Beginning Balances -- Best Practices
This document EVENTUALLY WILL OFFER best practice steps for entering beginning balances. Member comments are encouraged to help improve it.
1. Entering outstanding/unpaid invoices in AR
Print a list of outstanding invoices from the old system as of the conversion date. For each outstanding invoice, enter the total amount, including taxes as a debit memo. Distribute the credit amount to the accounts receivable control account. (Account tab, click alternate prepaid account, put AR account under "account number")
The effect will be to debit and credit the accounts receivable control account. The net effect on the GL will be 0, since it will be in and out for the same amount. After you are finished, print an aged listing. It should balance to the list from the old system. It should also balance to the AR amount in the opening GL entry. (see entering opening GL balances)
Import into armemo api. Follow similar procedure to above, Under alternate prepaid account, use the AR control account. Desired effect is debit and credit of AR account in the GL, having no effect on GL, only the subledger. (see opening GL balances)
Edit note1 (megabill)
When preparing the spreadsheet-CSV document, I'd advise putting any default values, such as the control account number, right into the spreadsheet. It is my experience that it is easier than working through making sure you have properly set the "alternate value" defaults in the import map. It is also my experience that in many cases you can print a report "to disk" on the old system and harvest the data you need for this spreadsheet by opening the disk report in Excel.
Method 2A (megabill)
It is possible by the same methodology to import outstanding invoice detail into the api.invoice and api.invoiceline views. This is a much more complex procedure and will require more data and more care to do correctly. Whether this is chosen over the memo approach would necessarily depend upon the user's needs.
2. Entering outstanding/unpaid invoices in AP
Follow the same procedure as AR above.
3. Entering bank balance as well as in transit (uncleared) checks and deposits
You have to enter the outstanding cheques from the last bank reconciliation as adjustments, and charge them to the bank account in the GL, so they will be in and out and the net effect will be 0. You can also enter them as journal entries. Debit and credit the bank account for these outstanding cheques.
Reconcile your bank, and you will end up with unreconciled amounts, which will stay there, until you go into the GL transaction table, and turn off the flag. Otherwise, they will stay there indefinitely. I can't see any other way to get rid of them.
3a. Entering opening inventory
The opening inventory can be entered as a physical count, or an adjustment of quantities. I believe you have to enter opening costs when entering these types of transactions, but I am not sure. If this is the case, you will have to reverse the entry that gets created in the GL, so as not to double count for the GL opening balances discussed below. I believe that V 3.6 will allow you to reverse GL entries so maybe that is the best way to do it. maybe someone else can confirm this.
4. Coordinating the above 4 items with entering beginning balances in GL.
I find the current documentation on entering the gl balances way more complicated than it needs to be. This is what I suggest:
Print a trial balance from the old system. Enter it as a series entry into the new system (xtuple) and balance.
Please note that if you enter your trial balance into a previous fiscal year, and you print a trial balance in the current year, IT WILL NOT BALANCE, since the PL accounts will be zeroed out, but the retained earnings will not be updated until you close the previous year. So the solution is to just close the previous fiscal year to recalc retained earnings. You can always re-open it again, if you need to adjust the previous year, with auditor entries for example. If you subsequently adjust the previous year, make sure to re-close it again.
If you want to do comparative financial statements for the previous year, you need to enter the starting balances, and then enter the net changes only for each subsequent period.
After you enter your opening balances in the GL, the control accounts should equal the sub ledgers. For example, the AR balance in the GL should equal the total of the AR subledger. The same is true for Accounts payable, Bank accounts and inventory.
Comment by Melissa of Paladin Logic:
Here: http://www.xtuple.org/EnteringOpeningBalances is where the recommended method of setting opening GL balances can be found.
We recommend that if at all possible, method #1 be used to set the Chart of Account beginning balances. More information is at the above link.
Fri, 12/17/2010 - 13:35#1
Proposal from another project
Here is the proposal I found from another large opensource ERP/accounting project called Adempiere (fork of Compiere) to deal with opening balances entry:
I think it is worthwhile reading about the approach that other projects are taking for the same problem.
Here is another one:
This one uses the manual method
Here is another one on best practices for data migration
Sat, 11/13/2010 - 10:00#2
Needs to be clarified and verified
The methods that I entered above are the ones that I suggest. But I think they need to be verified on a real company, and audit the results to confirm that it is correct.
Tue, 11/09/2010 - 20:27#3
I don't see why the opening gl instructions have to be so complicated? What is wrong with this?
Print a trial balance on the old system, as of the conversion date.
Enter it as a series entry in the xtuple GL as of the same date, and balance.
What am I missing?