ByDesign Reporting Principles explained

n any implementation, when you start configuring the system, one of the most important activity
that we need to complete is configuration of Set of books for the company (Help
Document : Configuration: Set of Books) and during this set of books configuration, you are
required to select the appropriate reporting principle.

Details of the about the different reporting principle is available in Help Document : Reporting
Principles

Reporting Principles
As you can see in the image above, ByD Provides, 9 reporting principle.

I will try to explain the behaviour and impact of some of these reporting Principles. (Except
Fund, Profit center and segment, clearing and Grant, Fund, Profit center and segment, clearing)

Function of Expense :
If function of expense accounting is active (i.e the Income Statement by Function of Expense
principle is activated if you answered the question Do you report your income statement by
function of expense? with Yes) the functional area has to be filled in all P/L items. Therefore
functional area derivation will be processed.

• PrCtr/Segment
If profit center (and segment) accounting is active (i.e The Profit Center Accounting and
Segment Reporting principle is activated if you answered the question You can create financial
reports based on segments and profit centers with Yes.) the profit center will be derived in each
item that refers to one of the objects

 Material (from Product category + Business residence)

 Cost Center (within Organization hierarchy)

 Fixed Asset (directly or via assigned cost center)

 Free Cost Object

 All other objects (via assigned Cost Center)

Segment always will be derived from profit center (within Organization hierarchy).
• … with Balancing
means that profit center and segment has to be filled not only in items referencing to objects
above but in all items. This will be done by inheriting profit center / segment from items with
reference to items without reference. If the relationship is N : 1 it can happen that the item
without reference should be filled with more than one profit center / segment. In such a case
item will be split and each of the resulting items will be filled with one profit center / segment.
hence the name Balancing.

• … with Clearing
means that within each journal entry balance for each profit center / segment has to be zero. If
necessary system creates new items to a specific G/L account (profit center clearing) within a
journal entry to achieve zero balance.
 Profit Center / Segment
Functional Area
Name Inheriting / Balance Zero
Derivation Derivation
Splitting Items

Profit center and segment No Yes No No

Funct of exp, profit ctr/seg Yes Yes No No

Profit center and segment, balancing No Yes Yes No

Funct of exp, profit ctr/seg, balancing Yes Yes Yes No

Profit center and segment, clearing No Yes Yes Yes

Funct of exp, profit ctr/seg, balancing Yes Yes Yes Yes

Function of Expense Yes No No No

Posting Example (Invoice Like Documents)
 "Profit center and segment" or "Funct of exp, profit ctr/seg"

Company Currency Transaction Currency

General Ledger
Line Debit Credit Debit Credit
Account

1 AR $97.63 €100.00

2 GL 1 $29.29 €30.00

3 GL 2 $68.34 €70.00

We have 3 items and the profit center / segment are derived from cost centers on the overhead
items. But the accounts payable item has no profit center.
 "Profit center and segment, balancing" or "Funct of exp, profit ctr/seg, balancing" or "Profit center and segmen
profit ctr/seg, balancing"

Company Currency Transaction Currency

General Ledger
Line Debit Credit Debit Credit
Account

1 AR $29.29 €30.00

2 AR $68.34 €70.00

3 GL 1 $29.29 €30.00

4 GL 2 $68.34 €70.00

We have 4 items and the profit center / segment are derived from cost centers on the overhead
items. The accounts payable item has profit center / segment inherited from the overhead items.
It’s split into two items because in overhead items two different profit center exist.
 Function of Expense

Company Currency Transaction Currency

Line General Ledger Debit Credit Debit Credit

 Account

1 AR $97.63 €100.00

2 GL 1 $29.29 €30.00

3 GL 2 $68.34 €70.00

We have 3 items and profit center / segment are not derived on the overhead items. Also the
accounts Receivables item has no profit center.

Posting Example ( Manual journal Entry) :

 "Profit center and segment" or "Funct of exp, profit ctr/seg" or "Profit center and segment, balancing" or "Fu
balancing"

Company Currency Transaction Currency

General
Line Ledger Debit Credit Debit Credit
Account

1 GL 1 $ 97.63 € 100.00

2 GL 1 $ 97.63 € 100.00
 "Profit center and segment, clearing" or "Funct of exp, profit ctr/seg, balancing"

Company Currency Transaction Currency

General
Line Ledger Debit Credit Debit Credit
Account

1 GL 1 $97.63 €100.00

2 GL 1 $97.63 €100.00

PC Clearing -
3 $97.63 €100.00
Credit

PC Clearing -
4 $97.63 €100.00
Debit

Profit center / segment are derived from cost centers on the items.
 "Profit center and segment, clearing" or "Funct of exp, profit ctr/seg, Clearing"

Company Currency Transaction Currency

General
Lin
Ledger Debit Credit Debit Credit
e
Account

1 GL 1 $97.63 €100.00

2 GL 1 $97.63 €100.00

PC Clearing -
3 $97.63 €100.00
Credit

PC Clearing -
4 $97.63 €100.00
Debit

Two more balance zero items are created. This is done to achieve Zero balance for each profit
center / segment.
 Function of Expense

Company Currency Transaction Currency

General
Line Ledger Debit Credit Debit Credit
Account

1 GL 1 $29.29 €30.00

2 GL 1 $ 68.34 €70.00

Profit center / segment are not derived on the items.

I hope this will explain the reporting Principle and its impact on the Journal entries.