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USE OF MULTIPLE BALANCING SEGMENTS IN FUSION GENERAL LEDGER

 

AS WE KNOW EBS  R12 HAVE ONE BALANCING SEGMENT ASSIGNED TO COMPANY SEGMENT. ORACLE FUSION GENERAL LEDGER OFFERS USE OF 3 BALANCING SEGMENTS AND THESE ARE-

 

  • Primary Balancing Segment
  • Second Balancing Segment
  • Third Balancing Segment

 

Primary Balancing segment is required whereas second and third balancing segments are optional and can be assigned to division or to cost center segment. With the help of these balancing segments, Fusion GL offers tracking of Financial transactions and results at a finer level of granularity compared to single balancing segment in EBS R12.

 

A balancing segment is a segment in chart of account structure. Whenever we define structure , we must choose one of the segment as balancing segment. Primary Balancing Segment is a Segment qualifier attached to company segment and helps to generate Balancing entries in receivables and Payables. By doing this , system ensures that journal entries are balanced that is- debits equal credits for each value of the balancing segment and journal entries are always balanced by company (since Company segment is chosen as balancing segment)

 

In Oracle Fusion General Ledger, we can use 3 segments as balancing segments. First one is called Primary Balancing segment and is a required segment (this normally represent Company or Legal entities). Values in this segment is assigned to legal entity when we configure accounting in General Ledger.

 

The other two balancing segments (second and third) are optional and can represent other parts of the enterprise structure, like divisions or cost center or line of business (LoB). Balancing segments helps to monitor company's retained earning or to track assets, Liabilities and Equity ie net balance sheet.

 

Advantange of using balancing segments are;

·         Balancing segment ensures that all journals balance for each balancing segment value.

 

·         General ledger automatically calculates and create balancing lines as required in journal entries.

 

·         By using Multiple Balancing Segments (MBS), it is possible to generate Financial Statements for each unique combinations of Segments.

 

·         This offers greater insight into visibility of operations to monitor and measure financial performance of a company. Multiple balancing segments ensures that account balance comes from journal entries where Debits equal Credits and financial reports are properly generated for each account combination across all the balancing segments. This helps users and company to get more granular reporting however this requires more resource and steps to achieve granularity.

 

 

Example:

Chart of Accounts contains Total 5 segments with 3 balancing segments: ( Company, Cost Center and Line of Business )

Segment

Company

(Balancing Segment)

Cost Center

(Balancing Segment)

Line of Business

(Balancing Segment)

Account

I/C

 

 

Values

 

00 (Clearing Company or any value not tied to a LE)

 

 

01

000

1001

1817 (I/C Receivables)

01

02

101

2001

2817 (I/C Payables)

02

03

202

3001

4817 (I/C Revenue)

03

04

302

4001

6817 (I/C Expense)

04

 

 

 

 

6110 (Office Supplies Expense)

 

 

 

 

 

2110 (Accounts Payable)

 

 

 

 

 

 

1899 Intracompany A/R

 

 

 

 

 

2899 Intracompany A/P

 

 

Scenario A: Company 01 receives a $1000 invoice for supplies that are used by both Company 01 and Company 04 across 2 different Cost Centers and Lines of Business for each company. Company 01 enters a journal entry for $1000 where they owe 60% against Cost Center 101 and Line of Business 1001. Company 04 owes 40% against Cost Center 202 and Line of Business 3001.

 

 

 

 

Step 1: Enter Manual Journal in General Ledger

Account Combination

Debit

Credit

Co

CC

LOB

Acct

I/C

 

 

01

101

1001

6110 (Office Supplies)

01

600

 

04

202

3001

6110 (Office Supplies)

01

400

 

01

101

1001

2110  (Accounts Payable)

 

 

1000

 

Step 2: System Automatically Generates Balancing Lines

Account Combination

Debit

Credit

Co

CC

LOB

Acct

I/C

 

 

01

101

1001

6110 (Office Supplies)

01

600

 

04

202

3001

6110 (Office Supplies)

01

400

 

01

101

1001

2110  (Accounts Payable)

 

 

1000

01

101

1001

1817  (I/C Receivables)

04

400

 

04

202

3001

2817 (I/C Payables)

01

 

400

Grand Totals

1400

1400

 

 Scenario B (Most Complex): Company 01 receives a $1000 invoice for supplies that are used by both Company 01 and Company 04. However, the following allocation of costs applies across the following Cost Centers and Lines of Business:

  • Co 01- CC 101- LOB 1001 = 20%
  • Co 01- CC 202- LOB 2001 = 30%
  • Co 04- CC 202- LOB 3001 = 40%
  • Co 04- CC 202- LOB 4001 = 10%

Step 1: Company 01 Enters Manual Journal in General Ledger

Account Combination

Debit

Credit

Co

CC

LOB

Acct

I/C

 

 

01

101

1001

6110 (Office Supplies)

01

200

 

01

202

2001

6110 (Office Supplies)

01

300

 

04

202

3001

6110 (Office Supplies)

01

400

 

04

302

4001

6110 (Office Supplies)

01

100

 

01

101

1001

2110  (Accounts Payable)

 

 

1000

 


Step 2: System Automatically Generates Balancing Lines

Account Combination

Debit

Credit

Co

CC

LOB

Acct

I/C

 

 

01

101

1001

6110 (Office Supplies)

01

200

 

01

202

2001

6110 (Office Supplies)

01

300

 

04

202

3001

6110 (Office Supplies)

01

400

 

04

302

4001

6110 (Office Supplies)

01

100

 

01

101

1001

2110  (Accounts Payable)

 

 

1000

01

101

1001

1817  (I/C Receivables)

04

500

 

04

202

3001

2817 (I/C Payables)

 01

500

01

101

1001

1899 (Intracompany A/R)

00

300



01

202

2001

2899 (Intracompany A/P)

00

 

300

04

202

3001

1899 (Intracompany A/R)

00

100

04

302

4001

2899 (Intracompany A/P)

00

                       100

Grand Totals

1900

1900

 


 

 

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