Key Aspects of Average Balance Processing

To use average balance processing, you must enable it for a specific ledger.

With this feature, you can enable average balance processing only for those ledgers that require it. This ensures you incur no additional overhead unless you need average balance processing.

Here are some other key aspects of average balance processing.

Balances Capture

The application calculates the necessary aggregate balance information needed to calculate average balance amounts as of any day in the year.

Effective-Date Transaction Processing

A transaction's effective date determines which end-of-day and aggregate balances are updated. These balances, in turn, determine the calculated values of your average balances.

Transaction Calendar Control

Certain organizations that need average balance processing, such as financial institutions, are required to post transactions only on business days. Posting on weekends or holidays isn't allowed, although some organizations do post period-end accruals on nonbusiness days. You can control transaction posting with a transaction calendar. When you define a transaction calendar, you choose which days of the week are business days and you also specify the holidays.

Each ledger that's enabled for average balance processing is assigned a transaction calendar. When transactions are posted, the application checks the effective dates against the transaction calendar. If the dates are valid, the transaction is posted. For invalid dates, you can tell the application how you want the transaction handled.

Here are some other points on transaction calendar control.

Multiple ledgers can share a transaction calendar.
You can combine multiple ledgers in a ledger set to take advantage of processing efficiencies, such as opening and closing periods across multiple ledgers. All ledgers in a ledger set must share the same chart of accounts and accounting calendar, but can use different transaction calendars.
You can allow certain users to post transactions on nonbusiness days.
Controls are applied to imported journals, as well as manual journals.

Transaction Balancing by Effective Date Control

Usually, the application requires that total transactions balance for an entire period. When you enable average balance processing, the application checks total transactions for each effective date to ensure that debits and credits balance. When they don't, the transactions are rejected, or, if you have enabled suspense posting, the application creates a balancing entry to the suspense account.

Manual journals are balanced directly, since the effective date is entered at the journal level, not for individual journal lines. Imported journals are sorted and must be in balance by effective date within each source.

Backdated Transactions

A backdated transaction isn't limited to the current period. It can be in a prior period, or even in a period from a prior year, as long as the effective date is posted in an open period. Here's what happens when you post a backdated transaction:

The change to average balances is calculated using the effective date, rather than the current accounting date.
The application adjusts the ending and aggregate balances as of the effective date and all subsequent dates.
And the application adjusts both standard and average balances based on the same effective date.

Reporting

You can use the Inquire and Analyze Average Balances page, Smart View, and Financial Reports to review online information about the average or end-of-day balance of any balance sheet account for your ledgers or ledger sets. You can view summary or detail balances.

You can also run these predefined reports:

Average Balances Trial Balance Report: Displays standard and average balances for selected ledgers and accounts, as well as period, quarter, and year average-to-date balances for any accounting date you specify.
Average Balance Audit Account Analysis Report: Displays the detail account activity used to create the aggregate and related average balances.

Multicurrency Accounting

The application maintains average and end-of-day balances for all transaction currencies, in addition to the ledger currency. Converted amounts and revalued balances, as well as unrealized gains or losses, are factored into average balance calculations.