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
You May Also Like
-
A Company (also called corporation) may be understood as an association of persons in which money is contributed by them, to carry on some business or undertaking. Persons who contribute the money are called the shareholders or the members of the company. A corporation is an artificial being, invisible, intangible and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it.
-
GL - Review & Approve Journals
Review and Approval mechanisms ensure that the accounting transaction is reasonable, necessary, and comply with applicable policies. Understand why we need review and approval processes, what are they, and how they are performed in automated general ledger systems. Learn the benefits of having journal approval mechanisms in place.
-
Internally, an organization can be structured in many different ways, depending on their objectives. The internal structure of an organization will determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual.
-
Driving Business Efficiency through Divisions and Departments
In case of a multi-divisional organizational structure, there is one parent company, or head-office. And that parent owns smaller departments, under the same brand name. Dividing the firm, into several self-contained, autonomous units, provides the optimal level of centralization, in a company.
-
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.
-
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.
-
GL - Accrued / Unbilled Revenue
Accrued revenues (also called accrued assets) are revenues already earned but not yet paid by the customer or posted to the general ledger. Understand what we mean by the terms accrued revenue, accrued assets, and unbilled revenue. Explore the business conditions that require recognition of accrued revenue in the books of accounts and some industries where this practice is prevalent.
-
What is Accounting & Book Keeping
Accounting is a process designed to capture the economic impact of everyday transactions. Each day, many events and activities occur in an entity, these events and activities are in the normal course of business; however, each of these events may or may not have an economic impact. Events or activities that have an effect on the accounting equation are accounting events.
-
In this article we will discuss various types of "Management Entities". Various types of operational units, are created by management, to effectively run, manage and control their business. Different types of functional units, and divisional units, are widely used across industry.
-
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.
