How MultiCurrency Journals Are Balanced
A journal must balance before it can be posted. If a journal is out of balance when submitted for posting, the posting process can automatically create balancing lines, or add differences to existing lines, depending on your setup.
Settings That Affect Balancing for Multicurrency Journals
On the Specify Ledger Options page:
-
You can set these options In the Journal Processing Balancing section:
-
Enable Suspense for General Ledger or Subledger
-
Default Suspense Account
-
Rounding Account
-
Entered Currency Balancing Account
-
Balancing Threshold Percent
-
Balancing Threshold Amount
-
-
You can set the Enable intercompany accounting option in the Journal Processing Intercompany section and define balancing rules on the Manage Intercompany Balancing Rules page.
On the Manage Suspense Accounts page, you can define suspense accounts for specific journal sources and categories.
How Multicurrency Journals Are Balanced
The posting process checks entered amounts, accounted amounts, balancing segment values, and currencies, in determining whether a journal balances. When a journal doesn't balance, the posting process uses your setup to process the differences and automatically balances the journal. When the differences can't be handled automatically, the posting process fails.
The following figure shows the flow that the posting process follows to balance journals that have multiple currencies.
- Are accounted amounts in balance, or are accounted amount differences within threshold? If yes, the process continues to step 2. If no, and suspense is enabled, suspense balancing lines are created and the balancing process is complete. If no, and suspense isn't enabled, posting fails.
- For each balancing segment value, are accounted amounts in balance, or are accounted amount differences within threshold? If yes, the process continues to step 3. If no, and intercompany is enabled, intercompany balancing lines are created and the process continues to step 3. If no, and intercompany isn't enabled, posting fails.
- Does each balancing segment value balance by entered currency? If yes, the process continues to step 4. If no, and the Entered Currency Balancing account is defined, entered currency balancing lines are created and the process continues to step 4. If no, and the Entered Currency Balancing account isn't defined, posting fails.
- Are there any remaining accounted amount differences? If yes, the process continues to step 5. If no, the balancing process is complete.
- Is the Rounding account defined? If yes, rounding balancing lines are created and the balancing process is complete. If no, the difference is added to the largest line and the balancing process is complete.
The following examples compare unposted journals with the decision points in the flow to illustrate how the journals are balanced. The first segment in the account combination is the balancing segment, the ledger currency is USD, and the applicable options are set as follows:
-
Enable Suspense: Yes for General Ledger.
-
Default Suspense Account: 101.10.29900.000.000.
-
Rounding Account: 101.10.78550.000.000.
-
Entered Currency Balancing Account: 101.10.22270.000.000.
-
Balancing Threshold Percent: 1.
-
Balancing Threshold Amount: None.
-
Enable Intercompany Accounting: Enabled and intercompany rules defined.
Example 1: Accounted Amount Differences
The following table shows the lines, accounts, currencies, and debits and credits, for an unposted multicurrency journal with accounted amount differences.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
||
|
2 |
101.10.11200.000.000 |
ANG |
9,500.00 |
9,500.00 |
||
|
Total |
Not applicable |
Not applicable |
10,000.00 |
9,500.00 |
15,297.54 |
9,500.00 |
To understand how the journal is balanced, follow the flow:
-
Accounted amounts balanced or accounted amount differences within threshold? No. The difference between the total accounted debits and total accounted credits is 5,797.54, which isn't within the specified threshold of 1 percent.
Note: The threshold is calculated by multiplying the Balancing Threshold Percent setting by the total accounted debits or credits, whichever is greater. In this example, the threshold is 152.98, which is 1 percent of 15,297.54. -
Suspense enabled? Yes. Suspense is enabled for General Ledger and the suspense account is 101.10.29900.000.000. To balance the journal for each currency, the posting process creates suspense lines 3 and 4.
The following table shows the lines, accounts, currencies, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
Description |
|---|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
None |
||
|
2 |
101.10.11200.000.000 |
ANG |
9,500.00 |
9,500.00 |
None |
||
|
3 |
101.10.29900.000.000 |
ANG |
9,500.00 |
9,500.00 |
Suspense line. |
||
|
4 |
101.10.29900.000.000 |
GBP |
10,000.00 |
15,297.54 |
Suspense line. |
||
|
Total |
Not applicable |
Not applicable |
19,500.00 |
19,500.00 |
24,797.54 |
24,797.54 |
None |
Example 2: Entered Amounts Out of Balance by Entered Currency
The following table shows the lines, accounts, currencies, and debits and credits, for an unposted multicurrency journal that doesn't balance by entered currency.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
||
|
2 |
101.10.11200.000.000 |
ANG |
9,500.00 |
15,297.54 |
||
|
Total |
Not applicable |
Not applicable |
10,000.00 |
9,500.00 |
15,297.54 |
15,297.54 |
Follow the posting flow:
-
Accounted amounts balanced or accounted amount differences within threshold? Yes. Total accounted debits equal total accounted credits.
-
Accounted amounts balanced by balancing segment value or accounted amount differences within threshold? Yes. The balancing segment value for both lines is 101 and total accounted debits equal total accounted credits.
-
Entered amounts balanced by currency and balancing segment value? No. The journal doesn't balance by entered currency. The GBP currency has only debits and the ANG currency has only credits.
-
Entered Currency Balancing account defined? Yes. The Entered Currency Balancing account is 101.10.22270.000.000. To balance the journal, the posting process creates entered currency balancing lines 3 and 4 for each currency.
The following table shows the lines, accounts, currencies, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
Description |
|---|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
None |
||
|
2 |
101.10.11200.000.000 |
ANG |
9,500.00 |
15,297.54 |
None |
||
|
3 |
101.10.22270.000.000 |
ANG |
9,500.00 |
15,297.54 |
Entered currency balancing line. |
||
|
4 |
101.10.22270.000.000 |
GBP |
10,000.00 |
15,297.54 |
Entered currency balancing line. |
||
|
Total |
Not applicable |
Not applicable |
19,500.00 |
19,500.00 |
30,595.08 |
30,595.08 |
None |
Example 3: Entered Currencies and Balancing Segment Values Out of Balance
The following table shows the lines, accounts, currencies, and debits and credits, for an unposted multicurrency journal that doesn't balance by entered currency or balancing segment value.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
||
|
2 |
102.10.11200.000.000 |
ANG |
9,500.00 |
15,297.54 |
||
|
Total |
Not applicable |
Not applicable |
10,000.00 |
9,500.00 |
15,297.54 |
15,297.54 |
Follow the posting flow:
-
Accounted amounts balanced or accounted amount differences within threshold? Yes. Total accounted debits equal total accounted credits.
-
Accounted amounts balanced by balancing segment value or accounted amount differences within threshold? No. Balancing segment value 101 has only debits totaling 15,297.54. Balancing segment value 102 has only credits totaling 15,297.54. Each balancing segment value needs 15,297.54 to balance, which isn't within the threshold.
Note: The threshold is 152.98, which is 1 percent of 15,297.54. -
Intercompany enabled? Yes. To balance the accounted amounts by balancing segment value, the posting process creates intercompany balancing lines 3 and 4 in the USD currency.
-
Entered amounts balanced by currency and balancing segment value? No to both. The GBP currency has only debits and the ANG currency has only credits. Debits don't equal credits for either balancing segment value.
-
Entered Currency Balancing account defined? Yes. The Entered Currency Balancing account is 101.10.22270.000.000. To balance by currency, the posting process creates entered currency balancing lines 5 and 6. To balance by balancing segment value, the posting process creates entered currency balancing lines 7 and 8 in the USD currency.
The following table shows the lines, accounts, currencies, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
Description |
|---|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
None |
||
|
2 |
102.10.11200.000.000 |
ANG |
9,500.00 |
15,297.54 |
None |
||
|
3 |
101.10.29100.000.102 |
USD |
15,297.54 |
15,297.54 |
Intercompany balancing line. |
||
|
4 |
102.10.18100.000.101 |
USD |
15,297.54 |
15,297.54 |
Intercompany balancing line. |
||
|
5 |
102.10.22270.000.000 |
ANG |
9,500.00 |
15,297.54 |
Entered currency balancing line. |
||
|
6 |
101.10.22270.000.000 |
GBP |
10,000.00 |
15,297.54 |
Entered currency balancing line. |
||
|
7 |
101.10.22270.000.000 |
USD |
15,297.54 |
15,297.54 |
Entered currency balancing line. |
||
|
8 |
102.10.22270.000.000 |
USD |
15,297.54 |
15,297.54 |
Entered currency balancing line. |
||
|
Total |
Not applicable |
Not applicable |
50,095.08 |
50,095.08 |
61,190.16 |
61,190.16 |
None |
Example 4: Rounding Difference
The following table shows the lines, accounts, currencies, and debits and credits, for an unposted multicurrency journal with a rounding difference.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
None |
|
|
2 |
101.10.11200.000.000 |
ANG |
9,500.00 |
15,297.54 |
||
|
3 |
101.10.11200.000.000 |
GBP |
10,000.00 |
15,297.54 |
||
|
4 |
101.10.11300.000.000 |
ANG |
9,500.00 |
15,297.35 |
None |
|
|
Total |
Not applicable |
Not applicable |
19,500.00 |
19,500.00 |
30,594.89 |
30,595.08 |
Follow the posting flow:
-
Accounted amounts balanced or accounted amount differences within threshold? Yes. The difference between accounted debits and accounted credits is 0.19, which is within the threshold.
Note: The threshold is 305.95, which is 1 percent of 30,595.08. -
Accounted amounts balanced by balancing segment value or accounted amount differences within threshold? Yes. The balancing segment value for all lines is 101 and the difference between accounted debits and accounted credits is 0.19, which is within the threshold.
-
Entered amounts balanced by currency and balancing segment value? Yes. For each currency, entered debits equal entered credits, and the balancing segment value is the same for all lines.
-
Accounted amount differences remaining? Yes. For the ANG currency, the difference between accounted debits and accounted credits is 0.19.
-
Rounding account defined? Yes. The rounding account is 101.10.78550.000.000. To balance the journal, the posting process creates rounding line 5 for the ANG currency.
The following table shows the lines, accounts, currencies, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Currency |
Entered Debit |
Entered Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
Description |
|---|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
GBP |
10,000.00 |
15,297.54 |
None |
||
|
2 |
101.10.11200.000.000 |
ANG |
9,500.00 |
15,297.54 |
None |
||
|
3 |
101.10.11200.000.000 |
GBP |
10,000.00 |
15,297.54 |
None |
||
|
4 |
101.10.11300.000.000 |
ANG |
9,500.00 |
15,297.35 |
None |
||
|
5 |
101.10.78550.000.000 |
ANG |
0.19 |
Rounding line. |
|||
|
Total |
Not applicable |
Not applicable |
19,500.00 |
19,500.00 |
30,595.08 |
30,595.08 |
None |