General Ledger New User's Start-up Procedures

❑These instructions are for a New User (i.e., someone who wants to start using the MKMS General Ledger System).

❑There are four sets of procedures (Steps) which must be completed before your Company can actually start using the General Ledger System.

I.Basic Preparation Steps (complete Maintenance Entries; design the Company's Chart of Accounts; create a Trial Balance, P&L and Balance Sheet; then Close Accounting Periods)

II.Data Gathering and Report Printing Steps for making the necessary set of Summarized Transactions

III.Run the Setup Wizard.

IV.Perform the Steps to Transfer those Summarized Transactions to Spreadsheet files for Processing after running the General Ledger Start-up Wizard

I. Basic Preparation Steps

❑If you are reading this chapter in preparation for running the General Ledger Setup Wizard:

•You should:

a)Be starting to implement the MKMS General Ledger System

b)Have already read the Understanding a General Ledger chapter and its associated sub-chapters Accounting Terminology, Understanding Debits & Credits, and Double Entry Bookkeeping

c)Have already read the General Ledger Start-up Overview for New Users chapter

d)Have already read the Designing your Company's Financial Statements chapter

e)Have Completed all of the General Ledger System related Maintenance Entries

•Your Company's proposed list of the General Ledger Account Numbers (Chart of Accounts) along with the Purpose for each Account (i.e., each Account's Title) should have been designed (see the Designing your Company's Financial Statements chapter) by an in-house person (or your Company's Accountant) who will then be in charge of supervising the installation, and/or future maintenance of your Company's General Ledger.

✓The General Ledger Account Number entries - with their associated Titles - should have been assigned to the appropriate General Ledger Group

▪Those General Ledger Groups are used to sub-divide the Financial Transaction Totals posted to General Ledger Accounts - all of which are a member of one of the five basic Types of Accounts (i.e., Assets, Liabilities, Equity, Sales, Expenses - the Primary Account Divisions) - into smaller and more precisely defined sub-group.

✓The General Ledger Accounts list must also include those Mandatory Accounts which are required by this MKMS General Ledger System.

•This Chart of Accounts should preferably follow the format explained in the Understanding a General Ledger chapter using the recommended Numbering Range shown below (or a Numbering Range designed and supplied by the Company's Accountant).

Account Type Number Range

1.Assets 1000 to 1999

2.Liabilities 2000 to 2999

3.Equity 3000 to 3999

4.Sales 4000 to 4999

5.Expenses 5000 to 9999

•Assuming that these requirements have been met, there are specific Start-up Tasks that must be completed as you prepare to run the General Ledger Setup Wizard Wizard.

✓Each of these Start-up Tasks are listed and briefly explained below.

✓Each Start-up Task has its own explanatory chapter with detailed instructions provided.

✓These Start-up Tasks should be completed in the order presented.

A.Create a Trial Balance

•Use your Company's existing (old) system's General Ledger Balances to produce a Trial Balance that uses the new Account Numbers and Numbering Range that will be adopted in this MKMS General Ledger System

✓The in-house person in charge of your Company's General Ledger, or the Company's Accountant, must do one of these two things:

1.Manually create a Trial Balance on paper (or in a spreadsheet) that reports the General Ledger Account Balances for the most recently closed month (which had been finalized in that old General Ledger).

a.When this Trial Balance is created, as necessary, replace the old Account Numbers and/or Account Titles with the new Account Numbers & Titles that have been defined for your Company's MKMS General Ledger System Accounts.

2.Print the Trial Balance using your old accounting software, noting any and all of the differences in the Account Numbers and/or Titles - that will now be used in the New General Ledger - on that old system's printed Trial Balance report.

❖See the "Trial Balance Report" chapter for additional information about the normal format of a Trial Balance.

•Later, you will use this Trial Balance - either the manually created paper or spreadsheet one, or the old accounting software printed one - to complete the "Initialize GL Balances" dialog presented in the Setup Wizard.

B.Create the P&L and Balance Sheet Financial Statements - These will be used for data entry during, and as a double-check tool after, the Setup is finalized:

1.Create the Income Statement (some accountants use the term "Profit & Loss Statement") on paper or by using a spreadsheet program (or make a printed version, using your existing general ledger accounting program) but replace the old Account Numbers with the new Account Numbers (using the newly adopted Numbering Range).

✓This will include the exact Values (i.e., Account Balances) for the most recently Closed Month that were also used to create the Trial Balance (see the "A. Create a Trial Balance" discussion above) - and so should be the latest Revenue and Expense (and Profit/Loss) Values that have been finalized ("closed")

2.Create a Balance Sheet on paper (or make a printed one, using your existing general ledger accounting program) but replace the old Account Numbers with the new Account Numbers (using the newly adopted Numbering Range) .

✓This will also include the exact Values (i.e., Account Balances) for the most recently Closed Month that were also used to create the Trial Balance (see the "A. Create a Trial Balance" discussion above) - and so should be the latest Values that have been finalized ("closed").

➢Reminder - On these Balance Sheet and the Income Statement reports, make a note of any Account Number and/or Title changes that will be different in the new MKMS General Ledger System then what is currently being used by your Company.

C.Close the corresponding Accounting Period - Close all of the months within the MKMS Accounts Receivable and Accounts Payable modules that have been finalized ("closed") in your Company's existing (old) system's General Ledger.

•Be sure that the most recent Closed Month - used for the Financial Statements that were created in the "Create Financial Statements" step above - is also Closed (along with all prior months) in both the MKMS Accounts Receivable and Accounts Payable modules.

•This step is designed to prevent any User from accidentally entering Financial Transactions in the Accounts Receivable and/or Accounts Payable modules that could/would invalidate these specially prepared Financial Statements.

➢Note: As you go through this process, your Company's Central Station Monitoring operations are unaffected, and should continue to use MKMSCS normally.

II. Data Gathering and Report Printing Steps

❑The General Ledger Setup Wizard will walk you through the General Ledger Setup process, checking on the accuracy of your entries along the way.

•Prior to running the Setup Wizard:

a.If your Company wants to use Multi-Departmental Accounting, be sure that you have:

i.Defined those Departments.

ii.Assigned the appropriate Department number to those Sale-Purchase Items which should always be identified on Purchases (Bills), Sales (Invoices), and Financial Statements & Reports, as being used for, and/or sold by that Department.

b.Be sure that you have defined the appropriate General Ledger Groups.

c.Be sure that you have defined the General Ledger Accounts that will be required to duplicate the Chart of Accounts designed by the in-house person (or the Company's Accountant) in charge of the General Ledger.

d.Be sure that you have defined the Mandatory General Ledger Accounts, and that they have been incorporated into that Chart of Accounts.

e.Be sure that you have assigned a General Ledger Group to each General Ledger Account.

f.Be sure that you have assigned a General Ledger Account Number (and optionally a Department number - see a), i. and ii. above) to every Sale-Purchase Item record.

g.Be sure that you have created a General Ledger Account Number for every Bank Account that will be used.

❑Ideally, the most recently Closed Month represents a very recent month in your existing (old) General Ledger (whether manual system, or one that is maintained in another general ledger accounting program), and the most recently Closed Month in the MKMS Accounts Receivable and Accounts Payable modules - represent the same (or newer) Accounting Period (see the "C. Close the corresponding Accounting Period" discussion above).

1.If that most recently Closed Month is for an Accounting Period which is many months in the past and you are currently using another general ledger accounting software program (i.e., not maintaining your Company's general ledger manually), you may want to consider bringing that program's General Ledger Account Balances up to the "last" fully completed month, and close each of those intervening accounting periods, before continuing.

✓You should also Close those same months in the MKMS Accounts Receivable and Accounts Payable modules, before continuing.

✓If this is your decision, just continue to use MKMS in the normal manner until you've finished this closing "catch-up" process.

✓By doing so, the most recent month that will eventually be finalized ("closed") in that old General Ledger will also be the most recent completed and closed month in MKMS, and therefore the number of "catch-up" General Journal entries - that might be required after running the Setup Wizard - will be minimal.

2.When the actions discussed in 1. above are either:

a.Completed

b.not necessary because you're Company's old general ledger is (was) pretty current

c.not possible (e.g., you will not be able to get all those months Closed in your old General Ledger)

d.not possible because you're using a hand written system and have determined it would require too much time to do so

e.Then, Summarize the Financial Transactions for the most recent month that was closed in your current General Ledger:

i.Prepare an Income Statement, a Trial Balance, and a Balance Sheet using your Company's old general ledger accounting program (or manual general ledger) for the most recent (as practical) closed month.

a)The "As Of Date" for which these reports are prepared should represent the Account Balances which existed at the end of that specified Accounting Period.

ii.If it has not already been done, close all of the months prior to, and also for that As Of Date" month in the Accounts Receivable & Accounts Payable modules within MKMS.

iii.Then, create the next sets of Financial Transaction Summaries for those months following the Closed month of your old General ledger - one month at a time - following the instructions in the Print the Set(s) of Transaction Summaries Reports chapter:

a)Close the oldest month immediately following the "As Of Date" month in the Accounts Receivable & Accounts Payable modules

b)Print the Financial Transaction Summaries for that oldest month immediately following the "As Of Date" month which must be the month immediately following the "As Of Date" month that was Closed ("finalized") in your Company's old General Ledger.

c)Repeat this process for each subsequent month, until the most recently closed month in the Accounts Receivable & Accounts Payable module is "last" month.

iv.Save each of these sets of reports separately.

❑With these sets of Transaction Summaries Reports in hand, create a master file (it will be a spreadsheet file) containing a list of your Company's General Ledger Accounts.

•To do so, follow the instructions in the General Ledger Accounts chapter to execute these steps:

1.Open the General Ledger Accounts Form

i.Use the List option on its Ribbon Menu to view the list of each General Ledger Account's Number, Title, and Group (i.e., GLNumber, GLTitle, GLGroupID).

ii.Use the Export option to create a copy of these General Ledger Accounts in a spreadsheet file format.

iii.Name this exported General Ledger Accounts spreadsheet file something like "GL Accounts" (or whatever name you'll remember and associate with this GL Start Up process).

2.Open the "GL Accounts" spreadsheet file in Excel® (or whatever spreadsheet application you may be using) and add two columns on the right, each formatted as Currency with 2 decimal places and using the "($1,234.10)" format for negative numbers, naming these two columns as follows:

i.Debit - This column will be used to enter any Debit Value for each Account whose net Balance results in a Debit Value.

ii.Credit - This column will be used to enter any Credit Value for each Account whose net Balance results in a Credit Value.

3.Re-Save this file using the same name to create your master file (think of it now as a master spreadsheet file template)

4.Using the master spreadsheet file template, create a copy (use the Excel>File>Save as option to save this master spreadsheet file template repeatedly - but giving each copy a specified new name).

▪Each copy will be named (and later used) to record Transaction Summaries Reports Account Balances of a specified month

▪Make as many appropriately named copies of this master file template (e.g., "GL Balances 2016-03", "GL Balances 2016-04", "GL Balances 2016-05", etc.), as needed.

5.Enter the Month End Account Balances for each General Ledger Account which actually has an Account Balance (it will be entered either as a net Debit or a net Credit Amount) for that month, in the appropriate month's spreadsheet file.

▪This step is tricky so carefully read and follow the instructions in the Creating the Transaction Summaries section of the Summarizing the Start-Up Transactions chapter which are outlined below:

a.Export your General Ledger Accounts to a spreadsheet file.

b.Create the necessary spreadsheet files that will be used to record the Transaction Summaries Reports Account Balances

c.Open the appropriate spreadsheet file copy and enter the Transaction Summaries Reports month-end Account Balances for a specific month into that spreadsheet file.

d.Re-Save that spreadsheet file for the Month and Year they represent.

e.Repeat to record the month-end Account Balances into each month's spreadsheet file.

•Stop Closing and Printing when you have closed all the completed months that can be closed (or the months you deem possible to complete at this time) in MKMS:

a.Assemble all of these Financial Transaction Summaries on a month by month basis (ideally you should have finished all of the monthly reports except the unclosed current month's reports).

b.When you are prepared and ready to run the Setup Wizard, at that time, you must Stop entering Financial Transactions anywhere within MKMS

III. Run the Setup Wizard (following the instructions in the General Ledger Setup Wizard chapter) during which you will enter the Company's old General Ledger Account Balances - which are the Account Balances that existed as of the Closed Month's "As Of Date" in your Company's old general ledger software program (or manual system).

➢Note: Central Station Monitoring operations are unaffected, and should continue as normal.

IV. Post the Summarized Transactions

❑After running the GL Setup Wizard, you will be able to make General Journal entries in the MKMS General Ledger System for the sets of Financial Transaction Summaries for the months after the old general ledger's Closed Month's "As Of Date"

•You will continue to do so until those Financial Transaction Summaries are recorded in the General Journal following the instructions the Post the Summarized Transactions chapter) for most recently Closed Month in the MKMS Accounts Receivable and Accounts Payable modules.

•Remember, the current month must remain open for now (you will Print that Set of Transaction Summaries Reports for this open month, only when instructed to do so later).

•The ultimate goal is to have the MKMS General Ledger's Account Balances up-to-date as of "Today".

❑What's Next?

•As outlined above

a)Complete Step I. Basic Preparation Steps by creating a Chart of Accounts, creating the specified Financial Statements, and Closed the specified months.

b)Complete Step II. Data Gathering and Report Printing Steps by confirming the Maintenance entries have been completed, Closed the most recently Closed Month in your existing (old) General Ledger, and printed the required Set(s) of Transaction Summary Reports.

c)Finished the preparation required in the Step IV. Post the Summarized Transactions by creating the necessary spreadsheet files that will be used to record the Transaction Summaries Reports Account Balances and entered the month-end Account Balances in the appropriate spreadsheet file.

•Once these steps have been completed:

a)Stop entering Financial Transactions in the MKMS Accounts Receivable & Accounts Payable modules at this time.

b)Complete Step III. Run the General Ledger Wizard (see the General Ledger Setup Wizard chapter for those instructions).