System-Generated Journals
Journal entries automatically created by NetSuite features.
Types of System-Generated Journals
| Type | Feature | Purpose |
|---|---|---|
| Revenue Recognition | Advanced Revenue Management | Defer and recognize revenue |
| Amortization | Amortization Schedules | Expense prepaid items over time |
| Period End | Period Close | Close income statement |
| Elimination | Consolidation | Eliminate intercompany |
| System COGS | Costing Engine | Adjust COGS after recalculation |
| FX Revaluation | Multi-Currency | Revalue foreign balances |
Revenue Recognition Journal
Automatically generated when using Revenue Recognition feature.
How It Works
REVENUE RECOGNITION OVER TIME
═══════════════════════════════════════════════════════════════════════════════
Scenario: $12,000 annual software license sold January 1
Initial Invoice Entry (January 1):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ Accounts Receivable │ $12,000.00 │ │
│ Deferred Revenue │ │ $12,000.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $12,000.00 │ $12,000.00 │
└────────────────────────────────────┴────────────┴────────────┘
Monthly Rev Rec Journal (Jan-Dec, $1,000/month):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ Deferred Revenue │ $1,000.00 │ │
│ Software License Revenue │ │ $1,000.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,000.00 │ $1,000.00 │
└────────────────────────────────────┴────────────┴────────────┘
Effect:
- Revenue recognized evenly over 12 months
- Deferred Revenue reduces to $0 by December
- Matches revenue to service period (ASC 606)
Revenue Recognition Methods
| Method | Description | Use Case |
|---|---|---|
| Straight-line | Equal amounts over term | Subscriptions |
| Percentage | Based on completion % | Projects |
| Milestone | Recognize at milestones | Deliverables |
| Point in time | All at once | Product sales |
Amortization Journal
Automatically generated for prepaid expenses and fixed assets.
Common Amortization Scenarios
| Asset Type | Amortization Basis | Example |
|---|---|---|
| Prepaid Expenses | Straight-line over period | Insurance, rent |
| Fixed Assets | Depreciation schedule | Equipment, vehicles |
| Intangibles | Useful life | Patents, software |
| Leasehold Improvements | Lease term | Office buildout |
GL Example: Prepaid Amortization
PREPAID INSURANCE AMORTIZATION
═══════════════════════════════════════════════════════════════════════════════
Setup: $12,000 prepaid insurance, 12-month term
Monthly Amortization Entry (Auto-generated):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ Insurance Expense │ $1,000.00 │ │
│ Prepaid Insurance │ │ $1,000.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,000.00 │ $1,000.00 │
└────────────────────────────────────┴────────────┴────────────┘
Schedule Progress:
Month 1: Prepaid $11,000 | Expense $1,000
Month 6: Prepaid $6,000 | Expense $6,000
Month 12: Prepaid $0 | Expense $12,000
GL Example: Fixed Asset Depreciation
FIXED ASSET DEPRECIATION
═══════════════════════════════════════════════════════════════════════════════
Asset: Equipment $60,000, 5-year life, straight-line
Monthly Depreciation Entry (Auto-generated):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ Depreciation Expense │ $1,000.00 │ │
│ Accumulated Depreciation │ │ $1,000.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,000.00 │ $1,000.00 │
└────────────────────────────────────┴────────────┴────────────┘
Calculation: $60,000 / 60 months = $1,000/month
Period End Journal
System-generated entries for closing periods.
Types of Period End Journals
| Type | Purpose | When Created |
|---|---|---|
| Income Statement Close | Close revenue/expense to Retained Earnings | Year-end close |
| FX Revaluation | Revalue foreign currency balances | Period close |
| Consolidation | Eliminate intercompany for consolidated view | Period close |
| Intercompany Elimination | Remove IC transactions | Period close |
Income Statement Closing Entry
PERIOD END - CLOSE INCOME STATEMENT
═══════════════════════════════════════════════════════════════════════════════
December 31, 2024 - Closing Entry (System Generated):
Assuming:
- Total Revenue: $500,000
- Total Expenses: $350,000
- Net Income: $150,000
Closing Entry:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 4000 Sales Revenue │ $500,000 │ │
│ 5000 Cost of Goods Sold │ │ $200,000 │
│ 6000 Operating Expenses │ │ $150,000 │
│ 3000 Retained Earnings │ │ $150,000 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $500,000 │ $500,000 │
└────────────────────────────────────┴────────────┴────────────┘
Effect:
- All income statement accounts reset to zero
- Net income transferred to Retained Earnings
- Balance sheet updated with new equity
FX Revaluation Journal
Revalues foreign currency balances at period end.
GL Example
FX REVALUATION - AR BALANCE
═══════════════════════════════════════════════════════════════════════════════
Scenario: EUR 10,000 receivable
- Original rate: 1 EUR = 1.10 USD ($11,000)
- Period-end rate: 1 EUR = 1.15 USD ($11,500)
Revaluation Entry:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ Accounts Receivable │ $500.00 │ │
│ Unrealized FX Gain │ │ $500.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $500.00 │ $500.00 │
└────────────────────────────────────┴────────────┴────────────┘
Effect: AR now reflects current exchange rate
System COGS Adjustment
Created by costing engine after cost recalculation.
When Created
- Item receipt cost changes
- Vendor bill rate differs from receipt
- Backdated transactions entered
- Cost recalculation runs
GL Example
SYSTEM COGS ADJUSTMENT
═══════════════════════════════════════════════════════════════════════════════
Original COGS: $500 (50 units @ $10)
Recalculated COGS: $600 (50 units @ $12)
System COGS Adjustment Entry:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ Cost of Goods Sold │ $100.00 │ │
│ Inventory Asset │ │ $100.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $100.00 │ $100.00 │
└────────────────────────────────────┴────────────┴────────────┘
Note: This entry is read-only and linked to original transaction
Viewing System-Generated Journals
How to Find
- Transaction Search: Filter by type = Journal Entry, Created By = System
- GL Reports: Look for entries with memo "System generated"
- Related Records: View from source transaction (revenue element, asset, etc.)
Characteristics
| Feature | Description |
|---|---|
| Created By | Shows "System" or process name |
| Editable | Usually read-only |
| Deletable | Usually cannot delete |
| Linked | References source transaction |
Next Steps
- Recurring & Reversing - Memorized and reversing entries
- Cost Engine - How COGS adjustments work