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Checking Your Accounts in Visual ERP After Year-End

Hard to believe that 2 months have passed since the end of 2019. For many companies, it means it has been 2 months since completion of their year-end. I am sure a lot of accountants are having a sigh of relief as they have finished their year-end financial statements. Part of this process will be a review by their external accountants or a detailed audit by their accounting firm. Many times, this comes with the accountants providing year-end entries.  

This is where I can sometimes get on my soapbox as these entries may not adhere to Visual’s logic or accounting procedures.

My #1 rule is do not make General Journal entries to control accounts. For those of you that may not be familiar with this terminology, a Control Account is an account that is supported by a list. Think an inventory list or Accounts Receivable Aging. Many times, I have seen year-end entries posted to Accounts Receivable, Accounts Payable, Inventory, Work In Process or Cash accounts.

Here’s some examples why this might be done.

  • Some sales were missed, and an entry is posted to Accounts Receivable to recognize the revenue and set up the Accounts Receivable. All well and good but now the Accounts Receivable Aging doesn’t agree to the general ledger balance. The solution is easy. This entry needs to be reversed the 1st day of the new year (there is an icon in General Journal Entry that will create the entry). This one step is sometimes overlooked thus misstating results for the 1st month of the year.
  • The sale that was adjusted would also have cost of sales. An entry that would increase Cost of Sales and decrease inventory would be made. Again, this needs to be a reversing entry.
  • Another variation is a general journal entry to revalue foreign accounts to the year-end exchange rate. Let’s use Accounts Payable for our example. The entry could be:
    • Dr. Unrealized Exchange Gain/Loss
    • Cr. Accounts Payable

Similar to the Accounts Receivable example above the entry would need to be reversed. Even better than this would be to use Visual’s revaluation functionality. It is a wonderful feature. It will do the math for you. In this case, there is no need to reverse the entry. It would, however, be important to continue running revaluation each month. If you want to know more about revaluation check our blog library for details.

2. Purchase Order Accrual is a control account with a supporting list found under Post Manufacturing Journals. If you work with Visual, you know about this report. I have seen some external accountants zero out this account balance or other times they do not verify that the Report agrees to the General Ledger. Either case, misstating this balance means over or under stating profit. If there are entries to this account, ensure the list and the general ledger still agrees. 

I get it. External accountants can’t know all the different software programs. I hope that this quick guideline allows you to review the year-end entries. You can ask yourself:

  • Do I agree with the entry?
  • If yes, then is it an entry that should be reversed in the new year?

Working with these tips should help you to keep your control accounts in balance with the general ledger. 

Now one more reminder. Once your statements are completed, do the year-end entry to close profit to retained earnings. If you need extra help, check out the download section of our website –