Accounting unit

An accounting unit represents a location or business center in a general ledger company, such as a division, department, region, or store. Your company can include up to five levels of accounting units. A level represents a layer in a company structure's hierarchy.

For example, a company structure might include three levels: region, division, and department. Each level is part of, or reports up into, the level above it. Each accounting unit must have a unique name, which can be up to 15 characters long. You cannot change an accounting unit name after you define it.

Uses of accounting units

You can use accounting units to further define your company structure. By defining accounting units at different levels, you build a structure that resembles your organization. There are two types of accounting units that you can define:

  • Posting accounting units are used to post journal entries. These accounting units are the lowest level of the chain in a General Ledger company.

    Note: You cannot define additional accounting units below a posting accounting unit.

  • Summary accounting units are used to summarize the activity of lower level accounting units for consolidation and reporting.

Considerations for naming accounting units

Consider these guidelines when defining accounting units:

  • Accounting units must have a unique name.

  • Names can be up to 15 alphanumeric characters.

  • You cannot change an accounting unit name after you define it, but you can change the description.

  • Naming posting accounting units numerically preserves ten-key efficiency for data entry.

Example

This diagram shows the accounting units, and their respective levels, as defined for the retail division of LGE Corporation. Although as many as five levels of accounting units can be defined, LGE Corporation has elected to define only three levels. By defining the company structure this way, LGE can report on results in a variety of ways, such as seeing results for:

  • only the River Bend restaurant (601 posting accounting unit),

  • only the Grove restaurant (602 posting accounting unit),

  • both restaurants (Restaurant summary accounting unit), and

  • all restaurants and gift stores (Retail accounting unit).

    Illustration: using accounting units at multiple levels to define company structure
    Note: To simplify reporting, you can include all posting accounting units at the same level in a company.
    Illustration: posting accounting units can be located at any place in the organization, but must be the lowest in the chain