Journal Entry Offset Account

Question

Hi Experts,
I have notice that if we add some entry on Journal Entry it will automatic fill up the Offset Account. My question is what is the purpose of this field? and can we configure or edit that offset account that is link with the GL Account on JE?
Thanks,
Jonathan

Answer 1

Hi,
Please check the following explanation regarding the offet account with examples :
The Offset Account in the JE is used mainly for reporting purposes. It contains the account from the opposite entry in the current JE.
When creating a JE the Offset Account field is blocked for editing and it is not possible to manually enter an account. This field is automatically populated when the JE is added to the system. It is filled with the first posted account from the opposite side (Debit/Credit account) in the current posted JE. Naturally the account cannot be pulled at random from the Chart of Accounts, but must be present in a row in the current JE.
Once the JE has been posted, it is possible to manually change the offset account by selecting one of the accounts in the current JE from the drop down list.
For example, a manual JE is created posting a debit of 100 and 150 to BP1 and BP2 respectively. When manually creating it, it looks as follows:
Line1: BP1 Debit 100 OffSet Account: None
Line2: BP2 Debit 150 OffSet Account: None
Line3: Account1 Credit 100 OffSet Account: None
Line4: Account2 Credit 150 OffSet Account: None
Once the JE is added to the system the offsetting accounts are assigned. In this case the first posted debit account is assigned to both of the credit entries.
The first posted credit account is assigned as the offsetting account for the debit entries.
Line1: BP1 Debit 100 OffSet Account: Account1
Line2: BP2 Debit 150 OffSet Account: Account1
Line3: Account1 Credit 100 Offset Account: BP1
Line4: Account2 Credit 150 OffSet Account: BP1
To ensure the correct offset account is assigned to the correct account, if the above is not suitable, the sequence of entries in the JE needs to be: Debit, Credit, Debit, Credit. Working this way, the offset accounts will be correctly assigned.
Continuing with the above example, the offset account for BP1 should be Account1 and the offset account for BP2 should be Account2.
To create the JE ensuring that the correct offset account is assigned to each account the JE should look like the following:
Line1: BP1 Debit 100 Offset Account: Account1
Line2: Account1 Credit 100 Offset Account: BP1
Line3: BP2 Debit 150 Offset Account: Account2
Line4: Account2 Credit 150 Offset Account: BP2
You can also check Note No. : 893736  for the explanation.
Kind Regards,
Jitin
SAP Business One Forum Team