By linking specific transaction activities to corresponding General Ledger (GL) accounts in your organization's Chart of Accounts, all financial activities performed on a customer's account, such as deposits, withdrawals, disbursements, repayments, charges, and fees, will be automatically impacted in the appropriate GL accounts.
This automated process ensures that your organization's balance sheet is updated accurately and efficiently. Rather than manually entering each transaction in the journal entries, the system will automatically post them to the GL accounts associated with the specific transaction types, whether they fall under asset, liability expense, etc.
When linking a General Ledger (GL) account to a product, note that only the detail or sub-ledger account type can be linked. On the other hand, header accounts are used for grouping or categorizing detail accounts and cannot be directly linked to a product.
Once a product is linked to a GL account, all accounts under that product will have their entries recorded in the linked GL accounts.
To link GL accounts to a product, follow the steps detailed below:
- When creating a financial product, for example, Savings product. Navigate to the Charges & Accounting section.
- Under “Accounting Type,” click Cash on the checkbox.
- An accounting page will be displayed. This page is categorized by accounting type: Assets, liability, expense, and income. For each of these accounting types, you are required to select a GL account from your charts of accounts that will be impacted when a transaction affects each accounting type.
|This account is credited when customers make an overdraft.
|This asset account is debited when a deposit is made by the customer and credited when the customer makes a withdrawal. This account is commonly referred to as the "Deposit Account" or " Account."
|Liability account is credited when a customer makes a deposit and debited when a customer makes a withdrawal.
|Interest On Savings
|Expense account is debited when interest is due to be paid to the customer.
|Expense account, which is credited when a client fails to repay the overdraft balance.
|Income From Fees
|Income Account is credited when income from fees or charges deducted from a customer account is received.
|Overdraft Interest Income
|Income Account to be credited when customers pay interest on overdrafts.
|Income From Penalties
|Income Account to be credited when the penalty is received from customer's account.
Based on the type of account (asset, liability, expense, or income), select the appropriate GL account when setting up your product. Once the GL is selected, all subsequent transactions related to that product will be automatically logged in the accounting system.
Under the Charges & Accounting section of product creation, you can specify General Ledger (GL) account that will be associated with charges and fees. By selecting a specific GL account under the "Income From Fee" category, any fees or charges that are deducted will be automatically recorded in the designated income from fees GL account. This streamlined process ensures that the financial impact of these fees is accurately captured and reflected in the appropriate GL account.
Once a product is linked to a General Ledger (GL), any cash transactions that take place within any account associated with that product will be automatically recorded in the corresponding GL.
For example: when a cash deposit is made to a savings account, the specified GL designated for Savings reference will be debited, indicating an increase in the savings balance, while the Savings control GL will be credited, reflecting the movement of funds into the savings account. This automated process ensures accurate and efficient tracking of cash transactions across relevant GL accounts tied to the product.
Updated 8 months ago