ByDesign Reporting Principles explained

[HarshalVakil]

Hello,

 

The purpose of this blog post is to explain the different reporting principles that are available in Business ByDesign and its impact in the accounting entries / Journal Entries.

 

In any implementation, when you start configuring the system, one of the most important activity that we need to complete is configuration of Set of books for the company (Help Document : Configuration: Set of Books) and during this set of books configuration, you are required to select the appropriate reporting principle.

 

Details of the about the different reporting principle is available in Help Document : Reporting Principles

Reporting Principles

 

As you can see in the image above, ByD Provides, 9 reporting principle.

I will try to explain the behaviour and impact of some of these reporting Principles. (Except Fund, Profit center and segment, clearing and Grant, Fund, Profit center and segment, clearing)

Function of Expense : 
If function of expense accounting is active (i.e the Income Statement by Function of Expense principle is activated if you answered the question Do you report your income statement by function of expense? with Yes) the functional area has to be filled in all P/L items. Therefore functional area derivation will be processed.

• PrCtr/Segment
If profit center (and segment) accounting is active (i.e  The Profit Center Accounting and Segment Reporting principle is activated if you answered the question You can create financial reports based on segments and profit centers with Yes.) the profit center will be derived in each item that refers to one of the objects

• Material (from Product category + Business residence)


• Cost Center (within Organization hierarchy)


• Fixed Asset (directly or via assigned cost center)


• Free Cost Object


• All other objects (via assigned Cost Center)

Segment always will be derived from profit center (within Organization hierarchy).

• … with Balancing
means that profit center and segment has to be filled not only in items referencing to objects above but in all items. This will be done by inheriting profit center / segment from items with reference to items without reference. If the relationship is N : 1 it can happen that the item without reference should be filled with more than one profit center / segment. In such a case item will be split and each of the resulting items will be filled with one profit center / segment. hence the name Balancing.

• … with Clearing
means that within each journal entry balance for each profit center / segment has to be zero. If necessary system creates new items to a specific G/L account (profit center clearing) within a journal entry to achieve zero balance.

 

Name	Functional Area Derivation	Profit Center / Segment
		Derivation	Inheriting / Splitting	Balance Zero Items
Profit center and segment	No	Yes	No	No
Funct of exp, profit ctr/seg	Yes	Yes	No	No
Profit center and segment, balancing	No	Yes	Yes	No
Funct of exp, profit ctr/seg, balancing	Yes	Yes	Yes	No
Profit center and segment, clearing	No	Yes	Yes	Yes
Funct of exp, profit ctr/seg, balancing	Yes	Yes	Yes	Yes
Function of Expense	Yes	No	No	No

 

Posting Example (Invoice Like Documents)

"Profit center and segment" or "Funct of exp, profit ctr/seg"
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	AR	$97.63		€100.00
2	GL 1		$29.29		€30.00	C123	P123	S1
3	GL 2		$68.34		€70.00	C456	P456	S1

We have 3 items and the profit center / segment are derived from cost centers on the overhead items. But the accounts payable item has no profit center.

 

"Profit center and segment, balancing" or "Funct of exp, profit ctr/seg, balancing" or "Profit center and segment, clearing" or "Funct of exp, profit ctr/seg, balancing"
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	AR	$29.29		€30.00			P123	S1
2	AR	$68.34		€70.00			P456	S1
3	GL 1		$29.29		€30.00	C123	P123	S1
4	GL 2		$68.34		€70.00	C456	P456	S1

We have 4 items and the profit center / segment are derived from cost centers on the overhead items. The accounts payable item has profit center / segment inherited from the overhead items. It’s split into two items because in overhead items two different profit center exist.

 

Function of Expense
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	AR	$97.63		€100.00
2	GL 1		$29.29		€30.00	C123
3	GL 2		$68.34		€70.00	C456

We have 3 items and profit center / segment are not derived on the overhead items. Also the accounts Receivables item has no profit center.

 

Posting Example ( Manual journal Entry) :

"Profit center and segment" or "Funct of exp, profit ctr/seg" or "Profit center and segment, balancing" or "Funct of exp, profit ctr/seg, balancing"
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	GL 1	$ 97.63		€ 100.00		C123	P123	S1
2	GL 1		$     97.63		€               100.00	C456	P456	S1

 

"Profit center and segment, clearing" or "Funct of exp, profit ctr/seg, balancing"
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	GL 1	$97.63		€100.00		C123	P123	S1
2	GL 1		$97.63		€100.00	C456	P456	S1
3	PC Clearing - Credit		$97.63		€100.00		P123	S1
4	PC Clearing - Debit	$97.63		€100.00			P456	S1

Profit center / segment are derived from cost centers on the items.

 

"Profit center and segment, clearing" or "Funct of exp, profit ctr/seg, Clearing"
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	GL 1	$97.63		€100.00		C123	P123	S1
2	GL 1		$97.63		€100.00	C456	P456	S1
3	PC Clearing - Credit		$97.63		€100.00		P123	S1
4	PC Clearing - Debit	$97.63		€100.00			P456	S1

Two more balance zero items are created. This is done to achieve Zero balance for each profit center / segment.

 

Function of Expense
		Company Currency		Transaction Currency
Line	General Ledger Account	Debit	Credit	Debit	Credit	Cost Center	Profit Center	Segment
1	GL 1		$29.29		€30.00	C123
2	GL 1		$     68.34		€70.00	C456

Profit center / segment are not derived on the items.

 

I hope this will explain the reporting Principle and its impact on the Journal entries.

Let me know your thoughts.

 

Regards,

Harshal