An account inquiry is a review of any type of financial account, whether it be a depository account or a credit account. In this tutorial, you learn what we mean by drill through functionality in the context of the general ledger system. We will explain the concept of drill-down and how it enables users to perform account and transaction inquiry at a granular level and the benefits of using this functionality.
In information technology, to drill down means to move from summary information to detailed data by zooming in on something. In an ERP environment, "drilling-down" may involve clicking on some account balance or summary representation in order to reveal transactional data.
To drill down is to navigate through a series of steps, for example, the user starts with the summary balances that are made up of a group of accounts with individual balances, and drill down takes the user through the hierarchy to the individual account balances. The individual account balances are made up of transactions that have been posted in those accounts for a specified period and further drill down at this second level takes the user to the set of transactions. These steps of moving from summary balance to account balance belong to the general ledger system, however, the transactions might have originated from a subsidiary ledger. Further drill down at this level will take the user to a level of greater detail where the user can see the original transaction in the sub-ledger itself. Here in the drill-down process, the user is navigating from a higher level of consolidated information to a deeper level into data, without leaving the source system or changing user access.
When one drills down, one performs de facto data analysis on a parent attribute and inquiry of the detailed attributes that constitute the parent attribute. Drilling down provides a method of exploring multidimensional data by moving from one level of detail to the next. Drill-down levels depend on the data granularity and drill-down is a sub-function of inquiry and analysis. Drilldown functionality allows business users to gain better business insight to make critical decisions in order to beat out their competition.
Upstream Systems: In geography, upstream literally means towards the source of a stream or river, or against the normal direction of water flow. In the context of general ledger, upstream systems refer to the systems that send data to the general ledger system. In other words, upstream systems are subsidiary ledgers and other source systems that are capturing the transactional data and sending the accounting data to the general ledger for further processing.
Downstream Systems: Similarly, in geography, downstream literally means away from the source of a stream or river, or in the normal direction of water flow. In the context of the general ledger system, downstream systems refer to the systems that take data from the general ledger as their input. Some examples are consolidation systems, enterprise performance management systems (EPM), reconciliation systems, or business intelligence systems. The financial data from the general ledger are carried over as input for these downstream systems for further processing.
In the advances general ledger systems, users can drill down to sub-ledgers details from General Ledger and can get all of the transaction details that comprise an account balance, regardless of which sub-ledger originated the transaction. This functionality helps in analyzing any account balance by understanding the source of the transaction and viewing additional information that has been captured in the source system and not imported into the general ledger system.
Many advanced EPM or Consolidation downstream systems provides the users with the capability to drill down from their system to underlying Enterprise Resource Planning (ERP) transaction data. Some examples with the ability to drill down from Enterprise Performance Management (EPM) applications are Oracle Hyperion Financial Management System and Oracle Hyperion Planning. An example of a consolidation system is Oracle Financial Consolidation Hub. These systems allow the user to drill down from consolidated information to the related general ledger system. This provides users with greater visibility into business processes and a greater understanding of the consolidated data.
For most organizations, the basis for global financial consolidation, reporting and analysis, planning, budgeting, and forecasting are derived from a company's existing operational information which is generally stored in many different general ledgers like Oracle, SAP, PeopleSoft, or JD Edwards systems and drill down allows the user to see the actual data in the various general ledgers that constitute the data in these systems.
There are various drill-downs that are available in the general ledger system. We will briefly explain each one of them:
A Drill-Down Report is also called an Interactive Report and has more detail and capability to analyze and inquire data at a granular level. For example, the user is looking at the Balance Sheet Report with drill-down functionalities. The top-level information contains consolidated balances for a group of accounts such as current assets, fixed assets, etc. The drill-down functionality helps the user to select a line item (e.g., fixed assets) and drill-down further to a detailed list (secondary list) which displays various components of the fixed assets such as land, buildings, machinery, etc.
Some general ledgers provide the functionality to maintain summary accounts that contain consolidated balance for the group of accounts clubbed under that summary account. Users may drill-down to individual group accounts by using the drill-down functionality.
Drilling down on balances in the general ledger may take the user to line level transactions constituting those balances.
Drilling down on balances will take the user to the journal where the transaction has been captured in the source system.
Operational Structures in Business
Large organizations grow through subsidiaries, joint ventures, multiple divisions and departments along with mergers and acquisitions. Leaders of these organizations typically want to analyze the business based on operational structures such as industries, functions, consumers, or product lines.
Trial Balance in General Ledger
One of the greatest benefits of using a double-entry accounting system is the capability to generate a trial balance. What do we mean by trial balance? As the name suggests a trial balance is a report that must have its debits equals to credits. Understand the importance of trial balance and why it is balanced. Learn how it is prepared and in which format.
For any company that has a large number of transactions, putting all the details in the general ledger is not feasible. Hence it needs to be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger. Understand the concept of the subsidiary ledgers and control accounts.
Defining Organizational Hierarchies
A hierarchy is an ordered series of related objects. You can relate hierarchy with “pyramid” - where each step of the pyramid is subordinate to the one above it. One can use drill up or down to perform multi-dimensional analysis with a hierarchy. Multi-dimensional analysis uses dimension objects organized in a meaningful order and allows users to observe data from various viewpoints.
Accrued expenses, sometimes referred to as accrued liabilities, are expenses that have been incurred but have not been recorded in the accounts. Discuss the need to record accrued liabilities and why they require an adjustment entry. Understand the treatment for these entries once the accounting period is closed and learn to differentiate when the commitments become liabilities.
GL - Understanding Chart of Accounts
A chart of accounts (COA) is a list of the accounts used by a business entity to record and categorize financial transactions. COA has transitioned from the legacy accounts, capturing just the natural account, to modern-day multidimensional COA structures capturing all accounting dimensions pertaining to underlying data enabling a granular level of reporting. Learn more about the role of COA in modern accounting systems.
Horizontal or Flat Organizational Structures
Flat organizational structure is an organizational model with relatively few or no levels of middle management between the executives and the frontline employees. Its goal is to have as little hierarchy as possible between management and staff level employees. In a flat organizational structure, employees have increased involvement in the decision-making process.
GL - Different Accounting Methods
The accounting method refers to the rules a company follows in reporting revenues and expenses. Understand the two common systems of bookkeeping, single, and double-entry accounting systems. Learners will also understand the two most common accounting methods; cash and accrual methods of accounting and the advantages and disadvantages of using them.
Shared Services is the centralization of service offering at one part of an organization or group sharing funding and resourcing. The providing department effectively becomes an internal service provider. The key is the idea of 'sharing' within an organization or group.
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.
© 2023 TechnoFunc, All Rights Reserved