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 )

Step 1: Enter Manual Journal in General Ledger

Step 2: System Automatically Generates Balancing Lines

 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

Step 2: System Automatically Generates Balancing Lines