Automatic balancing

The General Ledger requires that journal entries balance in the company base currency before release. Because exchange rates are usually more than two decimals, rounding discrepancies can occur when converting to base or report currency. The resulting discrepancies may not be significant in size, but they prevent journal entries from balancing. Without automatic balancing, you must manually balance the journal entry by altering the currency value or by altering the exchange rate. For interfaced journal entries that are out of balance, the system creates adjusting journal entries in the error suspense system account, and you have to unrelease the entry and modify the adjustment to your satisfaction.

This option is required for companies that use euro-bound triangulated currencies whose exchange rates are set at a permanent, unalterable rate. See Setting up triangulated currencies.

If you select the automatic balancing option for your General Ledger company, the non-base journal entries are balanced automatically in base currency by creating balancing journal entries in an auto-balancing system account without altering the currency value or exchange rates. Interfaced journal entries are also balanced automatically, with adjusting entries posted to the same auto-balancing account. Adjusting entries are flagged with the source code AB.

If you use reporting currencies for your company, then you must also define a rounding adjustment system account to post adjustment entries that automatically balance entries in report currency. Report currency adjusting entries are flagged with the source code CY.

You can also define your company to use automatic balancing and set up your currency system accounts. See Defining General Ledger currency options and Defining balancing accounts.

For more information on system accounts, see the General Ledger User Guide.