ERP Internals/Modules/General Ledger

General Ledger produces the enterprise’s financial statements including the Balance Sheet, which shows the enterprise’s assets, liabilities and equity at a point in time, the Income Statement, which shows the enterprise’s income, expenses and net profit over a period of time, the Cash Flow Statement which shows sources and applications of cash, and associated financial reports such as the Trial Balance. The rest of the reports are there to track the numbers on the financial statements back to individual transactions. Most businesses prepare monthly statements. Every ERP package has a General Ledger module.

General Ledger is unusual in that it receives transactions from many other modules. There are two ways to accomplish this: Detail and Summarized. In the detail method, every invoice, check, or other such transaction creates a separate General Ledger transaction. The advantage of this is that the General Ledger is continuously updated in real time so the entire set of ERP tables is in sync. The disadvantage is that there are large numbers of transactions. In the summarized method, transactions are accumulated for some period (typically a day) and posted in summary. Instead of many small transactions, there is a few big ones. The advantage is that there are far fewer transactions. The disadvantage is that the General Ledger is out of sync with the rest of the ERP until the data is posted. This ERP described in this document uses the detailed method.

• Functions
• Reports

Tables

The first table is the Chart of Accounts table which contains one record for every General Ledger account. The second table is the Account Balance table which contains the closing balance for every account for one or more accounting periods. The third table is the Budget table which contains one or more budget amounts for each account for each accounting period. The fourth table is the Transaction table which contains one record for every transaction (debit, credit). There is at least one transaction for every account and there can be many.

Data Exchange

General Ledger receives transactions from Accounts Payable, Accounts Receivable, Bank Reconciliation, Fixed Assets, Inventory, Job Costing, Order Entry/Invoicing, Payroll, Purchasing (sometimes).

Transactions

General Ledger has only one transaction. It consists of one or more debits and one or more credits where the total of the debits equals the total of the credits.