AVG Balances

[amicguys]

Hi All,

If anybody have the docs relating to AVG balances, then plz share the same with all team members


Thanks
Vijay

[amicguys]

HI ALL,

<u>Activity</u>

The Average Balance feature of Oracle General Ledger provides organizations with the ability to track average and end-of-day balances, report average balance sheets, and create custom reports using both standard and average balances. Average balance processing is particularly important for financial institutions, since average balance sheets are required, in addition to standard balance sheets, by many regulatory agencies. Many organizations also use average balances for internal management reporting and profitability analysis.

The difference between an average and standard balance sheet is that balances are expressed as average amounts rather than actual period-end amounts. An average balance is computed as the sum of the actual daily closing balance for a balance sheet account, divided by the number of calendar days in the reporting period.

<u>Process</u>

Assume that we have three balance sheet accounts (Account A, Account B, and Account C). Each has an opening period balance of INR (0.00)

<u>Day One</u>
The transaction shown in the following table is the only activity which takes place on the first day of an accounting period:

<u>Day One Activity</u>

Account Debit Credit
Account A 1000
Account B 1000
The above activity yields the results shown in the following table:

<u>Day One Account Balances</u>

Account Activity End-of-Day Aggregate Average
Balance Balance Balance
Account A 1000 1000 1000 1000
Account B (1000) (1000) (1000) (1000)


Note that on day one the aggregate balance for each account is the same as the end-of-day balance. The average balance equals the aggregate balance divided by 1, the number of days in the period.

<u>Day Two</u>

On day 2, the following transaction takes place, as shown in the table below:

<u>Day Two Activity</u>

Account Debit Credit
Account A 100
Account C 100


The above activity yields the results shown in the following table:

<u>Day Two Account Balances</u>

Account Activity End-of-Day Aggregate Average
Balance Balance Balance

Account A 100 1100 2100 1050
Account B 0 (1000) (2000) (1000)
Account C (100) (100) (100) (50)

Note that the aggregate balance for each account equals the end-of-day balance for day 1, plus the end-of-day balance for day 2. Another way to state this is: aggregate balance equals the previous aggregate balance plus the current day's end-of-day balance.

The average balance for each account equals the aggregate balance divided by 2, the number of days in the period-to-date.

Day Three
On day 3, the transaction, shown in the table below, takes place:

<u>Day Three Activity</u>

Account Debit Credit
Account B 200
Account C 200
The above activity yields the results shown in the following table:
<u>
Day Three Account Balances</u>

Account Activity End-of-Day Aggregate Average
Balance Balance Balance

Account A 0 1100 3200 1066.66
Account B 200 (800) (2800) (933.33)
Account C (200) (300) (400) (133.33)



Note that the aggregate balance for each account equals the sum of the end-of-day balances for days 1 through 3. The average balance for each account equals the aggregate balance divided by 3, the number of days in the period-to-date.


Processing Options for Non-Business Days

There are methods you can use to control transaction processing when effective dates fall on non-business days:

? Leave alone - accept transaction dates and complete posting.
? Fail- reject transactions; no posting.
? Roll Date- roll transactions to the previous valid business day, within the same period, and
complete posting.

Note: The roll date cannot cross periods to find a valid business day. The following example illustrates the behavior when the effective date is close to a period boundary.

If April 3 is a Monday and a transaction has an effective date of April 2 (Sunday), the effective date will be rolled to April 3 (Monday), not to March 31(Friday).

Use this method is to control non-business day processing of automated journals from your subledger systems, such as Oracle Receivables and Oracle Payables.