TK-Ledger Manual

TK-LEDGER MANUAL
table of contents

(main)

PERIOD CONTROL

Overview

 Controlling fiscal periods and years is a common and necessary activity in accounting. In TK-LEDGER, period control has been designed to be as stringent, or as relaxed as is desired for each organization.

When a fiscal year, and the periods it comprises, is defined, as is done when adding a new organization, each of the periods within that year become immediately available for posting transactions. As time goes by and all of the transactions for a period have been entered, the period is normally closed to further activity. This is to ensure that the financial reports produced for that period do not change without the knowledge of the accountant or financial officer of the organization.

Prior to the end of a fiscal year, it often becomes necessary to begin posting transactions to the next fiscal year. This is easily accomplished by defining the new year, a process which can be done as early as desired. The only restriction is that the new fiscal year must be defined prior to closing the current year.

When the last period of the current fiscal year has been closed, it is time to also close the fiscal year. Remember, the next fiscal year must already have been defined, and therefore opened to transactions. The process of closing a fiscal year also performs two tasks normally done manually:

1) Carry forward the balances of the Balance Sheet accounts to the new year; and

2) Transfer the balance of the Current Year Earnings account to the Retained Earnings, Prior Years account for the next year.

Until the fiscal year is closed in this way, the Balance Sheet accounts of the next year will show no beginning balance, only the net of the transactions posted to that year. Therefore, it is a good idea to close off a fiscal year as early as possible, even if adjustments may have to be made to it at a later date.

Making adjustments to a prior fiscal year can be accomplished in two ways:

1) Re-open the year, make the adjusting transactions, and re-close the year. Any changes which might have been made to Balance Sheet accounts will be automatically carried forward; or

2) Adjust the beginning balance of the current year's Balance Sheet accounts using the Balance Sheet Adjustment Journal 'AD', provide through the Enter Transaction screen. This is often used in order to avoid having to republish last year's financial statements.

Another concept to remember is that when opening a new fiscal year, TK-LEDGER also carries forward the previous year's chart of accounts and department definitions if departmental accounting has been indicated in the G/L Parameters screen.

It is the brief period of time between opening the new year and posting the first transactions, that significant changes can be made to either the chart of accounts or the department definitions.

Since department codes can only be applied to income and expense accounts, there are no departmental balances to carry forward, and any change, including complete reorganization can be made.

The same holds true for the income and expense accounts in the chart of accounts. No income or expense balances are carried forward to the new year when the prior year is closed. Therefore, any changes can be made. However, remember that one of TK-LEDGER's strengths is its ability to show trends over the years. Significant changes to the income and expense accounts may interfere with such reporting opportunities.

Making changes to the Balance Sheet side of the chart of accounts is more delicate. Any new balance sheet account can be added at any time. However, removing an existing balance sheet account can only be done if the account has no balance in the prior year to carry forward.

An example which illustrates the normal period control process is provided below. The organization in the example utilizes a calendar fiscal year which, therefore, begins on January 1st and ends on December 31.

EXAMPLE OF END-OF-PERIOD AND END-OF-YEAR PROCESSING
for organization with calendar fiscal year
December 15 - Define new fiscal year;
- Make changes to new chart of accounts if appropriate;
- Make changes to department definitions if appropriate;
- Posting to first period can begin immediately.
December 31 - December officially ends and with it, the fiscal year.
January 5 - Revalue foreign currencies for December 31, if any;
- Print December's control reports;
- Review and make any necessary adjustments;
- Reprint control reports if any adjustments were made;
- Close December (which is the last period of last year);
- Close last year to carry Balance Sheet account balances forward.
January 15 - Additional adjustments have become necessary for last year and it is decided to re-open the year;
- Re-open last fiscal year, December will automatically be opened;
- Normal posting continues for January unaffected;
- Post adjustment transactions dated December of last year;
- Print control reports for December;
- Close December again;
- Close last year to carry forward any changes to Balance Sheet account balances.
February 15 - Print control reports for January;
- Review and make any necessary adjustments;
- Reprint control reports if any adjustments were made;
- Close January;
March 15 ... and so on.

Opening A
New Year

 Opening a new fiscal year is the process by which the number of periods and the starting and ending dates of each of the periods is defined. In addition, the current chart of accounts and list of departments is carried forward to the new year being opened.

A new fiscal year can be opened any time prior to posting the first transaction to it. When completed, all of the periods which were defined are open and ready for posting of transactions.

From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Fiscal Period Management.

From the FISCAL PERIOD MANAGEMENT menu, select Fiscal Year Maintenance.

Fiscal Year Enter the fiscal year to be defined. Unless this is the first fiscal year being defined for this organization, the year must be no more than 1 greater than the prior year. In other words, you may not skip fiscal years. Press [RETURN] when finished, or EXIT to return to menu.
Date Year Begins The date the fiscal year begins will be automatically computed by adding one day to the end of the previous fiscal year and displayed. Unless this is the first fiscal year to be defined, no entry here will be allowed.
No. of Periods Enter the number of periods in the organization's fiscal year. Possible values are 4, 6, 12 and 13.

Although the number of fiscal periods in a year can be changed from one year to the next, doing so makes year to year financial comparisons difficult, if not impossible. Change the number of periods only if absolutely necessary.

End Date As the illustration below suggests, the start date of each period is computed from the end date of the previous period and therefore does not need to be entered.

In this field enter the date the period ends in the form MMDDYY, or DDMMYY if you have chosen to use the international date format. Include all six digits; the cursor will automatically skip over the "/" displayed in the field.

For further information regarding entry of dates refer to the discussion on date entry conventions at the beginning of this manual.

Description Enter the description or name of the period. This text will appear on all financial reports to identify the period(s) being printed.

Use the [RETURN], cursor [UP], cursor [DOWN], and cursor [LEFT] to move from field to field until the information displayed is completely correct.

Although it is possible to exit this screen using the EXIT key before completing it, a warning message will be displayed indicating that errors have been found and should be repaired prior to beginning posting. This is not recommended procedure.

Exit this screen by pressing the EXIT key. If no error message is displayed, the fiscal year has been successfully defined and is now ready to receive transactions.

Closing A
Period

 Closing a fiscal period is the process by which it is made unavailable for further transactions. If the 'Force Control Reports' option in the G/L Parameters screen has been marked 'YES', it will be necessary to print these reports prior to proceeding with this function.

A period can be closed at any time because its closing has no effect on account balances. However, all fiscal periods in any fiscal year must be closed in order for the fiscal year itself to be closed.

From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Fiscal Period Management.

From the FISCAL PERIOD MANAGEMENT menu, select Close Period.

On the screen in the illustration above, there are several important pieces of information.

First, since periods must be closed sequentially, the screen shows which period is next to be closed on the right side.

Second, whether Control Reports are being forced or not, the screen shows which of the four Control Reports have been printed and which have not. If Control Reports are being forced, the screen will inform you that the period may not be closed until the indicated reports have been successfully printed and return you to the menu.

If Control Reports are not being forced, or each of the reports has been printed, you will be asked whether or not to proceed. Press [Y] and [RETURN] to proceed, or [N] and [RETURN], or just [RETURN] to quit.

Closing A
Year

 Closing a fiscal year is the process by which all of the Balance Sheet account balances are carried forward into the next year, and it is protected from further activity.

There is no special time at which it must be run since posting transactions to the new fiscal year is enabled by opening the new year as described earlier. However, all the periods in the year must first have been closed, and it is recommended that fiscal years be closed as early as possible in order to update the balances of Balance Sheet accounts.

After closing, the fiscal year can later be re-opened at any time for late, or adjusting transactions.

From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Fiscal Period Management.

From the FISCAL PERIOD MANAGEMENT menu, select Close Fiscal Year.

On the screen in the illustration above, there are several important pieces of information.

First, the fiscal year to be closed is displayed in the upper right corner. This helps prevent attempts to close a fiscal year twice.

Also, the list of periods defined for the fiscal year is displayed along with the status of each. If any remain open, a message will be displayed indicating that these periods must be closed before you will be able to continue.

If all of the year's periods have been closed, the message shown above will be displayed and you will be asked whether or not to proceed. Press [Y] and [RETURN] to proceed, or [N] and [RETURN], or just [RETURN] to quit.

The length of the process is dependent on the length and complexity of the chart of accounts, and on whether departmental accounting is being used. Average processing times may vary from thirty seconds to seven or eight minutes.

When the process has completed, you will be returned to the Fiscal Period Management menu.

Re-opening
A Period

 Re-opening a fiscal period is the process by which the period is made available for further transactions after having been closed.

From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Fiscal Period Management.

From the FISCAL PERIOD MANAGEMENT menu, select Re-open Fiscal Period.

As the screen in the illustration above suggests, the period to be re-opened must be in the current fiscal year. If it is not, the prior fiscal year must first be re-opened.

Since periods must be closed in sequence, they must also be re-opened in sequence. The first period to be re-opened will be the last period that was closed.

However, you can open multiple periods at one time by using the cursor [UP] key until all the desired periods are similary highlighted and marked. If too many were marked, press the cursor [DOWN] key to deselect periods one at a time. When the desired period(s) is marked, press [RETURN].

The message shown above will be displayed and you will be asked whether or not to proceed. Press [Y] and [RETURN] to proceed, or [N] and [RETURN], or just [RETURN] to quit.

The process will be completed in a second or two and you will be returned to the Fiscal Period Management menu.

Re-opening
A Year

 Re-opening a fiscal year is the process by which the year is made available for further transactions after having been closed. From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Fiscal Period Management.

From the FISCAL PERIOD MANAGEMENT menu, select Re-open Fiscal Year.

As the screen in the illustration above suggests, the last year to be closed will be the next to be re-opened and is shown graphically at the right side of the screen.

The message shown above will be displayed and you will be asked whether or not to proceed. Press [Y] and [RETURN] to proceed, or [N] and [RETURN], or just [RETURN] to quit.

The process will be completed in several seconds and will result in the last period of the year being opened as well. When finished, you will be returned to the Fiscal Period Management menu.

PREPARING BUDGETS

Establishing
A Baseline

 Budgeting is the process of setting targets for fiscal performance, both in income as well as expense. These targets can then be reported next to actual performance in a variety of ways with the Financial Report Writer.

A Baseline budget is simply a quick way of establishing a working budget based on a percentage increase (or decrease) from the previous year's budget, or actual performance. A baseline must be established prior to making changes and adjustments as described in the next section.

Further, the baseline can be re-established as many times as desired. Each time a budget is re-established, however, all prior work is replaced with the new baseline.

From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Maintain Account Budgets.

Fiscal Year Enter the fiscal year for which you wish to establish a budget and press [RETURN]. You may also exit the screen entirely by pressing the EXIT key at any time.

Change Enter the percentage of change you would like to target over last year. As the next field indicates, this change can be based either on last year's performance, or on last year's budget.

For a seven and one half percent increase over last year, enter 7.5, or for a ten percent increase just enter 10.

Based on
Last Year		 Use the [SPACE] key or cursor [RIGHT] and/or cursor [LEFT] keys to position the highlighted bar on the desired option. If BUDGET is selected, then the baseline will be established based on an increase over last year's budget. Should ACTUAL be selected, the baseline will be established based on an increase over last year's actual performance.

You can return to the Percent 'Change' field by pressing the cursor [UP] key.

Ready When you have answered the previous two questions, you will be given one last opportunity to quit without changing the year's budget if it exists. Answer [Y] and [RETURN] to proceed, or [N] to quit.

If you elected to proceed, a message will appear at the bottom of the screen indicating that the baseline is being created. The process will take from two to fifteen minutes depending on the complexity of your chart of accounts and whether or not you are using the departmental accounting feature of TK-LEDGER.

When completed, you will be ready for the next steps which are described in the following pages.

Modifying
The Budget

 Once a baseline budget has been established as discussed in the preceding pages, it can be adjusted or finetuned to reflect expected changes due to increased revenue or costs in selected areas.
Account Number Enter the number of a Detail account in the General Ledger. As illustrated below, two parts of the screen will be filled out with information which is important to the budgeting process. The cursor will move to the column containing this year's budget for the first period.

The upper box displays the summarization (or rollup) path of the account you selected. Each summary account that the detail account rolls up into is displayed along with its description, last year's budget or actual depending on which option you chose when establishing the baseline, and this year's total budget. The percent variance is also displayed.

The lower box itemizes the budget of the Detail account you selected for each period. You can move the cursor to any period using the cursor [UP] and cursor [DOWN] or [RETURN] keys and adjust the numbers on a period by period basis.

As you make changes to the period budgets, notice that the variance changes. In addition, the effect of each change is reflected in the total budget for each of the accounts in the summarization path at the top half of the screen.

In this way you can not only smooth or adjust budgets on a period by period basis, but you can also see the effect of these changes all the way up the summarization path.

Note that although the figures in the examples shown here are positive, they can also be negative. The account chosen for these examples happened to be an expense account for which amounts are store in the General Ledger as positive. Revenue accounts will, by definition, be negative. Reversing the signs on these accounts can have dramatic, although not necessarily desirable effects on the budget.

Finished With
An Account		 When finished adjusting the budget for an account, press the EXIT key. The screen will be cleared for you to select the next account to work on.
Finished With
The Screen		 When finished with this screen, press the EXIT key or press [RETURN] with no account number at the 'Acct #' field. You will be returned to the menu.

SPREADSHEET INTERFACE

Extracting Data
From Your
General Ledger

When TK-CALC is installed on your system with TK-LEDGER, you have a very powerful combination of management tools at your disposal: TK-LEDGER collects, stores and reports financial data; TK-CALC provides the ability to retrieve this data for modeling and reporting.

From the TK-ACCOUNTING menu, select General Ledger.

From the GENERAL LEDGER menu, select Spreadsheet Analysis.

If no organization has been selected, you will be asked to select the organization with which to work as described at the beginning of this manual. If an organization has already been selected, that organization will be used until another is selected using the Select Organization option in the TK-ACCOUNTING menu.

When an organization has been selected, the main spreadsheet system menu will be displayed as illustrated below. Refer to your TK-CALC user's guide for additional information regarding the creation and use of spreadsheets.

When the desired directory has been selected and a spreadsheet created, the following four @Functions will be available to enable the retrieval of general ledger data.

@ORG
Organization
Name		 The organization function identifies the organization for which the spreadsheet is being used. It does this by retrieving and displaying the organization's name in the cell. The formula for this is
@ORG(0)
The zero parameter '(0)' satisfies the format requirements of TK-CALC functions and must be present. However, it is not used for any other purpose. The result is shown below.

@ACC
Account Name		 Given a valid G/L account number, the @ACC function returns the description of an account. Since account descriptions may vary from fiscal year to fiscal year, it is also necessary to provide the fiscal year from which you would like the description to be taken. Syntactically, the function looks like this
@ACC(ACCTNO,FYR)
in which ACCTNO is a valid account number or the cell address of a cell which contains a valid account number; and FYR is a valid G/L fiscal year or the cell address of a cell containing the fiscal year.

In the preceding illustration, cells A11 through A15 contain the account numbers of expense summary accounts. In cell B11 the following formula was entered:

@ACC($A7,$B$4)
The account description was retrieved from the TK-LEDGER database and displayed as the cell's value. Note that in the first parameter, the account number, we have used an absolute column address, but a relative row address so that the formula can be copied to cells B12 through B15 without further modification.

In the same vein, the second parameter, fiscal year, uses both absolute row and column addresses. This reference should not be changed at all when copying the formula.

@LGR
Ledger Data		 The @LGR function retrieves financial numbers from the G/L database. The function can be used in several ways depending on the parameters.
@LGR(ACCTNO,FYR)
where ACCTNO is a valid account number, and FYR is a valid fiscal year, returns the account balance-to-date.
@LGR(ACCTNO,FYR,PD)
where PD is a fiscal period number, returns the net of the debits and credits to the account for the requested period. Note that the result is not an account balance, but the net of the activity in the account for the requested period. To retrieve the beginning balance (applicable only to Balance Sheet accounts) use a period value of zero.
@LGR(ACCTNO,FYR,BPD,EPD)
where BPD is a beginning period number and EPD is an ending period number, returns the net of the debits and credits for the requested periods. Therefore, in a twelve period fiscal year, a beginning period of four and an ending period of six, would result in the net activity for the second quarter.

@BDG
Budget Data		 The @BDG is syntactically identical to the @LGR function except that it retrieves budget data for the requested account instead of actual data. This then enables the creation of a large variety of budget reporting formats, even beyond what can be produced by the Financial Report Writer.

The three forms of the @BDG function are as follows:

@BDG(ACCTNO,FYR)
returns the entire year's budget, while
@BDG(ACCTNO,FYR,PD)
returns only the budget for period PD, and
@BDG(ACCTNO,FYR,BPD,EPD)
returns the budget for periods BPD through EPD.

The completed spreadsheet might look like this...

"INCLUDE DA,16