How do I create my correcting adjustments on ExpensePlus?

This article explains how to take a list of correcting adjustments (or journals) created by the person who prepared or examined your prior year-end accounts and enter these in the ExpensePlus Adjustments module.

Why is entering adjustments important?

In ExpensePlus, your closing balances for one year automatically become the opening balances for the next year. Therefore, it's important that historic records are accurate as they affect future years.

You need your accounts for last year to be accurate so that your accounts this year will be accurate too.

The four accruals adjustments

There are 4 types of accruals adjustments, with a reminder of where you'll find them on the Balance Sheet (Debtors or Creditors):

• Accounts Payable - expenditure owed by the organisation (Creditor)
• Accounts Receivable - income owed to the organisation (Debtor)
• Prepayments - expenditure paid early by the organisation (Debtor)
• Deferred Income - income received early by the organisation (Creditor)

How do I know what goes up and what goes down?

For the sake of this article, you'll need to know that:

• Expenditure and debtors increase when debited and decrease when credited.
• Income and creditors decrease when debited and increase when credited.

Example adjustments

Below is a list of example adjustments and what you need to add to ExpensePlus to reflect these adjustments. In double entry journals, one "account" will be debited and one will be credited. The debited account is usually displayed first. Where we've referenced "income" and "expenditure" below, these should relate to a fund and category in ExpensePlus.

Example 1 - Debit Creditors, Credit Expenditure

Looking at the list above, we know that an expenditure creditor is an accounts payable. In this example, creditors and expenditure are both being reduced so this is an Accounts Payable Reversal. If you have multiple outstanding Accounts Payable entries, you'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 2 - Debit Creditors, Credit Income

Looking at the list above, we know that an income creditor is a deferred income. In this example, the creditor is being reduced and income is being increased. This is therefore a Deferred Income reversal. If you have multiple outstanding Deferred Income entries, you'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 3 - Debit Debtors, Credit Income

Looking at the list above, we know that an income debtor is an accounts receivable. In this example, the debtor and income are both being increased. This is therefore a new Accounts Receivable entry. You'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 4 - Debit Debtors, Credit Expenditure

Looking at the list above, we know that an expenditure debtor is a prepayment. In this example, the debtor is being increased, and the expenditure is being decreased. This is therefore a new Prepayment entry. You'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 5 - Debit Expenditure, Credit Creditors

Looking at the list above, we know that an expenditure creditor is an accounts receivable. In this example, expenditure and creditors are both being increased. This is therefore a new Accounts Payable entry. You'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 6 - Debit Expenditure, Credit Debtors

Looking at the list above, we know that an expenditure debtor is a prepayment. In this example, expenditure is being increased, and debtors are being decreased. This is therefore a Prepayment reversal. If you have multiple outstanding Prepayment entries, you'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 7 - Debit Income, Credit Debtors

Looking at the list above, we know that an income debtor is an accounts receivable. In this example, the debtor and income are both being decreased. This is therefore an Accounts Receivable reversal. If you have multiple outstanding Accounts Receivable entries, you'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Example 8 - Debit Income, Credit Creditors

Looking at the list above, we know that an income creditor is a deferred income. In this example, the creditor is being increased and income is being reduced. This is therefore a new Deferred Income entry. You'll need to ask the person who prepared the list of adjustments which transaction this relates to.

Once I've entered these adjustments, what should I check?

Once these adjustments have been entered into ExpensePlus, if there are no further adjustments, your balance sheet figures (including fund balances) in ExpensePlus should now match your printed accounts. Once this is the case, you should lock your financial year to prevent any further adjustments being made.

To help you better understand the Adjustments module as a whole, please visit the module overview page here.