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Ledger.




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3 Tutorials
Getting Started Guide


Lesson III”General Ledger

Tu This lesson prepares you for setting up your company. You will learn how to
set up and maintain your chart of accounts, the basis for the General Ledger.
Next, you will learn how to enter a transaction that will post to the General
Ledger.

You will learn how to:
• Enter a new account into the chart of accounts
• Enter a prior year adjustment for an account
• Allocate a budget amount for an account
• Enter and post a transaction (General Journal entry)
• Change accounting periods.
Estimated Lesson Time: 30 Minutes

Beginning the Lesson
If you are continuing from Lesson II, skip this section and proceed with the
lesson.
If you are just starting the lesson, do the following:
1 Start Peachtree Accounting and open up the sample company, Bellwether
Garden Supply.

2 If the Action Items window appears, close it for right now.

3 From the Options menu, select Global. The Maintain Global Options
window appears.

4 In the Accounting tab, do the following:
Select Manual Decimal Entry and 2 as the number of decimal places.

• In the Hide General Ledger Accounts section, select Accounts
Payable. Make sure Accounts Receivable and Payroll Entry check
boxes are clear (not checked).
• Select the “Warn if inventory item is out of stock” option.
• Select the “Recalculate cash balance automatically in Receipts and
Payments” option.




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Lesson III”General Ledger
Working with the Chart of Accounts


5 In the General tab, do the following:
• Make sure the Line Item Entry Display option is set to two lines.
• Select both Smart Data Entry options by putting check marks in the
“Automatic field completion” and “Drop-down list displays
automatically” check boxes.
You could have other global options selected as well. However, the above
options are the only ones that directly affect this tutorial.
6 When finished, select OK to close the Maintain Global Options window.


Working with the Chart of Accounts
Peachtree Accounting comes with over 75 sample charts of accounts already
set up that you can choose from to customize or copy into your own chart of
accounts. You can create your own chart of accounts from scratch. However,
we recommend you use one of the chart of accounts from the sample
companies as a template”keeping the basic structure but editing and adding
individual accounts to suit your needs. You can copy the sample chart of
accounts when setting up your company during New Company Setup.


Entering an Account
1 From the Maintain menu, select Chart of Accounts.




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After setting up the sample company, we noticed an error in our chart of
accounts. We forgot to enter a $2000.00 money market fund created at
the end of last year, and accidentally included the balance in our savings
account. We want to first create an account for these funds. We can select
any unused account number, but it is wise to stay within traditional
account number ranges. For our sample company, all asset accounts are
in the ten-thousand level (10000 to 19900).
In the Account ID field, type 1˜5˜˜ and press e. The cursor moves to
2
the Description field.

Type Money Market Fund and press e. The cursor moves to the
3
Account Type field.

Enter or select Cash from the Account Type lookup box and press e.
4

5 Select Save to establish the account.



Making a Prior Year Adjustment (Beginning Balance)
Normally you would enter beginning balances after entering your chart of
accounts. However, our sample company has already established the account
beginning balances and entered transactions. We want to record our money
market fund balance as of the end of the last fiscal year.
1 Select the Beginning Balances button.

2 The Select Period window appears.
Period 1 begins 1/1/03. We will enter a balance prior to this period.
3 Scroll down and select From 12/1/02 through 12/31/02, and then click OK.




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Lesson III”General Ledger
Working with the Chart of Accounts




Before you leave this
window, the Trial
Balance should
equal zero (in
balance).

If the Trial Balance is
out of balance and
you select OK
(not recommended),
Peachtree will make
the correcting entry
for you.




Peachtree Accounting operates on a forced-balance trial balance. The
trial balance must always balance or equal zero (˜). This means the sum
of assets and expenses must equal the sum of liabilities, equity, and
income.
First we will decrease the balance of the savings account. Then we will
make up the difference by adding the balance of the new money market
fund.
4 Select Account 10400-Savings Account, and enter 5500.00 in the Assets,
Expenses column and press e.
Notice the Trial Balance is now out of balance (instead of 0.00, it displays
-2000.00).
Enter 2˜˜˜.˜˜ for Account 10500-Money Market Fund and press e.
5
The Trial Balance is now back in balance (displays 0.00).

6 Select OK to save the adjustment.
The beginning balance is posted to the General Ledger and will display
properly in our financial statements. You return to the Maintain Chart
of Accounts window.




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What If You Are Out of Balance?
Sometimes the trial balance may be out of balance. It™s a good idea to
investigate this first and make the adjusting entries. However, if the
reason cannot be determined, Peachtree Accounting will make a
correcting entry to temporarily put you back into balance. When you
select OK (with the trial balance out of balance) on the Prior Year
Adjustments or Beginning Balances window, a message appears warning
you that an equity account will be created (or updated) to contain the
difference or out-of-balance amount. You can select Cancel to return to
the window and make corrections, or OK to accept the correcting entry.
For more information on the chart of accounts and beginning balances,
refer to the “General Ledger” chapter of the User™s Guide.

Entering Budgets
Let™s enter a new expense account and allocate a budget amount throughout
the upcoming year.
1 In the Maintain Chart of Accounts window, select the New button.

In the Account ID box, type 717˜˜ and press e.
2

In the Description field, type Cellular Phone Expense and press e.
3

4 Select the Budgets tab.




Type 18˜˜.˜˜ in any Amount field for Budget This Year. Press e.
5




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Posting Transactions to the General Ledger


6 Select the Allocate button on the Budget This Year side.
The $1800.00 is distributed over all accounting periods during the year,
with any odd pennies being distributed to the last accounting period.

7 Select Save, and then select Close to close the window.
Budget information can be viewed in financial statements and certain
General Ledger reports.

Posting Transactions to the General Ledger
Peachtree Accounting offers two methods for posting transactions.

Real-Time Posting: Transactions are written to the General Ledger

as they are entered and saved. If your company uses real-time posting
you will select the Post button to record a transaction.

Batch Posting: Transactions are saved in a temporary holding area

and later posted in a group. You can print registers and check the
batch of transactions before they are posted to the General Ledger. If
your company is using batch posting, you will use the Save button to
record a transaction. Later, you post all the saved transactions at one
time by selecting System, and then Post from the Tasks menu.
There are several advantages for using either posting method. Refer to the
“General Ledger” chapter of the User™s Guide to determine which method best
suits your company™s needs.
You can change posting methods at any time by selecting Company
Information from the Maintain menu. Our sample company, Bellwether
Garden Supply, uses the real-time posting method.

The General Ledger and General Journal
The General Ledger contains all journal transactions posted to the chart of
accounts and keeps track of account balances. Each program area contains
journals that list the transactions for that specific area. For example, Accounts
Receivable information (sales orders, sales invoices, and receipts) is recorded
in the Sales Order Journal, Sales Journal, and Cash Receipts Journal,
respectively.
If you are operating in an accrual-based company, all journal transactions are
posted collectively to the General Ledger. If you are operating in a cash-basis
company, some journals will not be included, such as the Purchase Journal
and Sales Journal. These purchase and sales transactions are posted to the
General Ledger in the Cash Disbursements and Cash Receipts Journals,
respectively.


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The General Journal contains transactions that establish and adjust account
balances. It is used to transfer funds from one account to another or make
correcting journal entries. If you make beginning balance entries or prior year
adjustments in the Maintain Chart of Accounts window, Peachtree
Accounting generates the entries for you and inserts them into the General
Journal. Other examples include monthly accruals, asset depreciation, and

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