Average Balance Processing

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First Release Version: 12.0

Introduction

Average Balance Processing provides the ability to track average and end-of-day balances, report average balance sheets, and create custom reports using both standard and average balances. Average Balance Processing is mainly used in financial institutions and regulatory agencies where the average balance sheets and standard balance sheets are required. Other organizations also use average balances for internal management reporting and profitability analysis.

Functionality

General Ledger provides the following basic average balance functionality:

• Use Average Balance Processing only in those ledgers which require it.
• Maintain average balances for all balance sheet accounts automatically.
• A Transaction Calendar for all postings have effective dates which are valid business days.
• Transactional Input is balanced by effective date and by period.
• Average balance calculation is based on the effective date of transactions.
• Period, quarter, and year averages-to-date calculations are based on the balances for each day within the period, quarter, or year.
• The impact of net income is calculated on the average balance for retained earnings.
• The ability to query on average and ending balances for any effective date.
• Convert the average balances from primary ledger currency into any reporting currency.
• Consolidate the average balances from one accounting entity into another.
• Calculate allocations and other formula journals, using average balances as the basis.
• Archive and purge average and end-of-day balances, actual journal batches, entries, lines, and associated journal references for one or more fiscal years.

Average Balance Concepts

Average Balances Option Average balance processing is enabled by selecting the Enable Average Balances option. When the Average Balances option is enabled the General Ledger will store the aggregate balances used to calculate average and end-of-day balances.

Transaction Calendar A Transaction Calendar is created which includes an entry for every calendar day in the range of dates which exists in the Oracle General Ledger. Each day includes Date, Day of the Week, Business day indicator.

Non-postable Net Income Account A Non-postable Net Income Account is created to record the average balances calculations of net revenue and expenses for retained earnings. The Non-postable net income account is a balance sheet account classified as an account type of Owners' Equity. Three stored aggregate balances are used to compute the net income impact on the retained earnings average balance for any period, quarter, or year.

Aggregate and Average Balances

In Average Balance functionality the system calculates and stores three aggregate balances (period-to-date, quarter-to-date, and year-to-date) for each balance sheet account in the general ledger, for every calendar day. At posting of a transaction the General Ledger updates the standard period-end balances, as well as the three aggregate balances. In On-line inquiry and reports the average balances are calculated from the aggregate balances.

• Average Balance = aggregate balance divided by number of days in the range.
• End-of-Day Balance = current day's aggregate balance minus previous day's aggregate balance.

Comments

Links

• Related: General Ledger

This Topic Is Referenced By These Topics:
Related Links: GeneralLedger, PublishDocControlReport

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Collaborating Authors and Reviewers: BillDaley - 20 Mar 2007