Create Asset Liability Revenue & Owners Equity Accounts in Fusion Financials

In the continuation to my previous article wherein we defined some Expense accounts, next we will be creating Asset, Liability, Revenue & Owner Equity accounts. Firstly, we need to understand the concepts, i.e. what is asset and liability and how does it impact the accounting. The understanding of this concept will help you appreciate why the account values within the Fusion Financials Value Set must be qualified as an Asset or Liability or Revenue or Owners Equity. There is a lot of information on the web, and therefore I will be touching base at a very high level in the context of Fusion Financials Accounting Hub.

If you haven’t read the previous article, it must be read using this link. In that article, I explained that any value in the accounting flexfield value set, a segment that has label named Natural Account, can be assigned one of the Account types.

Some examples of Assets, Liabilities and Revenue are

Staff Loans

If you pay to staff in cash for a loan that they must return, then following components are involved from accounting perspective

1. Cash is given out by the company to the staff

This is a credit to the Cash Account. Now cash account is of type Asset.

2. Employee owes the money back to the company. In other words, the company has not thrown away the money, it is owed and that money still remains an asset to the company. The reality is that this is a piece of money that still belongs to the company and must be displayed in their balance sheet as an asset

This is a debit to the Staff Loan Account, which is of type Asset.

Receivables Invoice Transaction

Let us assume Fusion Practices Ltd have sold some consulting services to a customer and customer will pay the money in a months time after receiving service. In this case Fusion Practices Ltd will send an invoice to the customer. This invoice amount that is due[similar to loan repayment due], is shown as an asset in your balance sheet against receivables account.

The other side of the coin is that as a result of raising invoice, the Fusion Practices Ltd would earn revenue. This is a credit to the revenue account.

Bank Account

Anything in Fusion Practices Ltd’s bank account is an asset. When the customer pays a service invoice, it debits the Cash Account of type Asset. Now, this consulting company may do banking with Barclays and HSBC. It is now for the implementor to decide whether they wish to create a single Asset entry in the value set for Cash or should they create one entry in the value set for Barclays Bank Account, and another for HSBC Bank Account. It is preferred to segregate this at granular level, so that management can just by looking at GL Balances know how much Cash is in their Barclays Account and how much cash is in HSBC Account.

But the CFO of the company will ask How much Cash do I have in total? For this, in Fusion Financials you can define Account Hierarchy where both Barclays Bank Cash Account and HSBC Bank Cash Account will be the child to Cash Account. In Fusion General Ledger, the balances are stored in Essbase cubes. Therefore when a journal line entry is posted into Fusion General Ledger, then not only do the cubes get updated with the balances for HSBC & Barclays, but also the summary level Cash account entry also gets automatically updated.

Note - In the XXANV_ACCOUNT value set, if a “Generic Bank Account” was to be a parent entry for Barclays & HSBC, then Allow Posting would have been set to No, so that subledgers/modules are forced to segregate between Barclays & HSBC in this example.

Anyways, to resume from where we left in the previous article, let us now define some further entries in the XXANV_ACCOUNT value set in Fusion Financials. These value set entries will be created for Assets, Liability, Revenue & Owners Equity. We have in previous article already added the values for Expense to this value set.