Journal Entry Guidance

Contact:  University Accountant

Types of Financial Transactions

Actuals transactions record revenues, expenses, assets or liabilities of the university. For example, paying a vendor for supplies, receiving tuition payments from students, or accruing a liability for unbilled goods or services that have been received. Frequently, these transactions are recorded to the General Ledger from subsidiary systems that accumulate the original entries (e.g. Payroll, Accounts Payable, BYU Store, Pcard, Physical Plant)

 

Encumbrance or Open Commitments transactions reflect purchases that have been ordered but not invoiced from the vendor, generally resulting from the issuance of a Purchase Order. Encumbrances are removed as vendors are paid.

 

Budget transactions record the planned expenditures or planned revenues for a specific time period. Budget transactions are used primarily to show the amounts and categories authorized to be spent. Budget transactions also report available funds from prior periods that may be spent in the current accounting year (e.g. flexiable budget, balance forward, encumbrance carryover)

 

All transactions reported in the General Ledger accounting system originate from:

  • Campus subsidiary systems (e.g Payroll, BYU Store, Cashnet, UCA Receivables, Accounts Payable)
  • Campus or central accounting spreadsheet journal entries
  • Automatic allocation journal entries calculated from balances in the ledger at month-end
  • Budget adjustments

All campus activities are accounted for within Operating Units (cost centers). Operating Units segregate activities into their appropriate fund category. See the " Fund " section of this web page for a discussion of Fund codes.

 

Processing Guidelines for Journal Entries, Budget Adjustments, Deficits

Spreadsheet Journal Entries may be used to correct transaction coding errors originating from procurement transactions (e.g. Accounts Payable, Purchasing Card, BYU Store, Signature Card, Physical Facilities, OIT, Print & Mail Services), or other journal entries.

  • Subsidiary System coding errors (e.g. Payroll) may require correction by those subsystems rather than through a spreadsheet journal entry - especially if the entry is recurring.
  • Payroll system error corrections that change tax withholding or W-2 wages, or the account code a person was hired under must be processed through the HR/Payroll system. Simple reclassifications from one Operating Unit to another, while retaining the same account number, may be processed via a campus spreadsheet journal entry.  For more information regarding payroll error corrections, see "Salary and Wage Corrections/Transfers"

 

Budget Adjustments rather than an expense adjustment can be used within Fund 11, if expenses are properly coded and a deficit will result AND the deficit is to be resolved from another Fund 11 Operating Unit.  Budget Adjustments are either Temporary or Permanent.

  • Permanent Budget adjustments are made where the situation is expected to be recurring from year to year.
  • Temporary Budget Adjustments are made where the situation is expected to last only the current year.

 

Budget Allocations fund certain educational related and auxiliary activities (Funds 13 and 15) that have been specifically approved by the Church and the Budget Office to come from budgeted funds--Fund 11 (e.g. cover use of buildings or salaries for activities that would otherwise have been included in the annual Fund 11 budget.)

The majority of this support is considered "sale of services" from an educational related or auxiliary unit to the general university.  Allocations of this type are recorded by debiting an expense account in a central Fund 11 Operating Unit and crediting Account 4402 (Sales of Services -- Campus Appropriation) in a Fund 13/15 Operating Unit. All other support is considered an appropriation allocation and Account 4010 (University Allocation) is debited and credited in both the Fund 11 and Fund 13/15 Operating Units.  No campus entities should use Accounts 4010 and 4402 unless previously approved to do so by the Budget Office.

 

Deficits or Losses generally must be resolved by obtaining funding from other sources with the following exceptions:

  • Fund 11 deficits can occur for an Operating Unit in total, or for any one of 4 expense pools (below). Fund 11 deficits in total or by expense pool will result in an over expenditure reduction in the following budget year, thus limiting the available resources for that year.  The total budget in the pool is compared to the total expenditures in the pool.  If the pool has a positive balance available, then no over-expenditure reduction is given in that pool.  If the balance available in the pool is negative, the deficit amount is taken out of the budget for next year. 
    • Equipment 1625 and 6250
    • Access Equipment 6600 - 6620
    • Software 6000 - 6004
    • All Other Accounts - Salaries, Supplies, Student Aid, Travel, and 0020/30/35
  • Funds 12, 13, 15 may incur losses up to their available net assets.
  • Deficits in other funds mean available resources have been exhausted.

 

If funding is to be obtained from another operating unit to resolve deficits or losses, care must be taken to assure the purpose restriction for that source is consistent with the expenses incurred in the deficit Operating Unit. This is particularly important because it may be necessary to demonstrate to donors, management or the administration that expenditures can properly be associated with the funding provided to the deficit Operating Unit.

 

To enhance management of expenses incurred, where initial transactions have been coded properly, it is generally best to move support to the expense rather than moving expenses to available support. This may be done by moving dollar amounts equal to specific expenses or round dollar amounts that are supported by at least that level of actual expense in the deficit Operating Unit. Movement of support should not occur unless there are deficits.

 

Entries to move funding support to resolve deficits should identify the offsetting Operating Unit in the reference field of the journal entry. For example:

Operating Unit Account Debit Credit Reference
11123456 6109   (600.00) 23654321
23654321 6109 600.00   11123456

To transfer support to resolve Dept X deficit

 

When moving support from a Fund 11 Operating Unit to another Operating Unit, the dollars moved from the Fund 11 expense category (e.g. supplies or travel) must not be more than the actual expenses in the receiving Operating Unit and again, the purposes of both Operating Units must be consistent.

There are three options to move support to cover deficits:

  • Use the xxx9 accounts to keep individual regular accounts pure in both the providing and receiving Operating Units. In this approach use the xxx9 accounts to record an expense debit in the Operating Unit that will provide the support and a credit to a corresponding xxx9 account in the deficit Operating Unit. Revenue accounts (4xxx) should never be used for providing this funding. This option retains the original entries in the regular expense accounts (the non-xxx9 accounts). This approach is preferred where a Fund 11 Operating Unit is "selling" their services or supplies to another Operating Unit. Desired exceptions should be discussed with Financial Services.
  • Use the same account numbers for debit/credit amounts on both sides of the transaction. This allows greater granularity of account presentation where it is deemed necessary (e.g. the balances in individual wages, supplies and travel accounts will be displayed net of the support transactions)
  • Funds transfer accounts 9250/9260 keep the expense categories pure in both the providing and receiving Operating Units. Funds transfers using 9250/9260 may never be used with Rxxxxxxx or Cxxxxxxx-Operating Units or Operating Units in Funds 11, 21, 51 (for 9250/9260 transfers involving these Operating Units, contact Financial Services). Funds may not be transferred out of a Fund 20 Operating Unit without the approval of the Budget Office. Funds can be transferred into a Fund 20 from Funds 13, 19, 23, and 31 using the 9250/9260 account codes. For more information regarding the use of Fund 20 Operating Units see Fund 20 Rules.

Projects: Sponsored Research Operating Units (Rxxxxxxx) and Construction Operating Units (Cxxxxxxx) must account for specific expenditures. Adjustments related to deficit Research projects to offset excess expenditures will only be made by the Research Accounting Office. Construction projects and Sponsored Research projects may not receive 9250/9260 funds transfers.

Use of 4xxx Revenue Accounts: sales of products or services from campus businesses in Funds 12, 13, 15 should use accounts 4xxx. Other funds should not use accounts 4xxx, when providing support to other funds. When products or services are sold, campus businesses should properly assign sales to either Sales-Campus Units or Sales-Non-Campus Units or Sales-Taxable.

  • Sales-Campus Units means that products or services are sold from one BYU department to another BYU department
  • Sales-Off Campus Units means that products or services are sold to students, faculty, or other non-BYU customers
  • Sales-Taxable means that products or services are taxable when sold from one BYU department to students, or other non-BYU department customers

Agency Operating Units (47xxxxxx) are not owned by the University. Thus no budget adjustments, funds transfers or journal entries should be processed on their behalf.

  • The ONLY transactions that should occur for Agency Operating Units are cash receipts at the Cashier's Office and Agency check payments by the Operating Unit managers. Campus departments and subsystems should not process entries to Agency club accounts. Other situations requiring entries should be discussed with your University Accountant.
  • There should be no purchasing orders, purchasing card transactions, direct billings, (etc.) issued on behalf of an Agency Operating Unit

 

Options When Operating Unit is Overspent
Fund Adjust Budget Move support among Operating Units with consistent purposes to same expense category (same account or xxx9) To maintain expense history, use 9250/9260 funds transfer via journal entry (May not include Fund 11)
11 Budgeted and General Fund Yes Yes Not allowed
12 General Fund Auxiliary N/A Allowed but reduces management info Yes, preferred
13 Education Related N/A Allowed but reduces management info Yes, preferred
15 Auxiliary and Services Enterprises N/A Allowed but reduces management info Yes, preferred
19 Designated N/A Yes, preferred Allowed
20 Faculty Consolidation Yes Yes Yes, from funds 13, 19, 23, and 31 only
21 Allocated General Endowment Yes, requires transfer of funding by Budget Office Yes By Fin Services
23 Donor Restricted, Satisfied N/A Yes, preferred Allowed
31 Endowment Income N/A Yes, preferred Allowed
35 Quasi Endowment N/A No By Fin Services
39 Plant Fund N/A No Yes, required
R- Research Projects N/A By Fin Services No
C-Construction/WIP Projects N/A No No
47 Deposits Held for Others - Agency operating units ONLY receive checks or pay by check, no other campus entry methods should be used, including CPOs N/A No Not allowed
51 Donor Restricted N/A Yes By Fin Services
55 Quasi Endowment N/A No By Fin Services
17,32,37,43,53,55,72,73,76,77,89 Funds Used By Financial Services Only N/A No By Fin Services

Last Modified: April 27, 2015