Discuss and Transact Recurring Transactions and Cost Allocation

Summary

In this video, Sheena Grace Francisco explains recurring transactions and cost allocation in business. She covers how to use recurring general journals for regular transactions, such as rent and insurance, and discusses methods for allocating amounts to different general ledger accounts. The tutorial includes how to set up batch names, recurring methods, and formulas for recurring transactions, with practical examples for handling expenses. The video emphasizes simplifying processes, reducing mistakes, and saving time by automating recurring transactions and cost allocations. This ensures efficiency in managing business payments and subscriptions.

Takeaways

• 📝 Recurring general journals are used to post regular transactions with minimal changes, such as rent and insurance expenses.
• 💡 These journals help in reducing errors and maintaining consistency by automating recurring transactions.
• 🔍 There are multiple ways to locate recurring general journals, such as using the search tab or navigating through the finance section.
• 📋 The template for recurring general journals includes batch name, recurring method, and frequency settings for the transactions.
• 📊 Various recurring methods include fixed (constant amount), variable (amount resets to zero), and balance (based on account allocation).
• ⏳ Frequency formulas, like '1D + 1 month - 1 day,' help ensure the correct timing of recurring transactions, considering variations in months and days.
• 💼 Recurring transactions can involve multiple entries, such as different expenses or cost allocations, across departments like sales and production.
• 🔧 GL (General Ledger) accounts are often used for recurring transactions, but other account types, like vendors or customer payments, can also be selected.
• 💸 Cost allocation can be distributed by quantity or percentage across different accounts, with amounts and balances automatically adjusted.
• ✅ After reviewing the journal entries, finalizing the process includes posting the transactions and verifying successful completion.

Q & A

What are recurring general journals used for in business?

Recurring general journals are used to post regular transactions that have little to no changes, such as rent, insurance, and other expenses. They help streamline the process by reducing data entry errors and maintaining consistency.

What are the benefits of using recurring general journals?

The benefits of using recurring general journals include reducing the chances of mistakes, maintaining consistency in transactions, and simplifying the process of entering repetitive data.

How can you find a recurring general journal in a system?

You can find a recurring general journal by using the search tab and typing 'recurring general journal.' Alternatively, you can navigate through the finance section, go to 'journal,' and then click on the recurring general journal option.

What are the different recurring methods available?

The available recurring methods include 'Fixed,' where the amount remains constant every month, 'Variable,' where the amount resets to zero monthly, and 'Balance,' which is based on the allocation amount for specific accounts.

What is the importance of formulas in recurring transactions?

Formulas in recurring transactions are essential for setting dates or frequencies of postings. A commonly used formula might be '1D + 1 month - 1 day,' ensuring that recurring entries align with the correct days of the month.

What should you be careful about when using formulas for recurring transactions?

You must ensure that the formulas are compatible with the specific month and day of the recurring transaction, as months have different lengths. Using the wrong formula could lead to errors in posting.

What is the 'Document Number' field used for in recurring journals?

The 'Document Number' field is used to label the transaction, for example, naming it 'Rent,' which helps identify the type of expense being recorded.

How do you allocate amounts or costs in recurring general journals?

Amounts or costs can be allocated by inputting a specific value or percentage, and this will be applied to different general ledger accounts. You can choose options like 'quantity' or 'percentage' to allocate the expenses accurately.

What should you do after filling out a recurring transaction?

After filling out a recurring transaction, you should review it by using the 'previous posting' option to ensure everything is accurate. Once confirmed, you can finalize and post the journal.

What happens once you post a recurring transaction?

Once you post a recurring transaction, a message will pop up confirming that the journal has been successfully posted. You can then add more entries or transactions if needed.