The Balance Sheet contains the information that is both of a more long-term nature and presents a picture of the Company’s worth. Groups or sections of the Balance Sheet:
- Owner’s Equity of Capital
These are often broken down further into smaller sections such as:
- Current Assets – the most liquid of the Company’s Assets; Cash, for example
- Capital Assets – not as liquid as cash but one could exchange for cash if the need arose; Vehicles, Buildings, Equipment, etc.
- Inventory – goods held to be sold
- Long Term Liabilities – loans taken out to finance a building, for example
- Short Term Liabilities – reflects potential drains on the Company’s resources; Accounts Payable
- Owner’s Equity of Capital
- The amount that was pooled to start the Company, perhaps from the sale of Stock
- Retained Earnings – monies that the Company has made in prior years
The Income Statement contains the more detailed information to support the breakdown of the Balance Sheet. This has only two major groups:
- Revenue (Income)
This is where the daily transactions of running the Company are recorded; Sales of goods or services and the cost, Expenses, incurred to make those goods or provide the services. These are broken down even more to be able to track the income and/or expenses for a particular product or service. Usually also related to a specific Department or Warehouse or Job. Obviously, the difference between Revenue and Expenses equals Profit.
Setting the Chart of Accounts up in JDE
The Account Structure in JDE is Business Unit, period, Object Account, period, Subsidiary Account.
- Business Units describe where in your organization the transaction will have an impact. It represents the lowest organizational level within your business where you record all revenues, expenses, assets, liabilities, and equities. Business units typically represent a location, department, work center, or job, etc.
- The Object Account is the type of monies. It could be Cash or Open Accounts Receivable or Transistor Sales. It will be used as the description of the transaction. It is strongly recommended that the same numbering and description be consistent for all companies and business units for consolidation roll ups. More on that later…
- The Subsidiary Account is the optional part of the Account Number. It is used in the General Ledger as a further breakdown of the Object Account; Cash as the Object with a subsidiary dividing up the different bank accounts, for example, Cash in Bank of America. In Job Costing, the Subsidiary is used to define the Phase of a Job and that discussion is out of the scope of this document.
Here is a portion of a well-defined Balance Sheet.
In JDE there are two other fields that can be used to further define the account: Alternate Account and Subledger.
- Alternate Object.Subsidiary (obj.sub) can be used to comply with a regulatory chart of accounts, parent company requirements, a third-party coding scheme, or as the account number from a prior system used as a cross reference.
- Subledgers – Another further division of data. Subledger values must be defined to the system as the values used in the subledger are validated by type. If the subledger is an Address Book Number, that Address Book Number must exist in the Address Book Master before it can be used. There is a unique system-assigned Short Account ID assigned to each unique combination of Business Unit, Object, and Subsidiary. Balances are stored by this unique key. However, subledgers are an additional field which equates to an additional balance.
In other words, the unique combination in the table above, 1.3005.004, would have a Short Account ID of, for example, 00801045 (this is an alphanumeric value so leading zeros are significant). That has a single balance record per Fiscal Year per Ledger Type. However, if I were to decide to use a subledger with that account, the Short Account ID would still be 00801045 and there would be an additional balance per Fiscal Year per Ledger Type for 1.3005.004 subledger xxxxxxxx.
There are two more very important fields in the JDE Chart of Accounts: Posting Edit Codes and Levels of Detail.
POSTING EDIT CODES (PEC)
Posting Edit Codes are used to indicate the different usages of the accounts for functions such as headings, accounts reserved for budgeting only or system-generated amounts only.
Assign a posting edit code to every object or object.subsidiary account in the chart of accounts. This code determines whether the account posts to the General Ledger and whether it updates the Account Balances table (F0902).
Valid Posting Edit Codes and their purpose are defined in this table:
JDE Help Text explaining the Codes listed above:
LEVELS OF DETAIL
Levels of Detail are JDE’s way of allowing great flexibility across any different types of corporations all over the world without requiring to have the same COA. That way your COA matches the needs of your company rather than the COA that JDE dictates you use. Level of Detail is used to summarize and classify accounts in the General Ledger.
The chart below illustrates how the Levels of Detail work:
- Level 9 is the most detailed and Level 1 is the least detailed.
- Levels 1 and 2 are reserved for company and business unit totals.
- Levels 8 and 9 are reserved for posting accounts in the Job Cost system.
- Level 3 is assigned to title accounts for the balance sheet
- Liabilities and Equity
- Levels 3 or 4 are assigned to title accounts for the income statement. Title accounts include:
- Direct costs
- General and administrative expenses
- Other income and expenses
EXAMPLES OF LOD
3: Assets, Liabilities, Revenues, Expenses.
4: Current Assets, Fixed Assets, Current Liabilities, and so on.
5: Cash, Accounts Receivable, Inventories, Salaries, and so on.
6: Petty Cash, Cash in Banks, Trade Accounts Receivable, and so on.
7: Petty Cash – Corporate, Petty Cash – Branch, and so on.
- Balance Sheet must be first
- Last Balance Sheet account must be Net Income with a Posting Edit Code of ‘N’, Non-posting. The system calculates Net Income on the Balance Sheet.
- Next to last Balance Sheet account needs to be Retained Earnings. This must have a Posting Edit Code of ‘M’, Machine Generated.
- Account Numbers are sequential – Balance Sheet from 1000 – 4999, Income Statement from 5000 on up, for example
- Take advantage of JDE’s standard functionality and create a Model Chart of Accounts first
- Set up both a Model Company and a Model Business Unit
- Set up the Model Chart of Accounts within that Model Company and Business Unit
- Models can be specific to a particular type of business (Water, Energy, Construction)
- Use the Models to set up the Chart of Accounts for all other Business Units needed
- This will insure consistency across all Business Units of the same type
- Keep the Model current to business needs
- Set up PEC’s to be consistent across all companies
- Use Category codes (Segments of the business: Geo, Water resources, Mineral services, Energy services, Heavy Civil, etc.) for different reporting needs
- Provides reporting flexibility without changing the Chart of Accounts
- Record Category Code usage in the Model and in documentation available to personnel that will be responsible for maintenance of the COA
UNDERSTANDING A MODEL CHART OF ACCOUNTS
Create one master model business unit that includes the complete chart of accounts or create a model business unit for every business unit type and assign object accounts to it. You can then use these models as a basis for your actual chart of accounts.
- By creating a model chart of accounts, you ensure that when you copy the accounts from the model business units into your actual (or production) business units, the accounts are standardized across business units and companies.
- You should create your model chart of accounts using a consistent numbering scheme for your object accounts so that they can be copied across all business units.
- After you enter the business unit, object account, and subsidiary information for a new account, you can add a comment, memo, or other text.
- Carefully proofread your model chart of accounts to ensure that the descriptions, spelling, level of detail assignments, and posting edit codes are accurate. The model chart of accounts provides the basis for your entire chart of accounts. Revise accounts as needed to correct errors before you copy the model accounts to business units. Copying the model reproduces any errors in multiple business units.
- Some businesses need an alternate way to set up a chart of accounts. For example, some countries require businesses to submit reports using a government-defined (statutory) chart of accounts. You can use account category codes to set up an alternate chart of accounts that accommodates government requirements.
UNDERSTANDING ALTERNATE CHART OF ACCOUNTS
Using an alternate chart of accounts, you can:
- Roll up (summarize) accounts.
- Display subtotals.
- View several companies at one time.
- View accounts that make up an alternate account.
- View different levels of detail in other JD Edwards EnterpriseOne inquiry programs.
- You can display account balances by alternate or statutory accounts from the General Ledger Account Balance table. To do this, use one of the category codes that are set up for a statutory chart of accounts.
- An account category code indicates your statutory account number and the category code description indicates the account description. You can assign one or more alternate account numbers to category codes 21, 22, and 23 (User Defined Code table (UDC) 09/21–09/23). These category codes allow up to ten characters.
- The system rolls up accounts that are based on the digit that you specify. All accounts in which the digit matches are rolled together. For example, if you specify the third digit, then accounts from 1040000 through 1049999 are rolled together.
- You can review alternate accounts and account ledgers for one category code at a time. You specify the category code in the processing options.
- You can also review alternate accounts by company or organization structure, and you can review their balances online by company or organization structure. By doing this review, you can see several companies that comprise one legal entity.
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