Monthly Procedures

The purpose of this topic is to outline the monthly procedures an agency should perform to ensure the accuracy of their accounting data and to complete the work necessary to prepare meaningful financial statements.

  1. Print monthly management and corporate reports.

    In Accounts Receivable, apply finance charges or discounts and print customer statements and billing notices.

  2. Enter journal entries and run the Trial Balance report.

    • Use Journal Entries to record other monthly general ledger activity. You can use standard general ledger entries to create recurring monthly entries (for example, depreciation).

    • Print your Trial Balance for the month you are closing. The totals at the bottom of each of the four columns on the last page should be zero; debits must equal credit for grand totals. If not, you need to take certain steps. For details, see Out of Balance.

  3. Reconcile the general ledger (optional).

    • Use the Automatic Reconciliation function to enter the general ledger number for each of your open item general ledger accounts. This automatically clears all transactions that net zero, for each set of Ref 1 and Ref 2 combination.

    • Use Manual Reconciliation to reconcile the items in each of your open item general ledger accounts that did not reconcile with the Automatic Reconciliation function.

    • Make sure the detail open items in each of your open item general ledger accounts (usually receivables and payables) equal the general ledger account balance. For details, see Verifying Open Item Accounts.

  4. Accounts Receivable – Customers.

    Before you start this procedure, make sure you have completed the procedures above.

    • Run the accounts receivable report, specifying By G/L Account in the Report Type field on the Accounts Receivable Reports dialog box. Print this list.

      • Accrual Accounting:  Enter the end of the accounting period for the cut-off date. 

      • Cash Accounting: For the Date, use the Sunday date of the week for which you last posted your ARC report to the general ledger.

    • In GL Edit & Query, select open items for general ledger accounts 2040, 1510, 2050, and 2055. Select Ref 2 as the primary sort and Ref 1 as the secondary. Print this list.

      • Each item in the 2040 list should match each item printed in the OnAcct column on the accounts receivable report.

      • Each item in the 2050 list should match each item printed in the Gift Cert column on the accounts receivable report.

      • Each item in the 2055 list should match each item printed in the Layaway column on the accounts receivable report.

      • For accrual accounting, the total of what is in ARC Direct and Invoice should equal the 1510 information.

      • For cash accounting, each item on the 1510 list should match each item printed in the ARC/Dir column on the accounts receivable report. You might have some receipts for invoice items for which you have not yet done the ARC posting. This is okay.

    Research items on the reports that do not match and take appropriate action.

  5. Accounts Payable – Providers.

    Before you start this procedure, make sure you have completed the procedures above.

    • Run the travel payables report, specifying By GL Account in the Report Type field on the Travel Payables Reports dialog box.

    • In GL Edit & Query, select open items for general ledger accounts 2045 and 2020. Select Ref 3 as the primary sort and Ref 1 as the secondary. Ref 3 should contain the provider for each displayed item. If not, you should research and enter the correct provider on each detail item, update and then proceed. Print each of these lists.

      Each item on the 2045 list should match each item printed in the OnAcct$ column on the travel payables report.

      • Cash Accounting: For each positive item in the Cust$ column, a minus item should be on the 2020 listing, which means the customer has paid that amount and it is in the general ledger as a payable to that provider.

      • Cash Accounting: For each positive item in the Prov$ column, a plus item should be on the 2020 listing, which means the provider has been paid that amount and it is in the general ledger as a receivable from the customer.

      • Accrual Accounting: Run the travel payables report report, specifying By GL Account in the Report Type field on the Travel Payables Reports dialog box. The amount in the OnAcct$ column on the travel payables report should equal the amount in 2045. Now run the travel payables report by Standard Payables. The net due amount should equal the opposite of the amount in 2020.

    All unmatched items should be researched and properly disposed of or corrected.

  6. Accounts Payable – ARC.

    Use Manual Reconciliation to reconcile your 2010 general ledger account. Use Ref 1 as the primary sort. Print the listing. The only open items that should display are your last two weeks of ARC reports that you have not yet received from ARC. Make sure your ARC reports agree with the reports from ARC and that all items have been posted to the general ledger. Research any open items and correct them.

  7. Payroll.

    You should make sure all your payroll entries have been made for the month, which depends on whether you have a payroll service or not.

    Record the employer payroll expenses (accruals) for the month for FICA, MediCare, City Taxes, State, and Federal Unemployment taxes. Debit the payroll expense and credit the payroll liabilities for each of these tax items.

    Optional: Use Manual Reconciliation and reconcile your payroll liabilities accounts. Sort by Ref 1 as primary sort.

  8. Post Gross Sales to Accounting (Cash-Basis Accounting).

    If you use cash-basis accounting, use Post Gross Sales to post gross sales to the general ledger.

  9. Financial Statements.

    Run Financial Statements for the month and year you are processing. The Financial Statement Validity Check should contain all zeros. If not, scroll down to the bottom of this report and follow the procedures outlined there. Correct out-of-balance Journal Entries.

    Select and print the Balance Sheet Review, Income Review, and Expense Review for this year. Look at these reports to see if everything looks correct, if it does print the other financial statements.

  10. You should close the period after you have printed final general ledger financial statements. You might also consider closing future periods to prevent accidental posting to them.