While Mclowd™achieves a high - and ever increasing - level of automation in the way it facilitates entry of most transaction types, no accounting software developer can ever anticipate and provide for every type of transaction that might be contemplated.
To ensure that you are able to maintain your General Ledger correctly, and that final statements show correct balances, Mclowd™ (like all good accounting software products) provides a Journal Entry facility in which you can make entries of less common transactions or correct entry errors.
The Journal Entry facility presumes a basic understanding of double-entry accounting standards. It requires that the debit and credit amounts for every entry are equal.
The rules of double-entry accounting are fairly simple: a DEBIT adds and a CREDIT subtracts.
1.Accounts are classified as either BALANCE SHEET accounts or INCOME/EXPENSE accounts.
oBalance sheet account are ASSETS your Fund owns or DEBTS or PAYMENT OBLIGATIONS your fund owes. These accounts carry over from year to year, and are only closed when an asset is sold, a bank account is closed, or a major debt or loan is paid out.
oIncome/expense accounts total the income received by your fund and the expenses paid in various categories during a specific financial year. At the end of each financial year, these accounts are cleared to zero and the balances added to Profit and Loss totals and Member Account balances.
2.When you pay money out or incur a debt, the amount is DEBITED to an appropriate Income/Expense account and CREDITED to the relevant Balance sheet account.
3.When you receive money in, or raise an invoice for monies due, the amount is CREDITED to the appropriate Income/Expense account and DEBITED to the relevant Balance sheet account.
