Ledger Transactions
Ledger Transactions are created in the Posting to The Ledger process. They are written once and never altered, even when making corrections (see General Journals). This means that they can be relied upon as an auditable record of all financial transaction.
They are always created in sets of 2 or more with a common Journal_No, and these sets of records always sum to zero. This means that the sum of all ledger transactions will be zero.
Ledger Transactions record the date, account and amount of each change to the total value of the Ledger Account. They also record who posted the change and supplementary information from the [Source Transaction such as the Tran_Type, description etc.
Their value increases or decreases the total funds in the associated Ledger Account. If a correction must be made, new ledger transactions are added via General Journals with the appropriate values.
The End of Month Close Process (EOM) generates a log entry which has the effect of blocking further Posting to The Ledger actions in the period that is closed. This allows Finance Reports to be relied upon because the information that they show will not change after the End of Month Close Process is completed.
The End of Year Close Process (EOY) also generates a General Journals which performs roll-ups of selected Profit and Loss Accounts. All ledger transactions for the financial year will be summed in the selected accounts and the total written as a EOY Balance Brought Forward ledger transaction. A balancing negative ledger transaction representing the sum of the EOY amounts is written to the Retained Earnings account which allows this set of EOY ledger transactions to sum to zero. The purpose of these EOY amounts is to allow the financial position in any account to be calculated just by summing the ledger transactions within the current financial year. This total will be the sum or all transactions for previous financial years plus the transactions in the current year.
It should be noted that a EOY General Journals is normally used to bring over balances from previous financial systems. This means that there will not be any supporting ledger transactions in the current system to support these initial balances. This sometimes needs to be taken into account when running reports.