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CHAPTER 3: MURIEL’S MURALS
1. How is the posting date different from the session date?
The posting date is the actual date that the transaction occurred and this date should be recorded for the
transaction in the journal. The session date is the date that the transactions are entered into the computer
program, usually the calendar date in an ongoing business. The posting date may be earlier than the session
date, but cannot be earlier than the Earliest Transaction date – the date you started to record ongoing journal
transactions in Sage 50. Dates later than the session date may be entered if future dates are allowed in the
2. List some of the different ways to enter May 09, 2015, in a date field.
The following formats assume that the data file date format is month-day-year – as in all our data files. For
other date formats, the order for month, day and year will change accordingly.
• May 9
• may 9
• may 9 15
• 5 9
• 05 09
• 5 9 15 or 5 09 2015
• 05 9 15 or 05 09 2015
• 5/9/15 or 5/09/2015
• 05/9/15 or 05/09/2015
You can use different separator characters to replace the / above. In some date fields you may need to
include the year. For example, if the fiscal period is longer than one year, the date might be incorrectly
interpreted as May 9, 2014 or May 9, 2016. In this case, you can still enter the year as two digits.
3. How does Sage 50 help provide a complete audit trail?
Sage 50 does not allow entries to be deleted. It requires that you correct journal entries after posting by
making complete reversing entries; it provides a complete record of all transactions for an audit trail. You
Solution Manual 2013: Answers to Review Questions and Cases 8
must provide all details (source, date, debit and credit accounts and amounts) before you can post an entry.
The Journal report includes all the transactions entered, including these reversing entries when you show the
corrections, with full details of the transaction date, the source of the entry and a descriptive comment. Thus
it is possible to trace the work completed.
For the journals that include the Adjust An Entry option, the program automatically creates this reversing
entry, posts it and adds it to the journal report. These same journals also have the option to reverse
transactions in a single step. Again, Sage 50 does not remove the entries; it adds a reversing entry instead.
Displaying these corrections is an option in journal reports so that the complete record is always available.
4. What are some of the advantages of entering transactions in Sage 50 over using a manual accounting approach?
Are there any disadvantages?
The main advantages are the built-in controls and the ease of generating reports. Because the software will
not allow posting of entries until all information is added to the journal and debits and credits are equal, the
chance of making a mistake is reduced compared with the manual entries where omissions might not be
noticed. Reports are available instantly for any time period without extra data entry. Ledgers are updated
automatically and do not require separate entries.
The Adjust An Entry feature in Sage 50 can also save time and prevent errors by allowing a previously
recorded entry to be recalled, corrected and resaved. The program automatically creates the intermediate
reversing entry and minimizes the chance of making an additional error. Similarly, the program can create a
reversing entry automatically when no further corrections are needed. Again, the opportunity for error is
The principal disadvantage is probably the need to enter complete setup data for the company. However, the
initial data required is minimal (most data can be added later when it is needed) and the time saved for
preparing Trial Balances, Balance Sheets and Income Statements is more than made up by the setup time.
Some people feel that the inability to “erase” mistakes is a disadvantage. It is, however, an important control
technique that allows the software to be used in real business settings, so this feature has its own advantages.
Instead of erasing incorrect entries, Sage 50 can reverse them automatically in most journals.
5. Describe a method of creating new General Ledger accounts.
You can create new accounts from any Account field in a journal by double-clicking while in the field to
access the Select Account screen. Click Add New Account and click Create to start the Account Wizard. You
can also type in a new unique account number. When you press Tab or Enter, Sage 50 recognizes that the
number is new and asks if you want to create or add it. If you choose Yes, the Add Account Wizard will
6. What are the limits on entering new session dates? On entering transaction dates?
You can advance the session date up to the first date of the next fiscal period. After starting a new fiscal
period, you can enter later session dates for the new fiscal period up to the end of the new fiscal period.
Transaction dates must fall between the Earliest Transaction date and the session date. You cannot go
beyond a current session date until you advance the session date (unless you have allowed future-dated
transactions). You can also move the session date to an earlier date, up to the Earliest Transaction date – the
date you started to record ongoing journal transactions in Sage 50. Entering a date for the Company – System
screen option Do Not Allow Transactions Dated Before can also place restrictions on the dates you can enter
and prevent the user from entering incorrect earlier dates.
7. What date appears as the default in journals? In reports?
The default date in journals and reports is usually the session date. If you have a journal open after posting a
transaction, the default date is the posting date used for the previous entry. Income Statements, and other
Solution Manual 2013: Answers to Review Questions and Cases 9
reports that cover a period of time, have the Fiscal Start and the session date as the default start and finish
dates respectively. The session date is the default for reports that are prepared for a single date.
8. How is a General Journal entry in Sage 50 different from a manual accounting journal entry?
In Sage 50, source information is required before you can post the entry and debit and credit entries must be
equal. The account balances are automatically posted to the ledger records for the accounts used, so the
General Ledger is continually updated. The manual system has no built-in controls for the accuracy of the
bookkeeper. It is possible to record an incomplete entry and the ledger records must be updated separately,
creating another opportunity to transcribe the amounts incorrectly. Neither system has the ability to detect
an incorrectly chosen account, although the software includes the complete account names so you can more
easily check your work.
9. Describe the different ways that you can add the account number to the account field in the General Journal.
You can type the account number directly into the Account field in the journal. You can also find the number
in the Select Account list. To access the account selection list, click the list icon in the Account field, press
Enter when the cursor is in the Account field or double-click the Account field. If you type a number in the
account field before opening the selection list, the list will advance to the first account beginning with that
number. In the selection list, click the account you need and press Enter or click the Select button to add the
account to the account field in the journal.
10. Describe the procedure for correcting a journal entry after posting.
Click the Adjust An Entry tool button or choose Adjust An Entry from the Entry menu in the journal. Browse
to locate the journal entry you want to correct and double-click it to open it, or click to select it and then click
the Select button. Make the corrections and post the changed transaction. Sage 50 posts two entries — the
reversing entry and the correct transaction entry. If an entry should be removed, it can be reversed (see
11. Describe the procedure for correcting a journal entry before posting.
Return to the field that has the error. Clicking the field is the easiest way to return to it. Select the text you
want to change by clicking or dragging through it and type the correct information. To change an account,
click the Account field and press Enter to open the Select Account list. Double-click the account you need or
click it to select and click the Select button to add the account to the journal.
12. What does it mean if a button or menu option is dimmed?
The option you are selecting is not available. The option may be turned off, not available because of multiuser restrictions, or the command may not apply for the present situation – such as trying to use the copy
command when no text has been selected.
13. How do you advance the session date in Sage 50?
Close all open windows. You cannot change the session date while other Sage 50 windows are open. You can
use the Home window Close All Windows tool or close each window separately. Then choose Change
Session Date from the Maintenance menu, enter a new date and click OK. You can also click the date
calendar icon beside the current session date on the right-hand side of the Home window in the Enhanced
view to open the calendar. Click the new session date on the calendar and then click OK to enter the date and
return to your Home window and entering transactions.
14. Why would you choose to advance the session date by one week at a time instead of one month at a time if you are
entering transactions for one complete month?
Advancing the session date in smaller increments helps to avoid entering an incorrect transaction date for an
Solution Manual 2013: Answers to Review Questions and Cases 10
15. When would you restore a data file from the backup copy? How would you do this?
You would restore a backup if the original file had been corrupted or damaged so that you could not open it,
or if the original file has recent accounting errors that cannot be reversed or corrected. If you have entered
other transactions or data after this backup was made, you will need to re-enter that data.
To restore the backup, choose Restore from the File menu in the Home window or from the Company
module Data Management icon drop-down list, or choose Restore From Backup in the Select Company
window when you start Sage 50. Follow the instructions in the Backup wizard screens to select the backup
file and to name the restored file. If the name is the same as the one you used before, you must confirm that
you want to replace the existing file.
16. What does customizing a report mean? Why might you customize a report? How would you do this?
Whenever you change the default settings you are customizing a report. You can change the default columns
that are displayed and you can sort or filter the information according to selected criteria.
You might want to customize a report because you want to show information in a different way that is more
appropriate to your business. You might also choose to omit information that does not apply to the business
or perhaps to the particular group you are preparing the report for.
To begin the customizing, display the report and click the Modify Report tool to open the Report Options
window. From the Report Centre, select the report you want, click Modify This Report and click OK to open
the Report Options window. Then click Report Options, Report Columns, Filter Report or Sort Report to
begin entering the changes you want.
17. What is the difference between sorting and filtering a report?
Sorting changes the order of information in a report based on the criteria you choose, such as showing latest
to earliest date order instead of earliest to latest or sorting by amount or source document. All the data will
be included. Filtering selects or includes only part of the data based on the criteria you choose, such as
showing only journal entries with source codes that include a key word.
18. Describe the purpose of the Display tool in the Home window tool bar.
The Display tool in the Classic view accesses lists and journal reports (or the related report options window)
directly when a ledger or journal icon is selected. When no icon is selected, the tool will access a drop-down
list of these same reports. The tool button bypasses the Reports menu.
19. How do you reverse a General Journal entry? Why would you do this?
To reverse an entry, click the Adjust A Previously Posted Entry tool or choose the Entry menu and click
Adjusting Entry to open the Search window. Enter the search parameters to help you locate the entry you
need. Click OK to list the transactions that meet the search criteria. Click the transaction you want and click
Select to display the transaction in the journal window. At this stage, you can make corrections or reverse the
transaction. To reverse it, click the Reverse Entry tool or choose the Entry menu and click Reverse Entry.
Click Yes to confirm.
You might choose to reverse an entry if you had entered it twice by mistake. You might also reverse an entry
that had a large number of errors. Reversing it first and re-entering it from scratch might be simpler than
making a large number of changes.
20. What is the difference between backing up a file for the first time and making additional backups?
The first time you make a backup, the default name is a new backup1.CAB file in a new Backup folder inside
your working data file folder. The comment for the backup includes the number 1. You will be asked if you
want to create the new file and folder.
Solution Manual 2013: Answers to Review Questions and Cases 11
The next time you back up the same file, the default location and name will the ones you used before
(BACKUP folder and backup1.CAB if you used the defaults). The comment number will be updated to 2. If
you are using the same file name as before, you will be asked if you want to replace the existing backup file.
The number in the comment will be updated with each backup even when you change the file name.
21. What is a session date? How does it affect journal entries? Why is it important?
The session date is the date you are entering transactions, usually the current calendar date in an ongoing
business. When you open a journal window, this will be the default date for posting a transaction unless you
enter a different date. If future-dated transactions are not allowed, the session date is the latest date you can
use for a journal transaction. In this way it offers an important control that minimizes the chances of entering
an incorrect date. Since the posting dates are used to generate reports, entering accurate journal dates will
help to create accurate reports. For sales and purchases, dates also affect the availability of discounts and
interest charges on overdue accounts.
22. If you enter a date as 02-03-12, what date will you see in the Sage 50 journal date field?
The date you see in Sage 50 depends on the short and long date formats you have selected.
If you display short dates in journal entries (and reports), you will see 02-03-12 in the date field, but the date
represented will change according to your format selection – month, day or year may come first. Thus the
date may February 3, 2012, if your order is mm-dd-yy, March 2, 2012, if your order is dd-mm-yy, or even
December 3, 2002 if your order is yy-dd-mm.
If you display long dates in journal entries (and reports) the display will vary as follows:
• If your date format is MMM-dd-yyyy, you will see Feb 03, 2012.
• If your date format is MMM-dd-yy, you will see Feb 03-12.
• If your date format is dd-MMM-yy, you will see March 02-12.
• If your date format is dd-MMM-yyyy, you will see March 02, 2012.
23. How is accessing reports from the Report Centre different from accessing them from the Reports menu?
The Reports menu always opens the Report Options window before displaying a report. The Report Centre
shows a sample of the report and a description as soon as you select the type of report. Then you can click
Display to open the report immediately with the default settings or click Modify This Report to open the
Report Options window.
24. What are drill-down reports? How do you access them? What information do they provide?
Drill-down reports are additional reports that you see from an open report window. They usually provide
(drill down to) more detail about some part of the report. For example, you may access the ledger record for
an account, the detail for a summary listing, a journal report entry or the original journal entry.
When you move the mouse pointer over any part of the report display, a magnifying glass icon appears if
there is a drill-down report available. The status bar names the drilled down report you can see. Doubleclicking this detail in the report will open the secondary or drilled-down report.
25. List the report or reports that provide the same details as the General Graphs (Expenses And Net Profit As A % Of
Revenue, Expenses By Account and Revenues By Account). If there is no report that gives the same information,
can you create one by customizing an existing report?
The Revenues By Account graph shows the breakdown of total revenue according to the different sources.
You can get these details from the Income Statement by dividing the amount for each source of revenue by
the total revenue to get the proportions. The amounts for unselected revenues are added together to
determine their proportion of the total.
Solution Manual 2013: Answers to Review Questions and Cases 12
The Expenses By Account graph shows each selected expense as a proportion of total expense. Again, the
Income Statement provides the information to produce this graph. Divide the amount for each expense by
the total of all expenses to arrive at the proportions. The unselected expenses are added together to
determine their proportion of the total as the other expenses category.
The Expenses And Net Profit As A % of Revenue is another form of the Income Statement. Selected expenses
and the net profit are each calculated as a proportion of total revenue and unselected expenses are added
together to form the category for other expenses.
At the end of April 2015, after paying several bills, Missoni completed the following manual journal entries to
record the transactions (cheque numbers are in brackets):
Date Ref. Accounts Debit Credit
Apr. 30 rent (#434) Expenses 800.00
Apr. 30 hydro (#435) Expenses 100.00
Apr. 30 telephone (#436) Expenses 90.00
Apr. 30 printer cable (#437) Supplies 20.00
Apr.30 rewrit. CDs (#437) Supplies 40.00
Manually show the detailed journal entries that record these transactions as they would appear in a Sage 50
journal report. (You may want to print a General Journal Report for reference to see the details that Sage 50
How is the Sage 50 method of entering journal transactions different from the manual accounting procedures?
What are the advantages of using Sage 50?
Account numbers and proper account names must be added. The last two purchases should be combined
because they use a single cheque number and the same asset account. The Sage 50 entries are:
Apr.30-15 CHQ 434, pay office rent
5120 Rental Expenses 800.00
2670 GST Paid on Purchases 40.00
1080 Cash in Bank 840.00
Apr.30-15 CHQ 435, pay hydro account
5060 Hydro Expense 100.00
2670 GST Paid on Purchases 5.00
1080 Cash in Bank 105.00
Apr.30-15 CHQ 436, pay telephone account
5140 Telephone Expenses 90.00
Solution Manual 2013: Answers to Review Questions and Cases 13
2670 GST Paid on Purchases 4.50
1080 Cash in Bank 94.50
Apr.30-15 CHQ #437, printer cable & DVDs
1340 Supplies: Computer 60.00 (new Account required)
2670 GST Paid on Purchases 3.00
1080 Cash in Bank 63.00
Sage 50 requires that all accounts (and headings, totals and subtotals) have numbers. You may use from 4 to
8 numbers in the Premium version. The sequence of these numbers must follow the pattern of 1000s = Assets,
2000s = Liabilities, etc., for 4-digit account numbers so that the program will know how to prepare the
financial reports (e.g., whether a debit entry will increase or decrease the account balance). New accounts
must be inserted in the correct sequence, and the numbering requirement means that sometimes they cannot
just be squeezed between two other accounts. An entry with unequal debits and credits cannot be posted, so
the program provides a check on the accuracy of the arithmetic and typing entries. It automatically calculates
and enters as a default the debit or credit amount that will balance the entry as you complete a transaction so
you do not need to type the final amount. This can save some data entry time and allow you to verify your
own amounts. You do not need to write the account name in full. Entering the number (or choosing it from
the list) is sufficient. The program fills in the account name so it is easy to check your entry. This saves time
when you enter the transaction, but still provides complete information in the journal report. The journal
report provides an audit trail very simply when you show corrections, and the software can also generate
other major financial reports.
Complete the following purchase in the General Journal.
Purchase Invoice #DE-67113 Dated May 7, 2015
From Devon Equipment Co., $300 for power tools, plus $15 GST. Invoice total $315. Terms: net 30 days.
After posting the above transaction, you realize that the equipment was rented instead of purchased, so it should be
charged to the equipment rental expense account.
Make the corrections necessary to reflect this expense accurately.
Why is it important to make the correction? What if another expense account were used as the original incorrect
account so that the income would not change on the income statement? Would it still be necessary to make the
The original entry can be adjusted using the Adjust General Journal Entry feature. Find the original entry
and edit the account number. The following three journal entries will appear in the journal report:
07-31-15 J33 DE-67113, Power tools
1550 Tools & Equipment 300.00
2670 GST Paid on Purchases 15.00
2210 A/P – Devon Equipment 315.00
07-31-15 J34 ADJDE-67113, Reversing J33. Correction is J35.
2210 A/P – Devon Equipment 315.00
1550 Tools & Equipment 300.00
2670 GST Paid on Purchases 15.00
07-31-15 J35 (Correct)DE-67113, Power tools
5120 Rental Expense 300.00
Solution Manual 2013: Answers to Review Questions and Cases 14
2670 GST Paid on Purchases 15.00
2210 A/P – Devon Equipment 315.00
The correction is important because assets do not appear on the income statement and costs would be
understated. If another expense account had been used in error, the change should still be made. It is important to record expenses correctly because the historical expense information is used to make decisions
about future purchases. For example, if a business rents the same equipment frequently, it may decide to
purchase the equipment instead of renting. Accurate information about expenses is also needed for future
cost reduction decisions. The journal report with corrections will show all the entries, providing a complete