Do Sub-Ledger Balances Add Up to GL Balances?

Often discussions with others result in going back to the basic principle I talked about the relationship of the Data Warehouse to the General Ledger. That discussion focused on activity, the thing that creates journal entries.

Today’s video builds on that but focuses on the balances. In the operational source systems, we typically make balances of some kind. Can one can accumulate all the balances in existing sub-ledgers to create the GL balances, as is sometimes attempted in a Data Warehouse?

The answer is no, again because of the different perspective generated by the Accounting Rules Engines, which turn single transactions into a dual, Debit and Credit perspectives, adding the flow through that account model accounts. The balances in the sub-ledgers are not built through the same set of logic that creates the accumulated balances in the General Ledger.

But they could be!

Consolidating our accounting rules, functioning at more granular levels and using the concepts of step-ups would allow this to happen.

Doing so will create greater consistency in our financial reporting processes, everywhere.

This is Episode 224 of Conversations with Kip, the best financial system vlog there is. Literally learn more–about ledgers and financial systems–at FinancialSystemsEducation.com.

Watch all episodes in order at the Conversations with Kip Playlist

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