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Overview of the General Ledger

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At the most basic level, the best way to think of Theatre Manager is as a replacement Accounts Receivable Sub-Ledger to your existing accounting system.

Sales and payments within Theatre Manager create daily G/L entries for your financial system, using the account numbers in your financial system.

There is a Powerpoint presentation on The Perfect Audit that contains most of the principles of Accounting in TM, especially the Golden Rule and the principle of Source Document Capture. We are happy to explain this for those that wish -and if followed - will give you a great audit.
The accounting module in Theatre Manager is designed to be used in conjunction with the organization's existing financial accounting system. Information generated from the Theatre Manager General Ledger provides:
  • Deposit and Sales Entries into your financial accounting system, including future liabilities for deferred revenues like gift certificates, events or donations.
  • A list of Accounts Receivables by patron.
  • Tax liability information.
  • Event / Play revenue breakdown reports, including order fees and exchange fees.

Sales are controlled and accounted for in the General Ledger module and display numerous variations of revenue breakdown. Implementing the General Ledger requires setting up a simplified chart of accounts, creating general journal entries, and posting the entries to the General Ledger. The General Ledger module provides information based on transactions which have been recorded. This differs from the ticket based reports as they show revenue at the moment of time that the report was created. The General Ledger provides detail and summary information.

The design of the General Ledger Chart of Accounts controls how information is maintained in the General Ledger. The number and type of accounts maintained determines the detail that is available from the General Ledger. This enables the ability to have all the detail information remain in Theatre Manager, while your financial package retains the summary information.

Data is entered into the General Ledger through General Journal Entries which record detail information on sales, exchanges and refund transactions for specific time periods. Summarizing the transactions is known as journalizing and the transaction detail created for each Deposit and Sales Entry records a chronological record of events / plays for the time period. The summarizing links together the debits and credits of each transaction and provides a complete record of each transaction.

There are five types of General Ledger entries:

  1. Deposit entries summarize payments by method of payment; Cash, Check, Visa, Mastercard, American Express and Other.
  2. Sales entries summarize revenue for new sales, exchanges and refunds. The sales entry can then be broken down and displayed in virtually any format that is required.
  3. Automatic entries that indicate when to transfer deferred revenue to earned revenue
  4. Manual General Ledger Entries record periodic transactions such as the payment of tax liabilities, adjustments, and year end closings.
  5. G/L entries for inter company transfers when using outlet version of Theatre Manager. This will show ticket sales and commissions due/payable when the ticket sale occurs for your outlet at another outlet - perfect for reconciliation of activity between companies.

After the transactions are recorded in the General Journal, the debit and credit information about each transaction is posted to the General Ledger. Posting the General Journal Entries updates the General Ledger Accounts to reflect all transactions which have been journalized. The General Ledger account balances provide summary information on all General Ledger Entries that have been posted.

Accrual Basis Accounting

Accrual Based Accounting reflects the understanding that the economic effect of a revenue generally occurs when the event occurs (eg tickets bought), not when cash is received. This approach supports deferred accounting, management of receivables, post dated payments and other features. In the US, the IRS requires accrual accounting for 'C' organizations under most circumstances and GAAP/FASB requires it. Canada Revenue Agency rules are similar.

Theatre Manager is designed exclusively around Accrual Accounting principles.

Cash Basis Accounting

Under the cash basis, revenues are reported when cash is received. If the order is entered in December, but the cash from the patron is not received until January, the revenue is reported in January because revenues are recorded when cash is received. Most 503C organizations should follow GAAP and use Accrual accounting per IRS and Canadian requirements.

This manual is not a source of basic accounting knowledge. For detailed explanations of general ledgers, chart of accounts, debits, credits, journalizing, and posting, consult an accounting manual. Follow the accepted accounting practices when selecting the debit or credit setting for accounts and the chart of accounts created in Theatre Manager's General Ledger should reflect your business practices.