Defining Reporting Dimensions

Defining Reporting Dimensions

Multitude of these legal and operational structures clubbed with accounting and reporting needs give rise to many reporting dimensions at which the organization may want to track or report its operational metrics and financial results.  This is where business dimensions play a vital role.

Multitude of these legal and operational structures clubbed with accounting and reporting needs give rise to many reporting dimensions at which the organization may want to track or report its operational metrics and financial results.  This is where business dimensions play a vital role.

Business Dimensions:

A dimension reflects the attributes of a business, such as legal structure, management structure, departments and projects. Dimensions are used to help capture and analyze underlying data and when used with reporting provides an effective tool to break down key components of business to help make better business decisions. Business dimensions describe the business-specific objects within the model, such as products, customers, regions, employees, and so on.

Why we need business dimensions:

In any typical entity, accounting process starts with recording of a transaction that has a financial implication on a voucher and it culminates with the preparation of final books of accounts. However this simple process gains complexity when the size of the organization and diversity of its environment increases. For example: Global companies regularly distribute goods from a central site to customers located in different countries or regions. Before shipping lo a customer, goods may be processed through a separate operating unit or subsidiary in the country of sales origin. A complex sequence of coupled accounting records is needed because these transactions impact multiple organizations and legal entities, and most governments require a financial record for transactions conducted between legal entities. Management need to contemplate these business dimensions properly for decision-making and enhancing the achievement of the competitive advantage and control over the operations of the enterprise.

  • There exist various types of entities or business units which are part of the same global group.
  • These units may represent countries, locations, businesses, functions, projects, cost centers, segments etc.
  • These units may have different reporting needs.
  • These units may be responsible for their own profit and loss.
  • They might be holding their own Fixed Assets.
  • They might be concerned with their own markets where their products are sold.
  • They might be constituted as separate legal entities over multiple layers of ownership with their peculiar independent local statutory reporting needs.
  • Subsidiaries and branches operating as individual entities need to be consolidated with the group financials.

Examples of different dimensions are:

  • Legal Entity: Financial results and trial balance at each legal entity level
  • Division/Department: Financial results and trial balance at each division or department
  • Product Line: Operating margins for each product line
  • Geography: Annual Growth for each geography in which a company operates
  • Project: Cost and profitability for each project undertaken by business
  • Cost Center: Costs accumulated and allocated through each cost center
  • Accounts: Total fixed assets owned by the legal entity, accounted under land and building, furniture and fixtures and other accounts
  • Functional Area: Total cost attributable to each function like finance, marketing etc.

These dimensions further have parent child relationships within themselves and other corporate relationships (known as Business Hierarchies) with other dimensions. Corporate relationships are the links between various dimensions like parent companies, subsidiaries, headquarters, branches, functions, product lines, cost centers etc. A dimension may consists of one or more hierarchies that can contain several levels.

Related Links

Creation Date Thursday, 29 December 2022 Hits 1145

You May Also Like

  • General Ledger Overview

    General Ledger Overview

    What Is a General Ledger? General Ledger (also known in accounting as the GL or the Nominal Ledger) is at the heart of any accounting system. A general ledger is the master set of accounts that summarize all transactions occurring within an entity. Ledger is the skillful grouping and presentation of the Journal entries. Learn the accounting fundamentals, general ledger process, and general ledger flow.

  • Different Types of Organizational Structures

    Different Types of Organizational Structures

    Modern business organizations run multiple product and service lines, operate globally, leverage large number of registered legal entities, and operate through complex matrix relationships.  To stay competitive in the current global business environment, they must often develop highly diverse and complex organizational structures that cross international borders.

  • Concept of Subsidiaries

    Concept of Subsidiaries

    A subsidiary is a company that is completely or partly owned by another corporation that owns more than half of the subsidiary's stock, and which normally acts as a holding corporation which at least partly or wholly controls the activities and policies of the daughter corporation.

  • What is a General Ledger?

    What is a General Ledger?

    The purpose of the general ledger is to sort transaction information into meaningful categories and charts of accounts. The general ledger sorts information from the general journal and converts them into account balances and this process converts data into information, necessary to prepare financial statements. This article explains what a general ledger is and some of its major functionalities.

  • Partnership Form

    Partnership Form

    When the quantum of business is expected to be moderate and the entrepreneur desires that the risk involved in the operation be shared, he or she may prefer a partnership. A partnership comes into existence when two or more persons agree to share the profits of a business, which they run together.

  • Contra & Control Accounts

    Contra & Control Accounts

    There are five types of core accounts to capture any accounting transaction. Apart from these fundamental accounts, some other special-purpose accounts are used to ensure the integrity of financial transactions. Some examples of such accounts are clearing accounts, suspense accounts, contra accounts, and intercompany accounts. Understand the importance and usage of these accounts.

  • Introduction to Legal Entities Concept

    Introduction to Legal Entities Concept

    Modern business organizations operate globally and leverage a large number of registered legal entities, and operate through complex matrix relationships.  To stay competitive in the current global business environment, they must often develop highly diverse and complex organizational structures that cross international borders. Learn more about Legal Entities and their importance for businesses.

  • GL - Enter & Analyze Journals

    GL - Enter & Analyze Journals

    In every journal entry that is recorded, the debits and credits must be equal to ensure that the accounting equation is matched. In this article, we will focus on how to analyze and recorded transactional accounting information by applying the rule of credit and debit. We will also focus on some efficient methods of recording and analyzing transactions.

  • Matrix Organizational Structures

    Matrix Organizational Structures

    In recent times the two types of organization structures which have evolved are the matrix organization and the network organization. Rigid departmentalization is being complemented by the use of teams that cross over traditional departmental lines.

  • Global Business Services (GBS) Model

    Global Business Services (GBS) Model

    Global business services (GBS) is an integrated, scalable, and mature version of the shared services model. Global Business Services Model is a result of shared services maturing and evolving on a global scale. It is represented by the growth and maturity of the Shared services to better service the global corporations they support.

Explore Our Free Training Articles or
Sign Up to Start With Our eLearning Courses

Subscribe to Our Newsletter


© 2023 TechnoFunc, All Rights Reserved