Where the numbers come from
Before you start, open this page: Accounting / Journal Entries.
Can’t find one? It may be turned off for your business, or your account may not be allowed to open it. Ask the person who set up your FeePrime. They can fix both.
This lesson explains how the accounting reports are built. Once you know, you can check them yourself instead of trusting them.
There is no separate set of books
Nobody in your business types accounting entries. There is no end-of-month job to run. There is no second set of books sitting next to your day-to-day records that someone has to keep in line.
Instead, the accounting entries are worked out from what you already recorded, every time you run a report. Your invoices, your payments and your stock movements are the source. The accounting is just a way of reading them.
Two things follow from that.
The good part. Your accounts cannot drift away from your operations. There is no posting step to forget, and nothing to reconcile between “the system” and “the accounts”, because they are the same records.
The other part. Your accounts are exactly as good as your daily recording. There is no accounting stage later that quietly fixes things. If a payment was recorded as the wrong type, it is wrong on your profit report, and the only place to fix it is the payment itself.
Where the numbers come from
Six things feed the accounting:
- Invoices. What customers owe you, and your sales.
- Payments. Every payment, according to what type it was.
- Order commissions. Commission someone has earned.
- Bills. What you bought and what you owe suppliers.
- Payroll. Wages, what you owe staff, and what you held back.
- Stock. Stock movements, and what the goods you sold cost you.
That list answers the question “why is this number here?”. Every figure on every report comes from one of those six.
Reading the journal report
A journal entry report shows the entries themselves. The date, the reference, where it came from, a description, and the two sides of each entry.
It also shows a total for each side, and the two totals should match.
That is not decoration. If the two sides match, the arithmetic held together.
Use this report when a number somewhere else looks wrong. The summary reports tell you what the number is. The journal tells you which events made it, with references you can open and read.
The habit worth building
When your accountant questions a number, do not argue about the total.
Run the journal for that period and read the entries. One of two things is true. Either the events are wrong, like a mistyped payment or a bill nobody entered. Or the events are right, and the explanation is sitting in front of you.
Try it
On staging.feeprime.com, run a journal entry report for a period where you have both an invoice and a payment. Find them both. Then check that the two totals match.