The Ledger : Income Statement

Additional Account Categories

Lisa Lookadoo — Tue, 15 Sep 2009 13:10:00 GMT

What are Additional Account Categories? I'm glad you asked. They are categories that are not included in traditional accounting and are not required to complete the chart of accounts. In The Financial Edge there are four additional account categories available: Transfer, Gifts, Gains and Losses.

Transfer accounts are used for interfund transfers. These accounts are treated like expense accounts and are closed into the fund balance account at the fiscal year end.

Gifts accounts are used for recording donations from constituents. These accounts are treated like revenue accounts and are closed into the fund balance account at the fiscal year end.

Losses accounts are used for recording losses such as on the disposal of assets or on the sale of marketable securities. These accounts are treated like expense accounts and are closed into the fund balance account at the fiscal year end.

Gains accounts are used for recording gains such as on the disposal of assets or on the sale of marketable securities. These accounts are treated like revenue accounts and are closed into the fund balance account at the fiscal year end.

These additional account categories are provided to allow flexibility in the chart of accounts setup. If you decide to use these additional categories, here is how your accounting equations would work:

Balance Sheet: Assets = Liabilities + Fund Balance (or Net Assets)

Income Statement: Net Surplus/Deficit = (Revenue) - (Expense) + (Gifts) - (Transfers) + (Gains) - (Losses)

I hope this helps you decide if the additional categories will be useful for your chart of accounts.

VCO Template Validation Shortcut

Daniel Dalnekoff — Tue, 11 Aug 2009 13:17:00 GMT

We have all been in this situation before, running a report and all of a sudden the results are not coming out correctly; be it a Balance Sheet out of balance, or an Income Statement missing activity from a certain expense code. Either way, one of the most common culprits of this could be something missing from your Visual Chart Organizer (VCO) template. Of course, it seems like a journey to close the report, navigate away from reports into the VCO section, then open the template, search for the missing accounts, and then run the validation report on the template. I agree, considering the probability of success, this is a journey even Leif Ericson may have thought twice about.

There is a shortcut here. In fact, the chart template of your choice can be validated without even leaving the report setup! From the General tab of your report, there is a small button just to the right of the menu where you can select the chart template being used. The button looks like a folder with a check on top of it - the universal sign for Validate.

From here you can create a new validation or select an existing saved parameter and validate the chart template of your choice. This is a quick and easy way to validate your template right from the report parameter to see if this could be the cause of your report issue. Of course, if a change does need to be made to the template you will need to head over to the VCO section of the software to make your edits, but at least it won't be a wasted voyage.

The Ledger Lowdown: Commingling Revenues and Expenses

Jennifer Maroney — Thu, 16 Jul 2009 13:12:00 GMT

Do you need to show offsetting sales with sales returns on your Income Statement? Whatever the reason to net revenues and expenses, you can do this by adjusting your Visual Chart Organizer (VCO). Just to give you a heads up, the process to adjust the VCO is the easy part; the hard part is what to select. Let's start with the easy and work up from there.

The way to control Income Statement section totals depends on the category selected for the specific header/total section. To change the category, open the VCO and highlight the header/total section to change. Then select the Header tab towards the bottom of the VCO. On the Header tab, you have the option to select several category types including Income Statement, revenue, expense, and transfer.

What do you select? This is where the complexity comes in. If your VCO template has homogeneous sections, e.g., revenue only or expense only, use the category type revenue, expense, gift, transfer, gain, or loss. These automatically result in the correct natural balance. If your report has commingled account types within each section, select the Income Statement category. Once you select this category, you'll notice a new option appears called Show debit balance as. From the drop-down select Negative if you expect a net credit balance or Positive if you expect a net debit balance. After you make your selection, run the Income Statement to make sure the correct sign displays. If not, simply go back into the VCO and change the Show balance as from Negative to Positive or vice versa.

Talk to you soon!

The Ledger Lowdown: Get it in Balance

Jennifer Maroney — Wed, 03 Jun 2009 12:39:00 GMT

Nothing is more frustrating than when you run your Balance Sheet and the bottom line is out-of-balance . So here you are with an out of balance Balance Sheet that you need to have to your board in an hour, or, even worse, an hour ago. What should you do? Well, the first thing is don't, or try not to, panic. A deep breath usually works for me. Then take a look at these common causes of out of balance financial statements and reports; you may be able to resolve the issue and be a hero:

An account is marked inactive and the report is marked to not include inactive accounts
The chart template is missing accounts
The financial statement is filtering out information
Fund Balance account is not defined on all fund records
The user does not have sufficient rights
Unposted journal entry batches are out of balance

So now that you know what the common causes are, the next step is to start narrowing them down to find your issue. First, create and preview a new Trial Balance Report for the same period and fund(s) as the out of balance financial statement. The report should always be in balance when including all accounts and their balances. If the Trial Balance Report is incorrect with no filters or Visual Chart Organizer (VCO) selected, create a case.

If your Trial Balance is correct, here are some other steps to help you find and resolve the issue:

Run the report as Supervisor or as a user without account level security defined. Financial statements will exclude accounts that a user does not have rights to view.
Mark the option on the General tab to include inactive accounts and rerun the report. Inactive accounts with activity will cause the report to be out of balance.
- If the report totals correctly, create a query of inactive accounts and change the account(s) from inactive to active.
Check your VCO template. As new accounts are added or new templates created, accounts can be left off or duplicated causing the report to be out of balance or total incorrectly.
- If you find there are missing or duplicate accounts, add or remove the appropriate accounts from your custom VCO.
- If the chart validation does not pinpoint the problem, run the report using the default template.
Check the filters on the report to ensure you're not filtering out accounts or activity. A combination of advanced filters on a VCO and report filters can cause you to filter your way out of balance. If the report is still out of balance, remove all filters from the report to determine if the filters are the cause; don't forget the column filters.
Run the report at a level 9. Running reports at a lower level will summarize activity. Increasing the level is an easy way to ensure no accounts are excluded from the report.

For more troubleshooting steps, take a look at Knowledgebase solution BB63184.

Talk to you soon!

Budgets and Encumbrances Net/Surplus Deficit

Karen Badham — Fri, 17 Apr 2009 14:30:00 GMT

Many of you include budget and encumbrance columns on Income Statements in one way or another. If you use these columns there are some options you can utilize.

These options are on the Format tab. To get to them, select the Format tab and highlight Detail. I'm going to go over each one.

Print change in Net Assets at the end of the report populates a detailed net surplus/deficit section. You will need to mark this if you are going to use any of the other checkboxes I mention.
Print total net surplus/deficit gives you net surplus/deficit section grand totals.
Print Net Assets for encumbrance on a separate line adds a special net surplus/deficit line for encumbrance columns. If this box is not marked the encumbrance columns won't calculate the net surplus/deficit correctly in most cases.
Calculate change in Net Assets for budget columns adds a special net surplus/deficit line for budget columns.

I hope this adds valuable information to your Income Statement!