Determining Your Summary Account Needs
The first step in defining your summary accounts is to determine your summary account needs. Summary accounts provide you with significant benefits when you produce summary reports and perform allocations.
To determine your summary account needs:
1. Consider the summary information you need for reports. Although you can easily define financial statements that sum a number of accounts together for a given row, you can use summary accounts for faster access to summarized balances.
For example, many of the reports for upper management in your company may include summary level amounts. You may have summary income or revenue statements and balance sheets, a summary overhead expense analysis and many other summary level reports in your management reporting package.
2. Identify the summary balances you need for online inquiries.
For example, you may need "flash" inquiries on the total of all cash balances for your domestic organizations to make daily decisions about investments or foreign currency hedging. You may also want to review the amount of working capital (current assets less current liabilities) for each division or department on a weekly basis.
3. Consider how you want to use summary accounts in formulas and allocations. You can use summary accounts as factors when defining journal formulas and allocations.
- Use summary accounts to reference summary balances in a recurring journal formula. For example, to estimate a sales commission accrual based on the total of all product sales for each division, you can use a summary account that totals all product sales in each division.
- Use summary accounts to reference summary budget balances in a budget formula. For example, to base the budget for employee benefits in each company on the total of all budgeted employee salaries, use summary accounts that total all employee salaries in each company.
- Use summary accounts when entering budgets with budget rules. For example, you can base your budget for the current year's Salary account on a percentage of the prior year's total Overhead expense, a summary account.
- Use summary accounts to indicate the total amount you want to allocate when defining your allocation formulas. Also, use summary accounts to help you calculate the allocation ratios to use in your allocation formulas.
See Also
Planning the Summary Account Structure
Planning Parent Values and Rollup Groups
Creating Recurring Journal Entries
Creating Budget Formula Entries
Defining MassBudgets
