Copyright Notice: Written by: Publishers: ISBN Revised 29 December Prepare financial reports

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1 A Step by Step Approach to Preparing Financial Reports and Processing Journal Entries using MYOB AccountRight Plus v19 Copyright Notice: Copyright 2010 Software Publications Pty Ltd. All rights reserved. No part of this material may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying or by information retrieval systems) without permission in writing from Software Publications Written by: Marian Brown, Dip Teach [Commerce], MICB BAS Agent Cert IV Training and Assessment, Cert IV in Financial Services [Bookkeeping] MYOB Certified Consultant for 16 years MYOB Accredited Author, MYOB Publisher, MYOB Accredited Trainer Publishers: Software Publications Pty Ltd [ABN ] Head Office Sydney Unit 10, 171 Gibbes Street Chatswood NSW 2067 Phone: Web address: ISBN Revised 29 December 2010 BSBFIA401A FNSICACC306B Prepare financial reports Process journal entries This book is dedicated to my Year 10 commercial teacher, Delmai Winnett who taught me my bookkeeping basics and encouraged me to further my accounting studies. Software Publications Pty Ltd 2010 PREPARING FINANCIAL REPORTS [manual and MYOB AccountRight v19]

2 Copyright/Trademark Information: MYOB, MYOB AccountEdge, MYOB AccountRight, MYOB AccountRight Plus, MYOB BusinessBasics, MYOB FirstEdge, MYOB M-Powered, MYOB M-Powered Services, MYOB M- Powered Bank Statements, MYOB M-Powered Invoices, MYOB M-Powered Payments, MYOB ODBC Direct, MYOB PowerPay, MYOB AccountRight Premier and MYOB AccountRight Enterprise are registered trademarks or trademarks of MYOB Technology Pty Ltd and their use is prohibited without prior consent. Ceedata, Solution 6 MAS and Xlon are registered trademarks or trademarks of Solution 6 Holdings Limited, a member of the MYOB group. Bpay is a registered trademark of Bpay Pty Ltd, ABN MasterCard is a registered trademark of MasterCard International Inc. Microsoft, Access, Excel, Internet Explorer, Office, Outlook, Smart Tags, Windows and Word are registered trademarks or trademarks of Microsoft Corporation in the United States or other countries. VISA is a registered trademark of Visa International Service Association. Other products mentioned may be service marks, trademarks or registered trademarks of their respective owners. Screen captures from MYOB AccountRight Plus v19 reproduced with permission. Limitations of Liability: This material is designed to provide basic information on how to use MYOB AccountRight/AccountRight Plus v19. Because business circumstances can vary greatly, the material is not designed to provide specific GST or business advice for particular circumstances. Also, because aspects of the GST are complex and detailed, the material is not designed to comprehensively cover all aspects of the GST. Further, the laws implementing GST and rulings and decisions under those laws may change. Before you rely on this material for any important matter for your business, you should make your own enquiries about whether the material is relevant and still current, and whether it deals accurately and completely with that particular matter; and as appropriate, seek your own professional advice relevant to that particular matter. This information is for the general information of MYOB clients and is not to be taken as a substitute for specific advice. Consequently Software Publications Pty Ltd and Marian Brown will accept no responsibility to any person who acts on information herein without consultation with Software Publications Pty Ltd. The information in this book is relevant to MYOB AccountRight v19. Earlier or later versions of MYOB AccountRight software could change the instructions in this workbook. References to websites may also change owing to the changing nature of this type of information. Please note: The information in this workbook is accurate at the time of printing [December 2010] only. Because payroll legislation and associated websites are constantly changing, URL S and screen dumps of websites in this workbook may have changed. PREPARING FINANCIAL REPORTS [manual and MYOB AccountRight v19] Software Publications Pty Ltd 2010

3 Checking the accuracy of your General Ledger (i) (ii) Does the Debit column equal the Credit column in the Trial Balance? If not, the following errors could exist in your ledger. - incorrect calculation of the balance in the account - incorrect amount posted from the journal to the ledger - amount posted to the incorrect column in the ledger - incorrect balance written in the Trial Balance and - balance written in the incorrect column in the Trial Balance. Hint: Calculate the difference between the debit and credit column and look for an amount half or double this amount indicates amount on the wrong side. (iii) Also view your accounts to make sure that the Ledger tells the correct story about the business eg you would not see Depreciation in the Bank Account. Updating General Ledger in MYOB and printing a Trial Balance Guess what!! In MYOB AccountRight you have to do nothing, just print reports. When the journal entries were entered and you selected the Record button, the General Ledger and Trial Balance were updated and prepared. Open the AccountRight data file used in Unit 4 BrocksPFR19.MYO. PRINTOUT 4 General Ledger (i) Select Reports in the Command Panel. (ii) Select Accounts. Software Publications Pty Ltd 2010 PREPARING FINANCIAL REPORTS [manual and MYOB] Updating the Ledger Unit 5 91

4 (iii) Point to General Ledger [Detail] and double-click. (iv) Select the following date range in Report Customisation.. (v) Click on the Report Fields TAB and deselect the following 92 Unit 5 Updating the Ledger PREPARING FINANCIAL REPORTS [manual and MYOB] Software Publications Pty Ltd 2010

5 (vi) Select Display. Scroll down the screen until to can see the Office Equipment at Cost account. (vii) Click on the to the right of Memo and drag to the right a little so that you can read the information in the Memo column. Your window will now look like this. (viii) Click on Print and Print in the Print Dialogue Box to print a copy of the General Ledger. PRINTOUT 4. (ix) Compare with the AccountRight ledger account with your manual account reprinted below. Although the information looks a little different, the same information is reported in both accounts. 150 OFFICE EQUIPMENT [Balance Sheet] Date Particulars Ref Debit Credit Balance Dr/Cr 31/7/10 Balance GJ 8, , Dr 1/6/11 Elite Computer GJ 3, , Dr 30/6/11 Bank [photocopier] GJ 8, , Dr (x) Now compare your printout with your General Ledger on pages Note: The MYOB data file only contains data for June 2011 and opening balances at the beginning of June. Your manual General Ledger has July 2010 transactions entered. Software Publications Pty Ltd 2010 PREPARING FINANCIAL REPORTS [manual and MYOB] Updating the Ledger Unit 5 93

6 (xi) Click on Close to return to reports. PRINTOUT 5 Trial Balance 30 June 2011 (i) In Accounts reports, point to Trial Balance and double-click. (ii) Select June of the 2011 financial year in Report Customisation. (iii) Select Display. (iv) Print a copy of the Trial Balance. (v) Compare the Trial Balance with the Adjusted Trial Balance on page 90. If you find an error, identify the account, call up the account and make the necessary adjustment. Reprint the Trial Balance. The only error you can have in MYOB is an error in keying in the journal entry in Unit Unit 5 Updating the Ledger PREPARING FINANCIAL REPORTS [manual and MYOB] Software Publications Pty Ltd 2010

7 Your Trial Balance should look like this. Figures just for June Figures for 1 July 2010 to 30 June 2011 to compare with your Trial Balance on page 90. You will notice that your AccountRight data file has a Sales less Returns and Purchases less Returns. This is the way returns are handled in AccountRight. In your manual General Ledger, you have a Sales account and a Sales Returns account and a Purchases account and a Purchases Returns account. File the above report in your ring binder in the appropriate section. Software Publications Pty Ltd 2010 PREPARING FINANCIAL REPORTS [manual and MYOB] Updating the Ledger Unit 5 95

8 @ Industry Code of Practice As the bookkeeper you could be directed by the owner to enter journals which are not supported by appropriate evidence. If you are a BAS Agent, you have to abide by the BAS Agent Professional Code of Conduct. If you are a member of the Institute of Certified Bookkeepers, you also have to abide by the ICB Professional Code of Go to the website for the Tax Practitioners Board. Select BAS agents TAB, then Regulatory information sheets. Select Code of Professional Conduct. PRINTOUT 6 Code of Professional Conduct Print a copy of the BAS Agent Code of Professional Conduct. Read through the code and apply this code to the following Case Study. Angus Brock actually purchased the Brother Printer for his daughter and will not be used by the business in any way. If you were a BAS Agent, which guidelines should you follow in the code when dealing with this situation? Unit 5 Updating the Ledger PREPARING FINANCIAL REPORTS [manual and MYOB] Software Publications Pty Ltd 2010

9 Writing Procedures As the bookkeeper working with AccountRight, Angus has asked you to rewrite the procedures [step by step] for entering journal entries in MYOB AccountRight only. You are required to: 1 Read the existing procedures for journal entries [reprinted below] 2 Take note of the format required for the procedures printed below. 3 In Word, prepare the procedure. 4 Present procedure to your supervisor [Angus] for approval. Extract from Brocks Tyreworld existing Policies and Procedures: Journal Procedures: All general journal entries [for example depreciation] must have some form of supporting documentation and be authorised by Angus. 6 All accrued and prepaid income and expenses must be accounted for in a General - required and filed in the Journal section of the monthly folder. 7 Posting references must be used. In the General Ledger indicate the journal the entry was posted from and in the Journal indicate the account number the entry was posted to. Identifying and correcting error: 2 In MYOB, if the error affects debtors or creditors, an invoice must be recorded [not a journal entry]. All errors must be documented with a brief explanation of how the error occurred. This evidence must be stored in the Journals folder. 3 In MYOB, if end of month reports have been printed, a screen dump must be taken of the incorrect entry and printed. The correction must contain an explanation and must be authorised by Angus. Use the following format for your Recording Journal Entry Procedures. Procedure Name: Written by: Approved by: Date Issued: Purpose: When to use Journals: The Procedure: RECORDING JOURNAL ENTRIES in MYOB AccountRight YOUR NAME Angus Brock Today s date This procedure instructs all staff employed by Brocks Tyreworld how and when to enter journal entries in MYOB AccountRight. Journals are used for the following transactions: - Accrued and prepaid income and expenses - For you to complete 1 All journal entries must have some form of supporting documentation and be authorised by Angus Brock. 2 For you to continue File this procedure in your ring binder as evidence of your ability to write procedures. Software Publications Pty Ltd 2010 PREPARING FINANCIAL REPORTS [manual and MYOB] Updating the Ledger Unit 5 97

10 CHECKPOINT Can you demonstrate the following? FNSICACC306B Process journal entries or X 1 Check and verify supporting documentation Prepare journal Authorise journal Enter data into system Check journal processing report File documentation 6.1 Required Skills Required knowledge 6.2 Supporting documentation is examined to establish accuracy and completeness Supporting documentation is examined to ensure authorisation by appropriate level Journal is accurate, complete and prepared within company timelines Journal is authorised in accordance with company policy and procedures. Data is entered into system accurately and in accordance with company input standards. Transaction is correctly allocated to system and account. Related systems are updated to maintain integrity of relationships between financial systems. Data entry is undertaken in accordance with relevant health and safety requirements. Where appropriate, processing report is examined for accuracy and reconciled in accordance with relevant company policy and procedures, accounting principles and practices. Entries requiring alteration are identified and adjusting entries processed accurately in accordance with company policy and procedures. Documentation is filed promptly and in accordance with company policy and procedures, industry and legislative requirements. Filed documentation is easily accessible and traceable. Computerised spreadsheet [depreciation schedule] and data base [MYOB AccountRight] Data analysis and interpretation [depreciation schedule, general ledger and trial balance] Evaluative and general analytical skills [finding errors] Negotiation and interpersonal skills [authorisation and discussion in relation to reports] Company policy and procedure Knowledge or awareness of relevant acts and guidelines Legal systems and procedures Industry codes of practice Computer systems Procedure writing An assessment for FNSICACC306B Process Journal Entries is available from your supervisor if required. Your supervisor can find this assessment on the Teachers Resource CD available from Software Publications. Your supervisor may also use this exercise as an additional exercise at this point in the workbook to consolidate the processing of journal entries. 98 Unit 5 Updating the Ledger PREPARING FINANCIAL REPORTS [manual and MYOB] Software Publications Pty Ltd 2010