Unearth the Hidden Secrets of Zero-Balancing in the New G/L

  • by Mitresh Kundalia, Director — SAP Practice, Quality Systems & Software
  • July 15, 2007
International financial regulations require you to zero-balance your financial data by certain characteristics, such as segments. See how to zero-balance characteristics in the new G/L, and how the system addresses the varying number of line items you may have.
Key Concept

Using document splitting with zero-balancing, the system posts additional line items so that the document is balanced for specific characteristics in addition to the document as a whole. The number of such additional zero-balancing clearing items depends on the number of unique characteristics in the document. Also, the system populates the partner characteristics to keep track of additional items with reference to unique characteristics.

Document splitting using zero-balancing in the new G/L ensures not only that the document is balanced, but also that the document is balanced for pre-defined characteristics. For example, you can configure a financial document so that it is balanced for the characteristic segment. You can pre-define the characteristics that you use for zero-balancing. In my examples, I use segments as the characteristic. A segment could be a line of business or a geographical location. You may need to ensure that your segments are zero-balanced to comply with International Accounting Standards Board regulations, and this process helps you report financial information by lines of business and/or geographical areas represented by segments.

In simple terms, when you perform document splitting using zero-balancing in the new G/L, the system posts additional zero-balancing clearing items so that the document is balanced for these characteristics. I’ll go through three examples to demonstrate some of the hidden secrets of how the system manages zero- balancing: one simple example to show you some of the basics, and then examples using three and four line items to show you how the system reacts to the different number of line items you may have. First I’ll start by going over some of the fundamentals of zero-balancing.

Mitresh Kundalia

Mitresh Kundalia heads the SAP practice at Quality Systems & Software (www.QSandS.com). QS&S is a leading business and technology consulting firm that specializes in delivering superior IT solutions using SAP products. Mitresh is widely acknowledged as a leading SAP expert and has worked on various SAP assignments, including strategic planning, fresh implementations, upgrades, and post-go-live support projects. With an MBA degree in finance, Mitresh manages SAP projects with a special focus on customer-focused solutions, management reporting, profitability analysis, SAP General Ledger, and business intelligence. He is a regular contributor at SAP events and publications and technical advisor to leading journals.

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