How Single Currency 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 Single Currency 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
-
Balancing Threshold Percent
-
Balancing Threshold Amount
Note: The Entered Currency Balancing Account option is only applicable to journals with multiple currencies. -
-
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 Single Currency Journals Are Balanced
The posting process checks entered amounts, accounted amounts, and balancing segment values 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 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 a single currency.
- Are entered and 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 entered and 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.
- Are there any remaining accounted amount differences? If yes, the process continues to step 4. 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 subsequently 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: None.
-
Balancing Threshold Percent: None for examples 1 through 4. For examples 5, 6, and 7, this option is set to 1.
-
Balancing Threshold Amount: None for examples 1 through 6. For example 7, this option is set to 100.
-
Enable Intercompany Accounting: Enabled and intercompany rules defined.
Example 1: Entered Amount Differences
The following table shows the lines, accounts, and debits and credits, for an unposted journal in the ledger currency with differences between entered amounts.
|
Line |
Account |
Entered (USD) Debit |
Entered (USD) Credit |
|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
|
|
2 |
101.10.11200.000.000 |
10,000.01 |
|
|
Total |
Not applicable |
10,000.00 |
10,000.01 |
To understand how the journal is balanced, follow the flow:
-
Entered and accounted amounts balanced or accounted amount differences within threshold? No. Entered debits don't equal entered credits.
-
Suspense enabled? Yes. Suspense is enabled for General Ledger and the suspense account is 101.10.29900.000.000. To balance the journal, the posting process creates suspense line 3.
The following table shows the lines, accounts, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Entered (USD) Debit |
Entered (USD) Credit |
Description |
|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
None |
|
|
2 |
101.10.11200.000.000 |
10,000.01 |
None |
|
|
3 |
101.10.29900.000.000 |
0.01 |
Suspense line. |
|
|
Total |
Not applicable |
10,000.01 |
10,000.01 |
None |
Example 2: Accounted Amount Differences
The following table shows the lines, accounts, and debits and credits, for an unposted journal in a nonledger currency with differences between accounted amounts.
|
Line |
Account |
Entered (GBP) Debit |
Entered (GBP) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
15,297.54 |
||
|
2 |
101.10.11200.000.000 |
10,000.00 |
15,297.55 |
||
|
Total |
Not applicable |
10,000.00 |
10,000.00 |
15,297.54 |
15,297.55 |
Follow the posting flow:
-
Entered and accounted amounts balanced or accounted amount differences within threshold? No. Accounted debits don't equal accounted credits and no threshold is defined.
-
Suspense enabled? Yes. Suspense is enabled for General Ledger and the suspense account is 101.10.29900.000.000. To balance the journal, the posting process creates suspense line 3.
The following table shows the lines, accounts, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Entered (GBP) Debit |
Entered (GBP) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
Description |
|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
15,297.54 |
None |
||
|
2 |
101.10.11200.000.000 |
10,000.00 |
15,297.55 |
None |
||
|
3 |
101.10.29900.000.000 |
0.01 |
Suspense line. |
|||
|
Total |
Not applicable |
10,000.00 |
10,000.00 |
15,297.55 |
15,297.55 |
None |
Example 3: Entered Amount Differences by Balancing Segment Value
The following table shows the lines, accounts, and debits and credits for an unposted journal in the ledger currency with entered amount differences for each balancing segment value.
|
Line |
Account |
Entered (USD) Debit |
Entered (USD) Credit |
|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
|
|
2 |
102.10.11200.000.000 |
10,000.01 |
|
|
Total |
Not applicable |
10,000.00 |
10,000.01 |
Follow the posting flow:
-
Entered and accounted amounts balanced or accounted amount differences within threshold? No. Entered debits don't equal entered credits.
-
Suspense enabled? Yes. Suspense is enabled for General Ledger and the suspense account is 101.10.29900.000.000. To balance the journal, the posting process creates suspense lines 3 and 4.
The following table shows the lines, accounts, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Entered (USD) Debit |
Entered (USD) Credit |
Description |
|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
None |
|
|
2 |
102.10.11200.000.000 |
10,000.01 |
None |
|
|
3 |
102.10.29900.000.000 |
10,000.01 |
Suspense line. |
|
|
4 |
101.10.29900.000.000 |
10,000.00 |
Suspense line. |
|
|
Total |
Not applicable |
20,000.01 |
20,000.01 |
None |
Example 4: Balancing Segment Values Out of Balance
The following table shows the lines, accounts, and debits and credits, for an unposted journal in the ledger currency that balances in total, but not by balancing segment value.
|
Line |
Account |
Entered (USD) Debit |
Entered (USD) Credit |
|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
|
|
2 |
102.10.11200.000.000 |
10,000.00 |
|
|
Total |
Not applicable |
10,000.00 |
10,000.00 |
Follow the posting flow:
-
Entered and accounted amounts balanced or accounted amount differences within threshold? Yes. Entered debits equal entered credits.
-
Entered and accounted amounts balanced by balancing segment value or accounted amount differences within threshold? No. Balancing segment value 101 has only debits and balancing segment value 102 has only credits and the threshold applies only to accounted amounts.
-
Intercompany enabled? Yes. To balance the journal by balancing segment value, the posting process creates intercompany balancing lines 3 and 4.
The following table shows the lines, accounts, amounts, and descriptions, for the posted journal.
|
Line |
Account |
Entered (USD) Debit |
Entered (USD) Credit |
Description |
|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
None |
|
|
2 |
102.10.11200.000.000 |
10,000.00 |
None |
|
|
3 |
102.10.18100.000.101 |
10,000.00 |
Intercompany balancing line. |
|
|
4 |
101.10.29100.000.102 |
10,000.00 |
Intercompany balancing line. |
|
|
Total |
Not applicable |
20,000.00 |
20,000.00 |
None |
Example 5: Rounding Difference Within Percent Threshold
The following table shows the lines, accounts, and debits and credits, for an unposted journal in a nonledger currency with a difference due to rounding.
|
Line |
Account |
Entered (GBP) Debit |
Entered (GBP) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
15,297.54 |
||
|
2 |
101.10.11200.000.000 |
4,500.00 |
6,883.89 |
||
|
3 |
101.10.12110.000.000 |
5,500.00 |
8,413.64 |
||
|
Total |
Not applicable |
10,000.00 |
10,000.00 |
15,297.54 |
15,297.53 |
Follow the posting flow:
-
Entered and accounted amounts balanced or accounted amount differences within threshold? Yes. The difference between the accounted debits and the accounted credits, which is .01, is 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. -
Entered and accounted amounts balanced by balancing segment value or accounted amount differences within threshold? Yes. All lines have a balancing segment value of 101.
-
Accounted amount differences remaining? Yes. The accounted debits are 15,297.54 and the accounted credits are 15,297.53.
-
Rounding account defined? No. To balance the journal, the posting process adds the rounding difference to the largest credit line, which is line 3.
The following table shows the lines, accounts, and amounts for the posted journal.
|
Line |
Account |
Entered (GBP) Debit |
Entered (GBP) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
10,000.00 |
15,297.54 |
||
|
2 |
101.10.11200.000.000 |
4,500.00 |
6,883.89 |
||
|
3 |
101.10.12110.000.000 |
5,500.00 |
8,413.65 |
||
|
Total |
Not applicable |
10,000.00 |
10,000.00 |
15,297.54 |
15,297.54 |
Example 6: Rounding Difference Over Percent Threshold
The following table shows the lines, accounts, and debits and credits, for an unposted journal in a nonledger currency with a difference due to rounding.
|
Line |
Account |
Entered (KRW) Debit |
Entered (KRW) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
18 |
0.02 |
||
|
2 |
101.10.11200.000.000 |
24 |
0.02 |
||
|
3 |
101.10.12110.000.000 |
6 |
0.01 |
||
|
Total |
Not applicable |
24 |
24 |
0.03 |
0.02 |
Follow the posting flow.
-
Entered and accounted amounts balanced or accounted amount differences within threshold? No. The difference between the accounted debits and the accounted credits, which is .01, is more than the 1 percent threshold.
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 0.0003, which is 1 percent of 0.03. -
Suspense enabled? Yes. Suspense is enabled for General Ledger and the suspense account is 101.10.29900.000.000. To balance the journal, the posting process creates suspense line 4.
The following table shows the lines, accounts, and amounts for the posted journal.
|
Line |
Account |
Entered (KRW) Debit |
Entered (KRW) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
Description |
|---|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
18 |
0.02 |
None |
||
|
2 |
101.10.11200.000.000 |
24 |
0.02 |
None |
||
|
3 |
101.10.12110.000.000 |
6 |
0.01 |
None |
||
|
4 |
101.10.29900.000.000 |
0.01 |
Suspense line. |
|||
|
Total |
Not applicable |
24 |
24 |
0.03 |
0.03 |
None |
Example 7: Rounding Difference Within Amount Threshold
The following table shows the lines, accounts, and debits and credits, for an unposted journal in a nonledger currency with a difference due to rounding.
|
Line |
Account |
Entered (KRW) Debit |
Entered (KRW) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
18 |
0.02 |
||
|
2 |
101.10.11200.000.000 |
24 |
0.02 |
||
|
3 |
101.10.12110.000.000 |
6 |
0.01 |
||
|
Total |
Not applicable |
24 |
24 |
0.03 |
0.02 |
Follow the posting flow:
-
Entered and accounted amounts balanced or accounted amount differences within threshold? Yes. The difference between the accounted debits and the accounted credits, which is .01, is within the amount threshold of 100.
Note: The threshold tolerance is the greater of the amount threshold and the calculated percent threshold. The Balancing Threshold Amount setting is 100. The percent threshold is calculated by multiplying the Balancing Threshold Percent setting by the total accounted debits or credits, whichever is greater. In this example, the calculated threshold is 0.0003, which is 1 percent of 0.03. -
Entered and accounted amounts balanced by balancing segment value or accounted amount differences within threshold? Yes. All lines have a balancing segment value of 101.
-
Accounted amount differences remaining? Yes. The accounted debits are 15,297.54 and the accounted credits are 15,297.53.
-
Rounding account defined? No. To balance the journal, the posting process adds the rounding difference to the largest credit line, which is line 2.
The following table shows the lines, accounts, and amounts for the posted journal.
|
Line |
Account |
Entered (KRW) Debit |
Entered (KRW) Credit |
Accounted (USD) Debit |
Accounted (USD) Credit |
|---|---|---|---|---|---|
|
1 |
101.10.11300.000.000 |
18 |
0.02 |
||
|
2 |
101.10.11200.000.000 |
24 |
0.03 |
||
|
3 |
101.10.12110.000.000 |
6 |
0.01 |
||
|
Total |
Not applicable |
24 |
24 |
0.03 |
0.03 |