FACCTS Accounting System - Application Notes

Accounts Payable Concepts

The accounts payable subsystem (A/P) maintains records on vendors and vendor invoicing and payments. It is designed to provide summary data to the FACCTS general ledger system. All detailed backup of the accounts payable control account in general ledger comes from the A/P subsystem, along with vendor histories, aged trial balance, purchase journal, computer-printed checks, etc.

The focal point of the A/P subsystem is the vendor file; this contains standard information about each vendor, such as name and address. This file also maintains the total payments on a calendar year basis for 1099 forms where required.

Vendor information may be printed on Rolodex™ cards as desired.

Vendors are referenced by a 6-character code reffered to as the "vendor number" by the system; since letters are allowed as well as numbers, we suggest a coding scheme based on the vendor name rather than a sequential numbering scheme.

Each vendor invoice is maintained in the A/P database in detail; each line item of the invoice carries the description, dollar amount, and general ledger account number for the expense distribution. The dollar amount in any given line can be plus indicating a debit from the vendor or minus indicating a credit from the vendor.

Also associated with each invoice is a "header" which carries the invoice date, total amount, balance, and a general description.

Invoice entry is via the A/P subsystem menu item "Invoice/Credit Entries".

• Select #13 Accounts Payable from the Accounting menu
  
• Select #15 INVOICE/CREDIT ENTRIES
  
• Enter the Invoice #
  
• Then enter the Vendor #
  
• Fill in all other appropriate information
  

In FACCTS, credits are identical to invoices except for the sign of the total amount; a credit might actually contain debit line items: the mixing of these types is completely general.

The manual checks section of A/P is used when an invoice is paid with a hand written check and the user must inform FACCTS. Once the check entry is made, there is no distinction between a manual check and a system check, except that the numbering scheme will normally be different.

The FACCTS A/P subsystem is capable of writing checks to vendors in payment of invoices based on several criteria. The decision to produce a system check for a given invoice on a given date can be made in one of the following ways:

2. If the "normal payment terms" is zero, no date is prompted during invoice entry; the user may still specify a date at this time if desired.

3. Whether or not a payment date has been specified for an invoice, the "Select Invoices for Payment" function may be used to select or de-select individual invoices.

Note that credits must also be selected if they are to be "used" during a check run. It is recommended that credits always be entered with a "payment" date equal to "today" to ensure that they will be used as soon as possible.

Also note that an invoice which has been selected for payment by one of the above methods will be de-selected by the system if a manual payment is made against it, even if the payment is a partial amount. The user must select the invoice again before the system will pay it with a system check.

If it is necessary to void a check (either manual or system) the FACCTS A/P subsystem is notified through the "Void Checks" function; this reverses the effect of the check on the invoices/credits involved and generates a ledger entry if necessary. Void checks will continue to show on the check register, but not on vendor history or other reports.

• Select #13 Accounts Payable from the Accounting Menu
  
• Select #18 VOID CHECKS
  
• Enter the Check Number
  
• Enter the Check Amount
  
• Enter the Vendor Number
  
• Fill in the Appropriate Information
  

The data stored in the A/P subsystem database is independent of the data stored in the general ledger system. The connection between the subsystems is the posting process in accounts payable which summarizes all changes in A/P position to G/L. Invoices are posted to the ledger based on the transaction date specified when the invoice was booked; for each unique transaction date with data to be posted, a ledger entry is constructed with one line item for each expense account and one for the A/P control account. The report produced by this process should be filed with the other journal entry aprons as part of the audit trail.

Checks written are posted to general ledger based on the check date. It is important to know that a void check may or may not show in the posting report, depending on whether it was voided before or after the posting run. If the check is voided after the run, a ledger entry is made by the void process; if the check is voided before the posting run, no ledger entry is made for the check.

The purchase journal lists all invoices dated during the selected period.

The check register lists all checks dated in the selected period. The checks are shown in check number sequence, with an indication of any break in numbering; note that there will normally be one break in numbering between the manual and system checks if both are used.

The check register is used to resolve any discrepancy in the bank reconciliation with the cash account, and as part of the audit process.

The expense journal shows the details of all entries to the expense accounts in general ledger coming from A/P. The detail consists of the actual line items from the invoices hitting each account, along with the vendor and invoice identity.

The aged trial balance serves several purposes in A/P. It provides a convenient way of deciding which invoices to pay in a given check run, with normal procedure being to circle or initial each invoice to be paid.

The aging also is useful in cash planning, and as a backup to the balance in the general ledger accounts payable control account.

The vendor history shows all activity against each vendor. For each invoice, all payments against that invoice are shown.

The invoice aprons provide a detail of the booking of each invoice, including the distribution to expense accounts. Normal procedure is to attach the apron to the file copy of the invoice as a permanent record.

The system will produce continuous form 1099's for all vendors with the 1099? field set to "Y". The report is based on the "Total Payments YTD" field in the vendor file.