# Defining how financial variances display in reports

Analyzing the difference between different years or versions is a key part of the budgeting system. The application includes a financial variance formula that determines if the variance is favorable or unfavorable using these factors:

- The account type
- The sign of the account type in the database
- If the account balance is positive or negative

The business logic behind the formula is:

Account type | Good result | Bad result |
---|---|---|

Assets | Increase | Decrease |

Liabilities | Decrease | Increase |

Equity | Increase | Decrease |

Revenue | Increase | Decrease |

Expenses | Decrease | Increase |

An example of a good result is when the calculation shows a decrease in expenses. An example of a bad result is when the calculation shows an increase in expenses.

The syntax is:

`Financial variance = Parameter 2 - Parameter 1`

Parameter 2 is the second column used in the formula. Parameter 1 is the first column used in the formula. Parameter 2 must precede Parameter 1. For example, 2015 is the first column in the formula and 2014 is the second column.

The financial variance formula uses the values stored in database to calculate, not the values displayed in the report.