Planning the Summary Account Structure
After determining your summary account needs, plan your summary account structure according to how you want to summarize your accounting information.
To determine your summary account structure:
1. Choose ways to summarize your accounting information depending on the structure of your account and your informational needs. Generally, organizations structure their accounts such that each segment represents a particular dimension, or a way of looking at their organization.
Here are some common dimensions and examples of ways you can summarize information within each dimension:
Company: A segment that indicates legal entities. You might summarize companies by major industry, such as Electronics Companies; by regions within a country, such as Eastern Companies; or by country group, such as European Companies.
Cost Center: A segment that indicates functional areas of your business, such as Accounting, Facilities, Shipping, and so on. You might keep track of functional areas at a detailed level, but produce summary reports that group cost centers such as Accounting, Planning & Analysis and Facilities, into one division called Administration.
Account: A segment that indicates your "natural" account, such as Cash, Accounts Payable, or Salary Expense. You will likely summarize your accounts by account type, namely your Assets, Liabilities, Equity, Revenues and Expenses. You might also summarize at a more detailed level, with summary accounts like Current Assets or Long-Term Liabilities.
Product: A segment that indicates products. You might want to summarize products into product groups such as personal computer components, storage devices, and so on.
District: A segment that indicates geographical locations, such as Northern California, Central Florida or Western New York. If you define segments that record data within smaller geographical areas, such as districts, you can easily summarize districts into states, or even into groups of states you can call regions.
2. For any organizational dimension you want to summarize, determine how many summarization levels you want within that dimension.
For example, you can summarize your natural accounts into Assets and Liabilities, or you can summarize at a more detailed level, such as Current Assets, Non-Current Assets, and so on. You can also summarize products into product groups and into larger groups called product categories. Likewise, you can summarize districts into states and then into regions.
You can also summarize at different levels within an organizational dimension. For example, you may decide to group your East Coast offices together, your West Coast offices into another group, and your Midwest offices into a third group. Each of these summary groups can then be included in separate rollup groups namely Eastern States, Western States and Midwestern States. Then, you may decide to combine these three groups into a higher level group, United States offices, and define a rollup group named Total Country Offices. If you have a single Canadian Office, you may decide to designate it as a group in itself and assign it to the rollup group Total Country Offices as well. In this example, your United States offices group is at the same summary level as your Canadian office group, but you have one summary level below the United States level, while you have no summary levels below your Canadian office.
3. To clarify your plans, sketch your summarization levels on paper. The following illustration represents the summarization of districts into states and regions:
Indicate the segment value and description of each of the parents in your sketch. Also write the rollup group name or number and a description of the summary level next to each of your summarization levels. You do not need to include every parent value in a rollup group. You may define some parent values for reporting or formula definition purposes only.
For example, you may decide to group all of your cost centers under the parent value "All Cost Centers." However, if you do not plan to report on your cost centers at a summary level, there is no need to assign these parent values to a rollup group.
You can define multiple summary levels by assigning children that are parents themselves (grandparenting). For example, you can assign cost centers or departments 110, 120 and 130 as the children for cost center or department 100 - Western Region. General Ledger automatically maintains rollup relationships from the summary level to the lowest detail level so that when you transfer a child value from one parent to another, all the values assigned to the child are transferred as well. However, you can only drill down balances from the summary level to the lowest detail level, not to intermediate levels.
4. After considering how you want to summarize within each of your organizational dimensions, think about how you want to combine your summary views across different organizational dimensions. For example, if you summarize departments into divisions and districts into regions, you may wish to reference and report on divisions by region.
You can also combine a particular summary level for one organizational dimension with a different summary level for another organizational dimension. For example, you may wish to reference and report on departments by region.
To decide upon the combinations of summary views across your organizational dimensions, you can lay your summarization level sketches side by side so that you can consider your summarization levels conceptually. The following chart shows how you might roll up your account segments into several levels:
5. Consider whether you want to create these summary relationships with summary accounts, or with reporting hierarchies. You can achieve the benefits of summary reporting with reporting hierarchies instead of summary accounts. A significant benefit of using reporting hierarchies instead of summary accounts is easier reorganizations.
Use reporting hierarchies instead of summary accounts when:
- You want to easily reorganize your summary views in the future.
- Your primary use for summarization is reporting. You cannot reference reporting hierarchies in formulas, allocations or online.
Use summary accounts instead of reporting hierarchies when:
- Your summary relationships are more permanent.
- You want to use summary accounts in formulas and allocations, as well as reporting.
- You want online inquiry of these summary amounts.
- You want faster financial reporting of these summary amounts.
6. To define parents for each of your account segments, organize your account structure so you can use ranges to easily define the children for your parent values.
For example, if you know that all of your administration cost centers are between 100 and 199, you can define the Administration parent as the range of cost center values between 100 and 199.
See Also
Planning Parent Values and Rollup Groups
Defining Summary Accounts
Entering Summary Account Templates