Guide to journals

Creating a journal file transfers your payroll costs to your accounts package. Every Payroll works using the double entry accounting system, as do most accounting systems.

Accounts terms

Accounts is all about balancing figures:

• Debits

• Credits

A key point to remember is that the total of all the debits should always equal the total of all the credits.

Debit and credit are formal bookkeeping and accounting terms. They are the most fundamental concepts in accounting, representing the two sides of each individual transaction recorded in any accounting system.

A debit transaction indicates an asset or an expense transaction, a credit indicates a transaction that will cause a liability or a gain.

A debit transaction can also be used to reduce a credit balance or increase a debit balance. A credit transaction can be used to decrease a debit balance or increase a credit balance.

Example credits	Example debits
Net pay	NI Employer
Employer national insurance A system of contributions paid by workers and employers in the UK, which funds various state benefits, such as the State Pension and Jobseeker's Allowance.	Payments
Employee national insurance	Statutory payments
Deductions	Holiday pay
Tax	Basic pay The standard amount paid to an employee which excludes additional payments like bonuses, overtime, and allowances.
Student loan A government loan that students can use to help pay for their education.	Statutory payment recovery
	Tax refunds

Debits and credits are not always what you may think.

If you need further guidance please contact your accountant.

What are nominal codes

Nominal codes Nominal codes are the codes that are used in the chart of accounts to record income and expenditure. are a way figures are identified in an accounts package. All companies will have their own codes. They can contain any characters & be any length.

The same nominal A nominal account is a general ledger account that you close at the end of each accounting year. code can be entered against several items. A company may not want to see everything broken down in the accounts. They might want similar items grouped into one figure. An example of this would be salary & hourly pay.

Nominal codes usually come from your set up on the accounts package, meaning you should know what figures need posting or transferring to which code.

A journal file can have information grouped or split into a huge number of ways, it all depends on the detail needed.