General Ledger Parameter : Accouting Distributions OR Source Document

General Ledger Parameters has one of the most important parameter called, "Value Used for Summary Account", and the options are:

1. Source Document
2. Accounting Distributions

What happens when either of the one is selected ?? Lets see...

This parameter is set at the beginning of the company setup, before any transactions are posted. This can be changed later, system allows it. But it is advisable that it shouldn't be changed, as it will mess up the entire reporting for the transactions.

This parameter decides whether the amount posted to the summary / control account should be distributed amongst the Financial Dimensions or not. This is very useful decision, as some companies might track the finances as per the financial dimensions (for e.g. Department, Cost Centre etc.) while some may not.

To understand this myself, I first created a purchase order and then added some charges to it by using the "Manage Charges" and "Allocate Charges" feature. Just before invoicing the PO, I changed the dimension of the charges line by using the "View Distributions" and "Distribute Amounts"  feature. And then posted the invoice. I performed the same steps for both the settings, namely "Source Document" and "Accounting Distributions".

Source Document: When the setting was "Source Document", even after me manually distributing the charges amount to different financial dimension (Business Unit, in this case), the entire amount (the invoice amount + the charges) were posted collectively ones to the summary / control account (the Accounts Payables account). This setting followed the dimension of the header of the PO.

Accounting Distributions : When the setting was "Accounting Distributions", after I manually distributed the charges amount to different financial dimension (Business Unit, in this case), the invoice amount was posted separately to the summary / control account (the Accounts Payables account) with the dimension it was supposed to be posted AND the charges amount was posted separately to the summary / control account (the Accounts Payables account) with the other dimension which was manually changed by me . This setting followed the dimensions that were given by the user. In this case the amount was posted to the summary / control account itself, but the only difference was, the amount was bifurcated to different financial dimensions. Hence now if the user wish to find out the charges per dimension, he can easily find out the dimensions consuming the least and the most charges. This can help him make better decisions.

For e.g.: The Invoice Amount = 302.71 USD and the Charges = 50 USD

Source Document

Accounting Distributions

 Please note these distributions to different financial dimensions are to be done manually.

Thanks!

AXAPTAMANIAC