I am confused about inter company journal balancing.As far as I can tell, it does one or both of:1) If you enable it you *can* post incorrect (i.e. imbalanced) journals. And if you disable it you can't (i.e. all journals must balance - A GOOD THING, RIGHT?)OR2) If you disable it there's no way for you to post between companies. And if you enable it you can (A GOOD THING).Is the setting there so that you can do (2), even though an undesired consequence is you have to accept (1)?From a manager's point of view, is it a good thing or a bad thing?Thanks.(Sorry if this is unclear - it's hard to explain what I mean).

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Vaibhav

  • May 31st, 2006
 

Option 1 is the correct one.

If we enable it then we can post unbalanced intercompany journals i.e debit <> credit for a balancing entity. For this we have to define intercompany accounts in setup-->Accounts-->Intercompany accounts, which will post the unbalance part to this intercompany account.

And if you disable it you cannot post the journals which are out of balance.

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Hiten Makwana

  • Oct 26th, 2006
 

From what i understood in your question, you are talking about enabling "Intercompany balancing" flexfield qualifier for the 'Company' segment.

If my understanding is correct,

Apart from option 1 nd 2 , the main idea behind this is to use the company segment as a Balancing segment for the "Consolidations"....

Also, allowing imbalanced journal entries with Suspense account created for the difference amount ,is the usual business practice....But only for the same Set of Books.

Please correct me if i m wrong....

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Murali

  • Sep 13th, 2007
 

Sorry to say that as u have said urself - its a little difficult to understand ur question

Intercompany transactions are mainly to make payments on behalf of other companies (sister concerns / subsidiary companies etc for example). One of the reason could be shortage of funds

There is no question of anything being 'bad' about this - remember that the respective accounts (receivables and pay-ables) are debited / credited automatically keeping a complete track of who has paid. These accounts are specified during creation / enabling intercompany.

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tonyj666

  • Mar 31st, 2010
 

If you enable intercompany balancing and post an out of balance journal Oracle will create the necessary journal entries to balance. So you can load  an out of balance journal but Oracle will correct the issue at the time of posting. Personally not a good idea as you would then need to manage the entries booked to this account.

If you have not enabled interco-balancing then the journal will be rejected at the time of posting

Note the journal would be rejected at the time of loading if the debits <> credits

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Amol

  • Aug 8th, 2016
 

Hi,
I think your confusion is about intracompany transactions, I will try to clarify it.
There are 2 types i) Intracompany & ii) Intercompany
Your question is is regards to intracompany. Which is nothing but a transaction between balancing segment values. Ex. Payables.
In payables option, accounting tab offset accounting is provided with 3 choices NONE,BALANCE & ACCOUNT.
If you choose none here & came across Intracompany transaction you must define a rule in GL to post it into GL else you have to choose either ACCOUNT or BALANCE so that system automatically balances the journal entry.

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