posted.

Generate G/L Entries from General Journal Lines

  1. Open General Journal using Tell me icon;
  2. Enter and post wrong transactions to generate lines in General Ledger Entries for correction.

Run reverse transaction functionality

Two reports need to be run to correct transactions involving income statement accounts:

  1. Open report Reversing G/L Entries for Class 6 - Inventory using Tell me icon;
  2. Fields Posting Starting Date and Posting Ending Date are mandatory. All inventory entries from G/L Entry having Posting Date between Posting Starting Date and Posting Ending Date are tested and reversed if the expenses account is on the credit side. Additional fields can be added to the G/L Entry tab.
Important

This report reverses only inventory transactions having expenses on the credit side. Reversed transactions can be identified in G/L Entry. They have:

  • Inversed field checked;
  • Inversation User filled in with the User ID of the user that had run the report.
  1. Open report Accounting Reversal 6|7 using the Tell me icon.
  2. Date filter is mandatory and must be filled in. Only entries from G/L Entry having Posting Date between Date filter limits are tested. Correction journal entries are generated in General Journal for expenses on the credit side or income on the debit side.
  3. In Options tab:
  • field Use Ledger Entry Posting Date must be filled in when the generated general journal lines must have the same Posting Date as the initial General Ledger Entry;
  • field Posting Date must be filled in when the report must generate correction general journal lines with a certain posting date value.
  1. After entering Date Filter from G/L Account tab push OK. General Journal Lines are generated.
Important

If journal lines exist in General Journal (having the template and batch parameterized in the new fields from General Ledger Setup), an error message is displayed and the user must delete all lines from that specific journal before running the report again.
After running the report, General Journal Lines are generated and the user must check them and post them to correct transactions. The ledger entries posted from general journal lines generated by Accounting Reversal 6|7 report are marked as well – field From Inversed G/L is checked. In this way, if the report is run again, only not inversed entries are processed. When run again, this procedure skips already reversed entries. This procedure does not apply to entries posted by the Close Income Statement routine.

Posted Results

Transaction for inventory was corrected and additional entries were posted to correct transactions having expenses on credit and incomes on debit.