Best Practices for Setting GL Opening

Owned by Ghugan Sivaperumal (Unlicensed)
2015-May-28

This document is written base on the scenario below :

  • Your financial Year is from January 01 to December 31
  • You previously recorded your account either manually or in another accounting system
  • You would like to record your account in EMP starting 2008-06-01
  • You have finished keying in Stock, Account Payable, Account Receivable, Cashbook Openings, and these Openings are all dated 2008-05-31
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Before you proceed to Set the GL Opening, please make sure you have gone through the checklist below :

Checklist

Now, you will probably be asking :

Why do I need to Delete all Journals in EMP created as a result of setting stock, account receivable and account payable openings?

In short, this step is performed to prevent recording the amount twice in your Balance Sheet.

You may refer to the example below to understand further :

  • To set the Stock Opening in EMP, you have created GRN
  • When GRN is created, EMP automatically creates the corresponding Journal in your account. The journal created for a GRN with amount RM100 is as below :

  • As you know, this GRN amount is already part of your Balance Sheet amount as of 2008-05-31. Thus, if you do not delete this Journal, your Inventory GL in your Balance Sheet as of 2008-06-01 will be as below :

Inventory = Inventory_opening_balance + Opening GRN amount (which is wrong)

By right, it should only be:

Inventory = Inventory_opening_balance

After deleting these journals, then what happen to my stock, account receivable and account payable openings?

No worries, the Deletion will only deletes the Journals. The previously created GRN, CM and Invoices to record stock, account payable and account receivable opening balance will still be intact.

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Now, you are ready to key in your GL Opening Balance.

To do so, you may refer to Set Opening Balances.

You will notice that the Set Opening Balance function does not allow user to key in P&L GL, for example, generalSales, salesReturn, expenses.

You will probably be asking :

Why?

Unlike P&L, Balance Sheet is generated on a accumulated basis, from the very beginning of time, thus, the idea here is that you will only migrate you Balance Sheet over to EMP. As for P&L, you will get to generate you very first P&L from EMP after 2008-06-01 with the actual GRN / Invoice / PR / SR etc key-ed in directly to EMP. To generate the P&L before 2008-06-01, you will do it on your old Accounting System.

Thus, when preparing your Balance Sheet as of 2008-05-31 to be keyed in to EMP, make sure you have closed your account as of 2008-05-31 :

What it simply mean is, please make sure you have transferred you profit / loss from your P&L as of 2008-05-31 to a retainedEarnings GL. So that it will be entered into EMP as part of your Balance Sheet Opening Balance.

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Once you are done, all you need to do now is hold the Balance Sheet as of 2008-05-31 in your hand, key the Opening Amount for all the GL in the Sheet into EMP one by one.

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Additional Info

Retained Earnings GL :

This GL is not one of the default GL in EMP. You will need to create this GL yourself from Accounting -> Configuration -> Chart of Accounts -> Add GL Code. Then, you can fill up the values in the form as below :

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