What Is a Default Zone?
A default zone is used to keep all zones in balance when transactions pass between zones. If you use zones, you must designate one of your zones as the default zone.
If you change the default zone, the system balances journal entries in the new zone from that point forward. Previous journal entries stay balanced in the original default zone. Lawson recommends that you do not change the default zone after activity takes place.
Carefully consider the use of a default zone. If you intend to override the default zone on journal entries, you will be required to complete more extensive setup and maintenance to establish all of the zone relationships.
How are Default Zones Used?
Some organizations never override the base zone that defaults from the general ledger company record so they do not need to establish as many interzone relationships. An interzone relationship must exist between the default zone on a journal entry and the zones entered on the detail lines.
If you do not override the default zone, you can create a balancing zone whose only purpose is to hold offsetting zone balancing entries. If the default zone is not included in the detail lines of an entry, the system will balance each of the zones and create offsetting entries to the interzone receivable and payable accounts in the default zone.
So, if your organization never overrides the default zone on a journal entry, the system will create more zone balancing entries than if you override the default zone with one of the zones used in the entry. Some organizations always override the default zone on a transaction so that it is the same as one of the zones entered on a detail line of the transaction. In this case, the application only creates offsetting entries to balance the zones on the detail lines and no additional entries are created to the base zone.
Defining Interzone Relationships Example
LGE Corporation divided its company into four zones, as shown in the illustration below, to maintain balances for the four distinct types of operations they run.
Zone 1 is the base zone and is where the majority of interzone transactions originate. They defined a relationship from Zone 1 to the other three zones. In this scenario, they did not have to define relationships between Zone 2 and Zone 3 or between Zone 3 and Zone 4.
The relationships they defined are one-way. Defining a relationship from Zone 1 to Zone 3 does not automatically create a reverse relationship from Zone 3 to Zone 1. However, because they don't anticipate overriding the base zone, such a relationship is not required.
If LGE anticipates overriding the base zone with Zone 2, a relationship will need to be set up between the override Zone 2 and the other zone.
Interzone Processing Example
LGE has four accounting units at the highest level, which means there are also four zones. The four zones are:
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HEADQTRS - Zone 1 (includes posting accounting units 101 - 104)
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HOSPITALS - Zone 2 (includes posting accounting units 201 - 305)
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CLINICS - Zone 3 (includes posting accounting units 401 - 503)
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RETAIL - Zone 4 (includes posting accounting units 601 - 702)
HEADQTRS (Zone 1) is designated as the base zone. In the following example, a transaction passes from a posting accounting unit in Zone 2 to a posting accounting unit in Zone 3.
Original Entry #1
| Accounting Unit |
Account Description |
Zone 1 (Base) |
Zone 2 | Zone 3 | Zone 4 |
|---|---|---|---|---|---|
| 201 | Miscellaneous Inventory | $1000 | |||
| 401 | Miscellaneous Inventory | $1000- |
Zone Balancing Entries for Entry #1
When LGE runs Journal Posting (GL190), the application creates the following balancing entries to the interzone payable and interzone receivable accounts defined in Interzone Relationships (GL30.1). These entries keep the zones in balance.
| Accounting Unit |
Account Description |
Zone 1 (Base) |
Zone 2 | Zone 3 | Zone 4 |
|---|---|---|---|---|---|
| 101 | Interzone - HDQTRS to HOSPITALS | $1000 | |||
| 201 | Interzone - HDQTRS to HOSPITALS | $1000- | |||
| 101 | Interzone - HDQTRS to CLINICS | $1000- | |||
| 401 | Interzone - HDQTRS to CLINICS | $1000 |
Because the base zone was not overridden, it is not included in the detail lines of the original entry. The system automatically creates a detail line to offset the zones on the original entry and makes offsetting entries to the base zone.
Original Entry #2
In the following entry, LGE overrides Zone 1 and uses Zone 2 as the base zone for the entry. The base zone is included in the detail lines of the original entry.
| Accounting Unit |
Account Description |
Zone 1 |
Zone 2 (Base) |
Zone 3 | Zone 4 |
|---|---|---|---|---|---|
| 201 | Miscellaneous Inventory | $1000- | |||
| 401 | Miscellaneous Inventory | $1000 |
Zone Balancing Entries for Entry #2
When LGE runs Journal Posting (GL190), the application creates the following balancing entries to the interzone payable and interzone receivable accounts defined in Interzone Relationships (GL30.1). These entries keep the zones in balance.
| Accounting Unit |
Account Description |
Zone 1 |
Zone 2 (Base) |
Zone 3 | Zone 4 |
|---|---|---|---|---|---|
| 201 | Interzone - HDQTRS to HOSPITALS | $1000 | |||
| 401 | Interzone - HDQTRS to CLINICS | $1000- |
Because the base zone was included in the original entry, the system simply creates a detail line to offset the zones on the original entry.
When you run Journal Posting (GL190), the application creates the following balancing entries to the interzone payable and interzone receivable accounts defined in Interzone Relationships (GL30.1).