Explanation of General Ledger Postings Home | FAQs & Troubleshooting

 

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The Accounts Payable module is a complete, double-entry accounting system that minimizes the amount of data entry required, saving time and reducing the possibility of posting errors. The Accounts Payable module posts transactions to the Daily Transaction Register using account numbers set up in General Ledger Account Maintenance. The General Ledger check box must be selected in Accounts Payable Options to post transactions to the General Ledger module and the General Ledger Posting Recap report. Transactions from Accounts Payable are posted to the General Ledger automatically.

The Accounts Payable, discounts earned, and discounts lost accounts are assigned to each division in Division Maintenance. When invoices and checks are processed for a vendor, the division number of the vendor determines the appropriate account numbers to post. If the divisions are not used, division 00 is used for all vendors.

The selection in the Account for Discounts Earned or Lost field in Accounts Payable Options determines how Accounts Payable posts to General Ledger. If Earned is selected in the Account for Discounts Earned or Lost field, the full amount of the invoice is credited to the Accounts Payable account when the Invoice Register is updated. During the Check and Electronic Payment Register or Manual Check and Payment Register update, any discounts taken are credited to the discounts earned account.

If Lost is selected in the Account for Discounts Earned or Lost field, the net amount of the invoice (the invoice amount less the discount) is credited to the Accounts Payable account and the discount amount is credited to a discounts taken account when the Invoice Register is updated. During the Check and Electronic Payment Register or Manual Check and Payment Register update, any discounts not allowed are debited to the discounts lost account.

When entering invoices, you will distribute the invoice amount to one or more general ledger account numbers (for example, expense accounts). These distributions are posted as debits for positive amounts and as credits for negative amounts to the respective general ledger accounts. Any offsetting credit posting is made to the Accounts Payable account automatically.

 Example - Accounting for Discounts Earned

If you are paying a $100.00 invoice and taking the 5 percent discount, the following general ledger postings are made.

G/L Account	Debit	Credit
Accounts Payable	100.00
Cash		95.00
Discount Earned	_______	5.00
	100.00	100.00

If the same invoice is paid without taking the discount (the discount is lost), the following general ledger postings are made.

G/L Account	Debit	Credit
Accounts Payable	100.00
Cash	_______	100.00
	100.00	100.00

 

 Example - Accounting for Discounts Lost

If you are paying a $100.00 invoice and taking the 5 percent discount, the following general ledger postings are made.

G/L Account	Debit	Credit
Accounts Payable	95.00
Cash	_______	95.00
	95.00	95.00

If the same invoice is paid without taking the discount (the discount is lost), the following general ledger postings are made.

G/L Account	Debit	Credit
Accounts Payable	95.00
Discount Lost	5.00
Cash	_______	100.00
	100.00	100.00

The Manual Check and Payment Entry process allows you to record payments on invoices that were not entered in Accounts Payable. When entering these invoice payments, you must distribute the invoice amounts to the appropriate general ledger accounts.

Regardless of whether you are accounting for discounts earned or lost, the general ledger postings for these invoices are the same. If a $100.00 invoice is entered using Manual Check and Payment Entry, the following general ledger postings are made.

G/L Account	Debit	Credit
Accounts Payable	100.00
Cash		95.00
Discount Earned (taken)	_______	5.00
	100.00	100.00

 

For more information, see:

Posting Previously Recorded Invoice Amounts

Posting Invoices Using Sales Tax Processing