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GL Account Codes

Details

For accounting purposes, General Ledger (GL) Account Codes define how processed dollars are grouped and distributed by general ledger processing.

Define a GL Account Code for every account and type of dollars to be reported from the payroll system for general ledger accounting.

General ledger is set up on account codes, processed for one or more payrolls, and then is reported for accounting purposes.

Every active GL Account Code provides the parameters for a general ledger account: debit versus credit, type of accruals, negative amounts permitted, overrides, filters, and the type of distribution. Each GL Account Code is for either earnings, deductions, taxes, or net pay codes. For each type, the codes to include are selected per GL Account Code. When new codes are added for earnings, deductions, taxes, or net pay, be sure to return to the GL Account Codes and select the new codes on the appropriate GL Account Code.

General ledger processing builds the information used for general ledger reports and exports and allows general ledger reports to be produced for the designated payrolls. Generating a general ledger report always provides the latest information based on the processing options defined the last time that general ledger was processed.

General ledger exports or reports, such as the General Ledger Distribution Report, can then be produced for use with a finance or accounting system.

Business Scenario

Every company has unique reporting requirements. Consider consulting the organization's accountant prior to and as part of the process of setting up the General Ledger Account Codes for an organization.

A basic general ledger can have as few as four general ledger accounts, as listed here and seen in the following table:

• Debit for earnings (Omit non-cash earnings.)
• Credit for employee deductions
• Credit for employee taxes
• Credit for net pays

The example presented here only applies to basic cash accounting and non-accrual general ledger accounts.

Sample General Ledger Account Information

Chart of Accounts

A chart of accounts is the part of a general ledger system consisting of an accounting and bookkeeping table used to assign codes to expense categories, like federal withholding taxes, net wages, and insurance premiums.

Often, an organization's corporate accountant can supply the organization's existing chart of accounts. It may be helpful if the accountant defines each component on the chart of accounts before delivering it.

Base the setup for the organization and the general ledger on the organization's chart of accounts, specifically those account charts that are related to payroll. System setup according to the chart of accounts, including labor segments and tier codes, allows the components of the general ledger to be defined for the organization. Consider the requirements of the organization's accounting system to determine appropriate setup parameters and offsets.

• During the setup of the company, organizational units, such as locations, departments, and tiers are defined.
• Labor segment 1-4 distributions are associated with pay entry per payroll.  Optionally, the employee Master values at the time of payroll processing can be used instead, depending on the GL Account Code setup.
• From the employee Master records, organizational assignments provide information for general ledger. Organizational units, such as locations, departments, and tiers, from the employee Master records cannot be edited in pay entry and become part of the payroll history.

GL Distribution Methods

Each GL Account code record causes dollars to be grouped by labor distributions according to the method selected in the processing information section.  Most commonly, all GL Accounts for an organization are defined with the same distribution method.

• Summary distribution for no labor distributions. Summary Distribution shows total dollars and hours without detailed breakdowns. All amounts roll-up into one amount per GL account.
• Master distribution for master record distributions. Master Distributionsorts and subtotals dollars and hours according to employees' assigned labor segments, as seen on each employee's Organization tab within the employee Master at the time when the payroll was processed.
• Payroll Distribution for payroll entry distributions. Payroll Distribution sorts and subtotals dollars according to the labor segment levels 1-4 assigned to payroll dollars at the time that the dollars were processed. Labor segments are assigned to payroll dollars per employee, per payroll calendar, and per row of earnings through payroll entry (auto pays, splits, payroll entry spreadsheet). Although employee records, including Master records and Employee Auto Pays, provide default labor distributions, labor segments can be changed and saved as part of the payroll entry process.

Filters, Overrides, and Negative Amounts

Filters can be placed on the tiers and labor segments to satisfy reporting requirements.

• Filters.  When a tier or labor segment is selected as a filter, the system applies the GL entries for only those distributed within that Tier or labor segment.
• Overrides.  When a tier or labor segment is selected as an override, the system applies the GL entries for ALL distributed amounts to one tier or labor segment.
• Negatives. For roll-up processing of negative dollar amounts (voids) for a finance system that accepts negative dollar amounts, select the Negative Amounts checkbox. Alternatively, leave the "Negative Amounts" checkbox clear when the finance system doesn't accept negative dollar amounts. Where the "Negative Amounts" checkbox is clear, processing takes the absolute value of any negative amount and switches the amount from debit to credit or vice versa. This creates a reverse entry for negative amounts, i.e., if the entry is a negative to a debit account, the system creates a positive credit entry.

Accrual Percentages

On a GL Account Validation Code, an Accrual % of zero cause accruals to be omitted for the account. WHERE a GL Account Code has an Accrual % defined, THEN that percentage overrides any Accrual % value defined on the General Ledger Processing tool. For this reason, often the accrual percentage is left blank on the code-level.