Reporting and Operations

Journal Entries

May 08, 2017
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Most transactions are posted automatically through the accounts payable and accounts receivable modules of the general ledger software owned by the not-for-profit. While these transactions are posted via journal entries generated by the software, the mechanism is not obvious.

Journal entries should be made for any transaction not automatically produced by the software. These entries often include payroll, reclassification of amounts already posted, reconciling items from the bank statement and allocations.

All journal entries must balance. Each consists of a debit and a credit, and the total of the debits must equal the total of the credits.

Entries should be made to reclassify previous posting and to correct errors. NEVER CHANGE AN EXISTING TRANSACTION! This is true even if the general ledger package allows you to do so.

The use of journal entries to correct prior transactions is necessary to create an audit trail. In this manner, all of the transaction made can be followed and traced to original documentation. All changes and entries should be reviewed by a second party and approved.