Describe journaling concepts
The purpose of a journal entry is to record a business transaction in an accounting book. A journal entry is recorded in the general ledger. The general ledger is then used to create financial statements for the business.
Based on the type of business transaction, different journal types can be configured in Finance. The Journal names page can be used to set up journals that can be used throughout Finance.
Journal names
The most important area to set up in the finance module is Journal names, depicted in the following screenshot. Specific journal names should be configured for each purpose, such as intercompany, accrual adjustment, and error correction. You can configure each journal name to ensure data entry for each purpose. Journal names can also be used for reporting purposes.
On the Journal names page, you can set up the following elements:
Workflow approval – To increase internal control, define journal workflows that establish limits for review and approval steps, based on criteria such as total debit amount. You set up workflows for the general journals on the General ledger workflows page.
Default values – Select default values for offset accounts, currency, and financial dimensions.
Journal control – You can set up restrictions on the company and account type, and also the segment values.
The following journal types are some of the more commonly used financial journals available in Finance.
Budget journal
You can use the budget journal type to process budget appropriations. To use this journal type, select Enable budget appropriation on the General ledger parameters page. The budget journal entries include information based on the ledger accounts defined on the Posting definitions page.
Check/Payment reversal
You can use the Check/Payment reversal journal type to reverse a posted check. To use this journal type, select Use review process for payment reversals on the Cash and bank management parameters page.
Customer payment journal
You can create customer payment transactions by using this journal. You use it to settle receivables.
Deposit slip payment cancellation
You can cancel a deposit slip by using the Deposit slip payment cancellation journal. To use this journal type, select Use review process for deposit slip payment cancellations on the Cash and bank management parameters page.
Elimination journal
You can create elimination transactions in an eliminations journal. To use this journal type, select Use for financial elimination process and Use for financial consolidation process on the Legal entities page. Before you can use this journal type, you must create a ledger elimination rule on the Ledger elimination rule page.
Fixed asset budget
You can create fixed asset budget register entries by using this journal.
Fixed asset journal
This journal can post fixed asset transactions.
General journal
This journal is used to post financial transactions to general ledger accounts and other accounts, such as bank, customer, and vendor accounts. Posting with a general journal always creates entries on general ledger accounts. This is true even when a user posts a journal line to a customer account, because an entry is posted to a general ledger receivables account through a posting group.
Global General journal
This is a newly introduced journal in Finance. You can use it to move between legal entities without switching the legal entity. It increases the productivity of general ledger accountants who work across legal entities.
Invoice approval journal
You can post approved vendor invoices to the appropriate ledger accounts.
Invoice register
This journal can register basic information about vendor invoices.
Periodic journal
This journal can create periodic transactions based on schedule.
Process allocation journal
You can create an allocation transaction in an allocations journal. Before you can create an allocation journal, you must create an allocation rule on the Ledger allocation rule page.
Project expense Journal
You can create project expense transactions by using this journal.
Remittance journal
You can create a bill of exchange remittance file for a customer, which can be sent to your organization’s bank by using this journal. You can also use this journal to create a promissory note remittance file for the vendor that can be sent to your organization’s bank.
Reporting currency adjustment Journal
You can make adjustments in the reporting currency for balances on ledger accounts by using this journal.
Vendor invoice pool
This journal can create vendor invoice pool transactions.
Vendor payment journal
This journal can create vendor disbursement transactions to settle accounts payable.
The following video explains how to create and post a general journal.
Create and post a general journal
Using the general journal, we can also perform intercompany and/or cross-currency finance transactions.