Journal entries are the first step in accounting and a cornerstone of understanding business health because they help answer questions about how the organization is doing from a fiscal perspective. Journal entries are also important because they are used to build other financial statements, such as the cash flow, income statement, and balance sheet. The accuracy of this information is critical because it helps provide insight into how much to spend, how much to save, and even whether new hires should be made.

What are Journal Entries in NetSuite

Journal entries are accounting records of transactions. Journal entries are created according to the double-entry accounting method, where each one is required to have a debit entry and a credit entry.  A debit is an entry made on the left side of the ledger for a payment made or owed, or a transfer to the account. A credit is made on the right side and represents a transfer from the account. The format of journal entries in NetSuite is similar to other ERP systems, recording the debit and credit sides of a transaction with the goal of ensuring that the sides are always equal. There are multiple types of journal entries and a journal entry can have multiple transactions, which can quickly increase complexity.

Types of Journal Entries

There are several important types of journal entries in accounting:

• Simple Entries: Journal entries concerning only two accounts. One that represents credits and one that represents debits.
• Compound Entries: Journal entries that concern at least one credit account and two debits or vice versa. The total of the journal entries must be equal but the number of credits and debits does not have to be equal. Compound entries usually occur on the same day and are similar categories.
• Transfer Entries: The purpose of transfer entries is to move an amount to another account, typically reserved for when a certain amount or transaction was recorded under the wrong account.
• Opening Entries: Recorded at the beginning of the accounting period to record the capital brought forward from a previous accounting period. This is necessary at the beginning of the year to reflect the true state of the business going into the new year.
• Closing Entries: Made at the end of the accounting period to move data from a temporary account to a permanent account. These are used primarily for nominal or income statement accounts.
• Adjustment Entries: Accrual accounting records transactions at the occurrence rather than when cash is received so adjusting entries are needed to update balances. There are three types of entries: accrual, deferral, and depreciation.
• Reversing Entries: Used to reverse adjusting entries made at the end of a previous accounting period to reduce issues, such as counting income and expenses twice. It is an optional step but makes it easier to record future transactions.
• Rectifying Entries: Used to make corrections to the books or general ledger accounts.

Another journal entry type specific to NetSuite is:

• Advanced Intercompany Entries: Used in a NetSuite One World environment when adjustments to the balances of general ledger accounts between a parent company and its subsidiaries are needed and transactions like invoices or vendor bills are not being used.

Benefits of Creating NetSuite Journal Entries in Excel

There are multiple benefits to creating journal entries in Excel. Users often complete their tasks faster in Excel than in the ERP system because the environment and keyboard shortcuts are more familiar to them. In addition, Excel is very powerful when it comes to mass data entry and updating. Using macros, users can simplify the journal entry process.  Excel can also make it easier to load multiple journal entries simultaneously. Sharing spreadsheets amongst users is also much easier in Excel. Multiple business users can update the same spreadsheet and reduce the risk of errors when sending individual spreadsheets back and forth.  

There are also some disadvantages to using Excel. Even with advancements in sharing capabilities, if using individual, static spreadsheets, the risk of errors can be high. Most users are familiar with Excel, but if they are not, the learning curve can be quite high. The ideal solution is a scenario where users can work in Excel with a dynamic connection to the data in the NetSuite ERP to greatly reduce issues with static data and sharing.

Creating Multiple Journal Entries in Excel

Excel allows for the creation of multiple journal entries simultaneously. They can be created as a new entry based on an existing Journal Entry from NetSuite, copied and pasted based on data from another system, or manually keyed in using picklists to validate values from NetSuite. When working with NetSuite, journal entries of up to 1,000 lines are allowed when they are created in the UI, and up to 10,000 lines when created from Excel. To create multiple transactions with multiple lines (line-level detail) ensure that all header-level fields are identical. 

CloudExtend Excel for NetSuite provides a dynamic connection between Excel and NetSuite. It allows users to work within Excel’s interface while maintaining confidence that their data is accurate and up-to-date. Learn more about creating, recreating, and editing journal entries in Excel here.