What Is a Zone?

A zone is a group of company accounting units that stay in balance when transactions are transferred between defined zone areas. Each zone includes an accounting unit at the highest level of your company structure and all associated lower level accounting units.

Identify the members of a zone by using the level number shared by each accounting unit in the zone. For example, if you assign a level of 1-0-0 to the a division at the highest level in your organization, and you assign levels of 1-1-0 and 1-2-0 to two lower level departments, the shared value is 1. If you choose to use zones, you must define one zone for each accounting unit at level 1 in your company.

Only organizations that require multiple balance sheets and want automatic entries to keep each zone in balance need to define zones and interzone relationships. When you run Journal Posting (GL190), the system automatically creates balancing entries to keep the zones in balance as intracompany transactions pass between zones.

You can create a balance sheet for any accounting unit without defining zones. Zones simply ensure that the balance sheets are balanced by creating balancing detail lines when a transaction includes multiple zones. This provides a level of balancing below the company level.