Adjusting Journal Entries

Use this screen to input and edit the various types of adjusting journal entries required to complete a file.

To access the Adjusting Journal Entries worksheet, press CTRL+J.

Any transaction entered in the Adjusting Journal Entry worksheet appears in the adjustment column in the trial balance documents. Although any type of transaction (e.g., cash disbursements) could technically be recorded here, the preferred method would be to use the Other Entries worksheet for these bookkeeping types of transactions (see Other Journal Entries command for more information).

Important: In a locked down file, only federal tax adjustments can be posted or modified.

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Current Entry

Displays the reference number of the current journal entry being entered or edited.

Click the menu drop-down button to access a list of existing reference numbers or enter a new reference number.

New (Entry)

Click the New Entry button to add a new journal entry. Enter the reference number for the new entry in the Current Entry box. The reference number is alphanumeric and can consist of up to 20 characters.

Delete (Entry)

Click the Delete Entry button to delete the current journal entry.

Renumber (Entry)

Click the Renumber Entry button to renumber an adjusting journal entry. The Renumber Entry button becomes available after selecting an adjusting journal entry. The reference number is alphanumeric and can consist of up to 20 characters.

Navigation Buttons

The four small navigation buttons in the top right of the screen allow you to skip to the first, previous, next, and last journal entries.

Created by:

The user name and initials of the person who created the adjusting journal entry is displayed. This is based on the or, if using protection, the .

Entries showing N/A indicate that the entry was created before this feature was in place.

Period Type

Select the period type from the drop-down menu of available types. The available selections are based on the period date sequences set in the Engagement Properties Reporting Dates tab.

Date

Represents the date of the journal entry. This date defaults to the ending date of the current active period. It can be modified as necessary by typing or selecting a date from the drop-down mini-calendar.

To make prior year adjustments to mapping/grouping numbers, select the prior year date. You can enter dates that are prior to the beginning of the current year, all the way back to the previous 4 years. You cannot enter a date earlier than that; if you do, then a message is displayed informing you that the date is outside the allowable range. Once a date in the allowable range is entered, Working Papers automatically displays the period chosen to the right of the Date field. For example, if the current year ends 12/31/2006 and you enter a date in 2004 in a yearly file, Prior Year 2 is displayed.

In the case of multiple period processing, this date can represent a prior period or a future period. If this date represents a prior period then only the year-to-date and not the current period financial statement is affected. Alternately, if this date represents a future period, the current financial statement is not affected. When you move to this future period, these future entries will be properly recorded.

Reference

If the entry is to refer to a working paper listed in the Document Manager, type or select a working paper reference from the drop-down list. If you wish to use the individual reference numbers (under customize), leave this field blank. Any data entered here refers to all lines of the journal entry.

Tip

This journal entry will not be cross-referenced on that working paper.

Type

Select the type of adjusting journal entries.

Code	Type	Description
N	Normal adjusting	These entries update all relevant automatic documents on the Document Manager such as journals, ledgers, draft financial statements, and leadsheets. Furthermore, any linked CaseView documents such as the client ready financial statements are updated. These entries are displayed in the Adjustments column on the trial balance or grouping documents. When updating from one period to another including a year-end close, these entries are transferred from this adjustment column to the opening or preliminary balance column on the trial balance and grouping documents.
R	Reclassifying	Reclassifying entries are not recorded in the normal accounting records. However, they are recorded in all draft financial statements and working papers such as grouping documents. Reclassifying entries are most useful for preparing year-end working papers where amounts need to be reclassified for presentation purposes in the financial statements. They can also be used for interim working papers and periodic reporting. When made in any period other than the last period of the fiscal year, reclassifying entries are excluded from the accounting records. In this case, the entries to non-consolidated balances do not have to be reversed. They are an excellent method to modify financial statements for disclosure rather than using the method of posting to the books and then posting a reversing entry in a subsequent period. In multiple period files, reclassifying journals display only in the month to which they are posted; their balances are not accumulated. Reclassifying entries made in the last period of the fiscal year do get included in the next year's opening balances when either of the following choices is made during a year end close: Update next year's opening balance with consolidated or report. Those reclassifying entries do then have to be reversed.
U	Unrecorded - factual	Unrecorded proposed entries can represent factual misstatement entries that will not be recorded because of materiality or proposed entries that may be subsequently changed to a normal status. Unrecorded entries only appear on the Summary of Unadjusted Errors document.
L	Unrecorded projected*–	Unrecorded projected entries can represent judgmental or projected misstatements that will not be recorded because of materiality or projected entries that may be subsequently changed to a normal status. Judgmental misstatements are differences arising from the judgments of management concerning accounting estimates, or the selection or application of accounting policies that the auditor considers inappropriate or unreasonable. Projected misstatements are the auditor’s best estimate of misstatements in populations. These projected error entries only appear on the Summary of Unadjusted Errors document.
G	Unrecorded - judgmental	Unrecorded judgmental entries can represent differences arising from the judgments of management concerning accounting entries.
E	Eliminating	These entries are used to prepare combinations or consolidations of divisions or companies. They appear in consolidated trial balances, groupings, and financial statement documents.
T	Tax – Federal	These entries are used to adjust the federal tax balance. They are not recorded in the normal accounting records. Use the trial balance, journal, and grouping documents to display the federal tax entries. If creating a Journal - Adjusting journal entries automatic document, any "Permanent" or "Temporary" adjusting entry will be displayed in the "Difference" column of the report.
V	Tax – State	These entries are used to adjust the state tax balance. They are not recorded in the normal accounting records. Use the trial balance, journal, and grouping documents to display the federal tax entries.
C	Tax – City	These entries are used to adjust the city tax balance. They are not recorded in the normal accounting records. Use the trial balance, journal, and grouping documents to display the federal tax entries.
B	Other basis	The other basis adjustment feature is a special type of adjustment that can be incorporated into balances. As an example, you can use it to post cash basis entries and then switch the balances from accrual basis to cash basis in reports See Other basis adjustments for additional information.
P	Prior period	These entries are used to post prior period entries in a monthly client file. Only the year-to-date and not the active period financial statement is affected. If the active period is changed at (a later date) in the Engagement Properties so that the new active period date now includes the prior period date, then these entries will change to a Normal type. Prior means prior period, not prior year.

*International Federation of Accountants (IFAC), "Handbook of International Standards on Auditing and Quality Control - 2009 Edition"
http://www.ifac.org/Members/DownLoads/2009-handbook-of-internatio.pdf.

Difference

This option is only available if 'Tax - Federal' is selected as the type of adjustment and CCH ProSystem fx is selected as the Tax Vendor in the Engagement Properties dialog. Select either a Temporary or Permanent tax adjustment. The Federal Tax adjustment amount will go to the Permanent or Temporary column of the corresponding Form, depending on the tax entity selected in the Engagement Properties dialog.

Accounts

Select the type of account that the journal entry affects.

Financial	Select Financial to create entries that adjust accounts in the client's chart of accounts.
Cash Flow	Select Cash Flow to create entries that adjust accounts on the Statement of Cash Flow. Cash Flow entries are not recorded in the normal accounting records.
Performance	Select Performance to record activity used in the analysis of performance measures (for example, waste management, employee expenditures, etc.).
L/S	Select L/S to create entries that adjust accounts on Leadsheet grouping. L/S entries are not recorded in normal accounting records, but they do roll forward on year-end close.
Group 1 to 10	Select any Group 1 through 10 from the list to create entries that adjust accounts in any grouping. Grouping adjustments are not recorded in normal accounting records.
Mapping	Select Mapping to create entries that adjust mapping account balances. Mapping adjustments are not recorded in normal accounting records. To help locate the map numbers, the heading lines from the map setup also display in the drop-down. See the Apply To option below to apply the adjustment to a grouping.
Tax Export Code	Select to create entries that adjust tax export code balances. These are not recorded in normal accounting records.
M3 Code	Select to create entries that adjust M3 code balances for US tax entities (excluding Non-Profit). These are not recorded in normal accounting records.

Notes:

Adjusting journal entries cannot be posted to calculated map numbers.
Adjusting journal entries that are posted to a map or group are included in the net income amount for the final balance in the Working Trial Balance.
Tax entries that are posted to a tax export code or M3 Code are included in the net income amount for the final balance in the Working Trial Balance.

Apply To

This function is only available when Mapping is selected in the Accounts pulldown. In the Apply To drop-down menu, select the corresponding grouping for which you would like to create another journal entry with the same amounts. Note that if you delete or modify a line in the adjusting entry of the map number, the corresponding entry in the grouping entry will also be deleted or modified. The corresponding grouping entry can only be edited through the mapping entry.

Select a group to which the value should apply, or select All to have the value appear wherever any applicable group or tax code balance appears.

Misstatement

This option is only available when the adjusting entry type is set to Normal adjusting, Reclassifying, Eliminating, Tax, or Other basis. Select the Misstatement type from the dropdown:

Factual	Misstatements where there is no doubt and where supporting documentation is available.
Projected	The auditor's best estimate of misstatements in populations; usually derived from sampling.
Judgmental	Differences arising from the judgements of management concerning accounting entries.

Entry Booked in General Ledger

Select this option to have this entry only affect the specified period (interim balances) and not the adjustment amounts for the regular adjusting entry types.

To enable this option, enter the Customize Adjusting Journal Entries dialog and select the option to "Allow Entry to be marked as having been booked in the General Ledger".

This entry amount will be reflected in the Working Trial Balance screen when drilling down to a Prior year adjustment column and then drilling down in the Adjustment column. The affected adjustment amounts will appear in the columns labelled with the term "Booked" in the Prior Adjustment screen.

Note: If you select this option with the date range of the General Ledger report left as default, the opening balance of each account will not include booked adjusting entries from prior periods.

Balance

Once the type of account (Financial, Performance, Mapping, etc) has been selected, use this pulldown to select whether the entry should be applied to the actual (N/A), Budget, Forecast, or any Custom Balance created in the client file.

Description

Enter a description of the journal entry. The description area is scrollable and can be as detailed as necessary. This description field wraps text automatically. Each line of the field can be up to 40 characters long. Press CTRL+ENTER to begin a new line in the Description box. The complete description is printed in the adjusting journal.

Recurrence

If the entry is to be saved as either a recurring or reversing entry, click the applicable radio button. The recurrence pattern defaults to the context set in the Engagement | Properties | Period Balances tab.

Note: When using SmartSync (i.e. in a synchronized copy of a file), it is recommended that you only modify recurring/reversing entries while Online and that only one person edits the recurring/reversing entries at a time.

Advanced

Click the Advanced button to make customized choices for recurring entries.

Calculated

Calculated entries allow you to enter a formula that will calculate the value to be included in the Amount field. Calculated entries will be useful for situations such as eliminating entries where users want to ensure the amount being eliminated reflects the most up-to-date value for the account. To enable this functionality, select this option. More information may be found .

Entity

Represents the entity that the entry affects. Select the affected entity from the drop-down list. This option is shown only in consolidated client files. This column shows or hides based on the current adjusting entry selected and current entity selected in the Context selector.

Number

Represents the Account Number for posting. Click the mouse button to display the Quick Lookup dialog. Once the account is located, click the Select button to input the account in the Adjusting Journal Entry worksheet.

For consolidated files, the accounts are filtered to display only the accounts that pertain to the current entity selected.

You can post adjusting journal entries to split-up accounts directly.

Calculated map numbers are not available for selection.

Name

Displays the name of the account number as entered in the trial balance.

To enter an extended description for the adjusting entry, click . Map numbers that have extended descriptions appear as .

When an extended description is entered, that description appears instead of the account name in all adjusting journal entries automatic documents except for the general ledger document.

Tax code

Select the appropriate tax code for the entry. To activate this column, click the Customize button. For more details, see the Customizing Adjusting Journal Entries Dialog. New Tax codes can also be created by clicking Customize and accessing the Tax Code tab.

Debit / Credit

Debits and credits columns. To activate these columns, click the Customize button. For more details, see the Customizing Adjusting Journal Entries Dialog. If this option is not turned on, only a single amounts column is displayed.

Cumulative

This column is shown for recurring entries only when the appropriate option in the Customize dialog is enabled. The cumulative balance displayed represents adjustments for each account for all instances of the recurring entry booked to the current and any prior period.

Cumulative amounts can also be typed into the column and, when this done, Working Papers calculates the amount in the Total Amount column. If the tax option is on, changes to the Total Amount column also are reflected in the Tax Amount and Amount columns for the entry. See the Customize dialog for more information on this feature.

Tax Amount

Calculates the tax amount based on the amount and the tax code entered in the tax code column. To activate this column, click the Customize button. For more details, see the Customizing Adjusting Journal Entries Dialog.

(Total) Amount

A debit amount should be typed with full decimals if necessary.

A credit amount can be preceded or followed by a minus sign and should be typed with full decimals if necessary.

Tip: When inputting large numbers in the journal, there may be a problem with displaying them properly due to their length. Correct this in one of two ways: either change the Working Papers default options (on the Tools menu, select Options, and then click Documents) to display whole numbers only; or change your display font (on the Tools menu, select Font Settings) to be a font such as Arial Narrow to squeeze more characters into the column.

Reference

An individual reference number for each line of the adjusting entry. Note: This column is hidden unless "Allow individual reference numbers" option is turned on. To activate the option, on the Tools menu, select Options, and then click Advanced. Click here for further details on this and other options. Alternately, click the Customize Button to enable the feature quickly. For more details, see the Customizing Adjusting Journal Entries Dialog.

Annotation

This column is hidden by default, but displays line annotation. Line annotation added here is shown on the appropriate automatic document.

Recalculate

The Recalculate button is used to update all of the calculated adjusting journal entries. All of these entries can also be recalculated using Tools|Recalculating Adjusting Entries. For more information, see Creating a Calculated Adjusting Journal Entry.

History

Click the History button to view the adjusting journal entry history.

See Tracking adjusting journal entries for additional information.

Customize

Click the Customize button to customize the appearance and functions in the adjusting journal entries screen. For more information, see Customize Adjusting Journal Entries Dialog.