7/30/2011

How to Enter Analytical Accounting Negative beginning balances

In Analytical Accounting, the dimensions and corresponding codes are always linked to the General ledger accounts. Analytical transaction are triggered only when a GL distribution is being made in any of the modules of GP which is supported by AA. Hence, We cannot post to AA without actually posting to GL Accounts. What if we have a situation to enter AA negative balances? We know that AA does not support entering negative balances. In this post we will see in which scenarios we will encounter the possibility of entering negative balances and how we can achieve this functionality through a workaround while respecting the business logic of AA.

Scenario

A client is migrating their balances to GP and as part of the migration, the account framework is changed to a new structure. As part of the new structure, they would like to maintain their employee loan balances in AA linked to 1 main GL Account for Employee Loans & Advances. In their old system on the contrary, each of the employee Loans and Advances are assigned to 1 GL account each so they do not have worries on negative balances as they just manage it by debiting and crediting the account to corresponding accounts. At the time of transfer, they realize they have their balances to be transferred to each of employees are as follows

EMP BALANCE
TOM -$1000.00
JERRY $10000.00

Situation

The beginning GL balance entry has only one GL account for Employee Loans & Advances with a net balance of $9000.00 so we cannot simply punch the above employees balances into the AA distribution.

Solution

1. Post the beginning balance entry with AA distributions as follows

EMP BALANCE
JERRY $9000.00
2. We are now left with $1000.00 for Jerry and –$1000.00 for Tom to be distributed in AA.
3. After the beginning GL balance entry (TB/BS) is posted, Create another GL entry with the following accounts and AA distributions as well.
ACCOUNT DR/CR BALANCE AA CODE
EMP LOANS & ADV DR $1000.00 JERRY
EMP LOANS & ADV CR $1000.00 TOM
4. That’s it. The net impact of the above entry is that your GL balance will see an additional debit and credit of $1000.00 with net change $0.00 but AA balances will be updated with the corresponding balances.
 
5. Remember that we encounter this situation mostly in beginning balances and will not have it occurring in normal day to day business as debits and credits in GL will take care of the same. 
 
If anyone has a better solution, Please do suggest here.