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Terms and Definitions Used in Intercompany Accounting

Intercompany Journal
This is a journal entry which has transactions for at least
two different companies (or balancing segment values).

Intercompany Journal Out of Balance
An out of balance intercompany journal is one which does not have equal
credit and debit totals for each group of lines by company.

Balancing Segment
This is the accounting flexfield segment that has the balancing segment
qualifier assigned to it. Typically the balancing segment stores the company
values. However, it could represent the cost center, the department or some
other values.
The terms balancing segment and company segment are usually interchangeable.
It is mandatory that one segment of your accounting flexfield be designated
as the balancing segment.

Intercompany Segment
The intercompany segment is the accounting flexfield segment that has
the intercompany segment qualifier assigned to it. This qualifier is only
available in release 11i and is optional. This segment shares the same
value set as the balancing segment.

Clearing Account
A clearing account is a temporary account that holds amounts to be
transferred to another account.

Clearing Company
This is the company value used to clear payables or receivables transactions.
General Ledger uses this company to balance intercompany transactions.

Trading Partner
Trading partner is the company against which the line transaction is made.

Transaction Types
Transactions types are the classifications for journal entries based on
the number of companies involved in the credit and debit side
of the transaction.

The different transaction types are:

One to One: Two different companies in the journal. One company
has the net debit balance and the other has a net credit balance.

Many to One: Different companies have net debit balance and one
company has net credit balance.

One to Many: One Company has net debit balance and more than one
companies have net credit balance.

Many to Many: Two or more companies have net debit balance and
two or more companies have net credit balance.

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