Chart of Accounts, Values, and Account Hierarchy Design
This domain covers the accounting key flexfield: how segments, value sets, labels, validations and hierarchies combine into a workable chart of accounts, and how those choices ripple into balancing, reporting and allocations.
Chart of accounts anatomy
- Each segment points to a value set defining length, validation, value security and formatting.
- Segment labels give behaviour: Balancing (intercompany balancing), Natural Account (with account type Asset, Liability, Owner's Equity, Revenue or Expense), Cost Center, Intercompany, Management, Second Balancing.
- Validation types include Independent, Dependent, Table and None. Dependent value sets need a parent value set; table-validated sets read from an external table.
- Cross-validation rules block invalid combinations, such as a cost center permitted only with certain natural accounts.
Hierarchies
Account hierarchies are trees with a tree version and a hierarchy type. They can be value-based or range-based, and a parent value may be flagged to allow posting. Published hierarchies feed allocations, budgetary control and financial reports.
Worked example
Design a five-segment account: Company, Cost Center, Natural Account, Intercompany, Future1. Reasoning: Company carries the Balancing label and uses an independent, validated value set; Natural Account carries the Natural Account label with account type set per value, not on the value set; Intercompany carries the Intercompany label so balancing rules derive due-to/due-from; Future1 stays unlabelled and unused so it can be repurposed later without a structural change.
Traps
Setting account type on the value set rather than on each value; posting to a parent with posting disabled; disabling a value that still carries balances; using a dependent value set for the balancing segment when it must be independent.