Account Balances Maintenance With and Without Optimization
Income statement type accounts are closed out to retained earnings at the beginning of each new fiscal year and they’re reset to zero. This applies to both standard and average balances. There are two possible options of maintaining income statement account balances after they've been reset to zero at the beginning of the new fiscal year.
Without Optimization
If you don’t opt in to this feature, income statement accounts will always have a zero-balance record created at the beginning of each new fiscal year and every accounting period thereafter. That record is maintained with each new accounting period that’s opened, until new activity is posted to that account in an accounting period in the new fiscal year, at which point a nonzero amount will be posted to the account's balance.
Such a zero-balance record doesn’t really serve a purpose and unnecessarily adds to the growth of the General Ledger balances tables and cubes. This can result in a drag on the application’s performance. There’s also a multiplier effect with the number of currency denominations for which there had been previous account activities, along with the growth with each new accounting period that’s opened.
With Optimization
If you opt in to the Optimized Maintenance for Account Balances feature, balances records for income statement type accounts are maintained more efficiently.
When you open a new fiscal year, a zero beginning balance record for the account isn’t automatically created. Instead, the maintenance of balances records for that account will only resume during the accounting period in which it has accounting activities posted to it in that new fiscal year.
This method is applied to every income statement type account, with every new fiscal year that’s opened after you enable the feature. This can result in avoiding the creation of a significant number of unnecessary zero-balance records.