GL Impact: Reading the Debits and Credits Behind Every Transaction
What actually happens in the ledger when a transaction is saved, the debit and credit rules underneath it, and a journal-impact table for the transactions used most.
Every transaction that touches the finances produces a journal behind the scenes. NetSuite shows it on the GL Impact subtab of the document — which accounts were debited, which credited, and for how much. It is the most useful diagnostic tool available, and the one technical people most often overlook.
When finance asks why a number looks the way it does, the answer is always there. Not on the form, not in a saved search — on GL Impact.
The debit and credit rules
Debit and credit do not mean increase and decrease. What they mean depends on the account type. Only one thing is always true: total debits equal total credits on every journal, without exception.
| Account type | Increases with | Decreases with | Examples |
|---|---|---|---|
| Asset | Debit | Credit | Cash, Receivables, Inventory |
| Liability | Credit | Debit | Payables, Tax Payable |
| Equity | Credit | Debit | Capital, Retained Earnings |
| Revenue | Credit | Debit | Sales, Service Income |
| Expense | Debit | Credit | COGS, Salaries, Rent |
One way to hold it: assets and expenses are where money flows into or out of the company, and both increase with a debit. The rest — liabilities, equity, revenue — are where that money came from, and increase with a credit.
GL Impact of the transactions used most
| Transaction | Debit | Credit |
|---|---|---|
| Item Receipt | Inventory | Accrued Purchases |
| Vendor Bill | Accrued Purchases / Expense | Accounts Payable |
| Bill Payment | Accounts Payable | Cash / Bank |
| Assembly Build | Finished Goods Inventory | Component Inventory |
| Item Fulfillment | Cost of Goods Sold | Inventory |
| Invoice | Accounts Receivable | Revenue (and Tax Payable) |
| Customer Payment | Undeposited Funds | Accounts Receivable |
| Deposit | Cash / Bank | Undeposited Funds |
| Credit Memo | Sales Returns / Revenue | Accounts Receivable |
| Inventory Adjustment | Inventory or Variance Expense | The opposite of the adjustment direction |
| Journal Entry | Set manually | Set manually |
Look closely at the Invoice: one document can produce more than two journal lines. Receivables are debited for the full billed amount, revenue is credited for the goods, and tax payable is credited for the tax. This is why total receivables will never equal total revenue.
Transactions with no GL Impact
- Sales Orders and Purchase Orders — a commitment, no value has moved.
- Estimates, Quotes and Opportunities — still at the quoting stage.
- Work Orders — a production plan.
- A Transfer Order at the ordering stage — value moves only when goods are actually shipped and received.