GL Allocation & Cash Book

GL Allocation

is a process of providing relief to shared service organization's cost centers that provide a product or service. In turn, the associated expense is assigned to internal clients' cost centers that consume the products and services. 

The basis components of a gl allocation system consist of a way to track which companies provides a product and/or service, the companies that consume the products and/or services, and a list of portfolio offerings. Depending on the operating system within a company, the GL allocation data may generate an internal invoice . Accessing the data via an invoice  module are the typical methods that drive personnel behavior. In return, the consumption data becomes a great source of quantitative information to make better business decisions. Today’s organizations face growing pressure to control costs and enable responsible financial management of resources. In this environment, an organization is expected to provide services cost-effectively and deliver business value while operating under tight budgetary pressure.

An effective GL allocation technique enables an organization to identify what services are being provided and what they cost, to allocate costs to business units, and to manage cost recovery. Under this model, both the service provider and its respective consumers become aware of their service requirements and usage and how they directly influence the costs incurred. This information, in turn, improves control within the business units and financial control across the entire organization. With the organization express the costs of services provided, the business units become entitled and encouraged to make abreast decisions about the services and availability levels they request. They can make deal offs between service levels and costs, and they can standard internal costs against outsourced providers.

To confirm if a particular department is running in profit or loss there should be proper allocation of aerial expenses or incomes across all the departments in a firm.

iContro ERP G5 has made this allocation very simple with “Auto Allocation” process.

 

Cash Book 

A financial journal that contains all cash receipts and payments, including bank deposits and withdrawals.

Entries in the cash book are then posted into the general ledger. The cash book is periodically reconciled with the bank statements as an internal method of auditing.

The book in which all cash transactions (either cash is received or paid) are primarily recorded according to dates ;

Features:

A Cash Book has the following features:

  •  All cash transactions are primarily recorded in it as soon as they take place;On the other hand, the cash aspect of all cash transactions is finally recorded in the Cash Book (no posting in Ledger); so a Cash Book is also a Ledger (a book of final entry).
  • It has two identical sides-left hand side, the debit side and right hand side, the credit side.
  • All the items of cash receipts are recorded on the left hand side and all items of cash payments on the right hand side in order of date.
  • The difference between the total of two sides shows cash in hand.
  • Its balance is verified by counting actual cash in the cash box.
  • It always shows debit balance. It can never show credit balance.

Advantages:

Generally cash transactions are numerous. What is credit transaction today, will be cash transactions tomorrow. In other words, all credit transactions are finally settled by cash. If like all other transactions cash transactions are also recorded primarily in Journal, the cash aspect of the transactions will be required to be posted to Cash A/C, in the Ledger separately. 

  • Daily cash receipts and cash payments are easily determined
  • Cash in hand at any time can easily be confirmed cash book balance.
  • Any mistake in the book can be easily detected at the time of verification of cash.
  • Any default of money can detecting while verifying cash.
  • Since cash is verified daily, Cash Book is always kept up-to-date.