How Accounting Works

Accounting records the financial treatment of an event. A source record says what happened; a journal's debit and credit lines say how it affects the books.

Recognize an expense before paying it

Recognition records the cost and the amount owed in the period to which they belong. Settlement records the later reduction of that obligation when cash is paid. The two entries explain different stages of one expense, so paying it does not create a second cost. The applicable accounting policy and configured rules determine the entries.

Consider a hypothetical USD1,000 invoice for December administration services, paid in January. The expense record and invoice support the December cost. Accounting may recognize a debit to administration expense and a credit to an amount payable. The bank account has not changed yet.

When the January payment arrives in bank data, its cash split links to the expense. The settlement accounting can reduce the payable and cash. Recognizing another USD1,000 expense for the same payment would count the cost twice.

A posting rule maps an eligible source event to GL accounts and required relationships. Accounting-only adjustments use their own journal route when an appropriate operational source does not exist.

Inspect the journal separately

Open Accounting Operations. Use Posting to investigate eligible sources or rule gaps, Journal Entries to inspect entries and their status, and Journal Explorer to follow source relationships and journal lines.

Check entity, period, currency, amount, debit and credit accounts and relevant class or subscription. A Draft journal is available for review; a Posted journal has entered the posted books. A balanced Draft does not establish Posted accounting.

The fictional core Cedarbridge expense journal #1 is Draft. Its separate USD100,000 subscription receipt has linked cash and contribution records but no journal found by the explorer. These are two different incomplete accounting states.

Read Accounting Setup before first processing and Posting & Adjustments for posting and corrections.

Build the period result

Review the GL first, then gross NAV before fees. Next review applicable fees and their accounting effects, followed by period allocations to investor capital accounts. That order lets you investigate the amount being allocated rather than treating any saved allocation as the final result.

Use Valuations & NAV, Fees and Investor Capital Accounts for those parts of the period.

Review and close

Compare ledger, cash, operational records and investor capital on the same entity, period, currency and gross/net basis. Investigate errors, retain support for accepted differences and complete the separate authorized close process.

A record lock prevents supported edits to a reviewed row, such as an expense or journal. Locking that row does not reconcile all related records or change the accounting period's status to Closed. Continue to Accounting Review & Close for period review and close.