Use divisions for the Balance Sheet

Divisions can be applied to various aspects of the Balance Sheet, including subsidiary ledgers of balance sheet accounts. This allows you to report the financial position of various divisions or cost centers, subsidiary businesses, projects, company branches, or portfolios. Divisions are created and managed as described in another Guide.

Now, an important distinction is that a balance sheet must report real account balances, not movements in those accounts like a profit and loss statement. So a division needs to be set on the account or subaccount level rather than for a transaction.

For purposes of illustration, let’s say you have two divisions:

  • Awesome division
  • Brilliant division

You create these divisions on the Divisions page under the Settings tab:

Applying divisions to accounts or subaccounts

Every balance sheet account (or subaccount) can now be assigned to a division. That includes:

  • Bank accounts
  • Cash accounts
  • Customers
  • Suppliers
  • Employees
  • Inventory items
  • Fixed assets
  • Intangible assets
  • Special accounts
  • Capital accounts
  • Expense claim accounts
  • Custom balance sheet accounts defined in the chart of accounts

For example, when you create a bank account, you can set the division to which this account belongs:

Notes
If a balance sheet account or subaccount is not assigned to a division, Manager treats it as belonging to the entire business. Its balance will show on undifferentiated financial statements, but not on those defined for a specific division.

The Division dropdown field does not appear on any screen unless at least one division has been created.

Now let’s create a fixed asset belonging to the same division:

Then, let’s create a payment transaction to purchase this fixed asset:

As you can see, when entering transactions and interacting with balance sheet accounts, you do not select a division on individual transactions. Balance sheet accounts are always “owned” by a single division. In other words, the balance of the account is owned by division, not the movement as on a profit and loss statement.

Viewing financial position by division

We can define divisional balance sheets. In the example below, the first column leaves the Division field with the default, Optional, entry. That column will report the position of the entire business. The other two columns will report balances specifically for the Awesome and Brilliant divisions:

The resulting report looks like this, with all balances showing under the Awesome division heading matching the Consolidated heading (because no other transactions were entered):

You can enter interdivisional transactions, too. For example, a fixed asset could belong to Brilliant division, but could have been purchased using money from Awesome division. Let’s edit the fixed asset and assign it Brilliant division, then look at the balance sheet again:

Now you can see the fixed asset we purchased is under Brilliant division.

There is also new account called Interdivisional loan that automatically tracks loans between divisions so divisional balance sheets always balance. The Interdivisional loan account only has balances at the divisional level. Its net balance at the consolidated, business level is always zero. Therefore, this account never shows on the Summary page.

If you have an existing business, you can migrate to divisional accounting by simply editing every balance sheet account and selecting divisions.

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