Difference between a Bank Transaction and Bank Transfer

Written By: Rhonda Hawley

from February 1, 2012

The following information shows the difference between a Bank Transaction and a Bank Transfer within Microsoft Dynamics GP through a real-life example. WFB CHG and WFB SVGS are 2 checkbooks set up with the application.

1.Janice noticed that her Checkbook (which is a totally separate module from the General Ledger) did not tie in total to what the General Ledger had for balances.

2.She knew that her General Ledger was correct.

3.Upon further investigation, we found that there were a couple of Bank Transactions (In the Checkbook Module) that should have been performed as Bank Transfers instead of Bank Transactions.

4.The Bank Transfers feature allows the user to do just as it says… transfer funds in the Checkbook module back and forth between various checkbooks. When this is done, both checkbooks balances are properly affected in the Checkbook module, and the General Ledger is also properly affected.

5.When the Bank Transaction feature is used to transfer funds between checking accounts (which it should not be, it should be done as a Bank Transfer), only one of the Checkbooks will be properly updated in the Checkbook Module. The reason for this is that the Bank Transaction window in the module only calls out one Checkbook name. However, the General Ledger transaction that coincides with a Bank Transaction is correct… it properly debits and credits the correct GL Accounts (which is totally separate from the Checkbook Module).

When a Bank Transfer is properly performed both of the Checkbooks involved are called out specifically. You will also notice that the GL Accounts tied to both of those Checkbook Ids are also listed. When this transaction is posted, both the WFB CHG checkbook and the WFB SVGS checkbook will have their register balances updated properly. Then, the transaction will flow to the General Ledger, properly DR and CR the GL accounts listed in the entry window.

To correct the situation in #5 so that the WFB SVGS CHECKBOOK reflects the $100 in-flow, a BANK DEPOSIT transaction within the Checkbook module is required. Doing a Bank Deposit allows the Checkbook balance to be affected, but NOT THE GENERAL LEDGER—in this case we did not want to affect the GL balance because that was posted correctly. It was only the Checkbook balance of the Checkbook we were attempting to transfer to that had not been properly handled. After the Deposit is posted, all of the Checkbook Balances will tie to the General Ledger Account Balances.

The important thing to keep in mind with all of this is that the CHECKBOOK IS NOT THE SAME AS THE GENERAL LEDGER ACCOUNT. Yes, they work in cooperation with each other when the transactions are performed correctly, but they operate independently in order to retain the “checks and balances” between the two modules (those 2 modules being the Checkbook Module and the General Ledger Module).