Primary Balancing Segment, Second Balancing Segment, Third Balancing Segment

Primary Balancing segment is required whereas second and third balancing segments are optional and can be assigned
to division or to cost center segment. With the help of these balancing segments, Fusion GL offers tracking of Financial
transactions and results at a finer level of granularity compared to single balancing segment in EBS R12.

WHY BALANCING SEGMENT IS REQUIRED-

LET US FIRST UNDERSTAND WHY BALANCING SEGMENT IS REQUIRED AND WHAT IS THE USE.
A balancing segment is a segment in chart of account structure. Whenever we define structure , we must choose one of
the segment as balancing segment. Primary Balancing Segment is a Segment qualifier attached to company segment
and helps to generate Balancing entries in receivables and Payables. By doing this , system ensures that journal entries
are balanced that is- debits equal credits for each value of the balancing segment and journal entries are always
balanced by company (since Company segment is chosen as balancing segment)

In Oracle Fusion General Ledger, we can use 3 segments as balancing segments. First one is called Primary Balancing
segment and is a required segment (this normally represent Company or Legal entities). Values in this segment is
assigned to legal entity when we configure accounting in General Ledger.

The other two balancing segments (second and third) are optional and can represent other parts of the enterprise
structure, like divisions or cost center or line of business (LoB). Balancing segments helps to monitor companys retained
earning or to track assets, Liabilities and Equity ie net balance sheet.
ADVANTAGE OF USING BALANCING SEGMENT-

Balancing segment ensures that all journals balance for each balancing segment value.

General ledger automatically calculates and create balancing lines as required in journal entries.

By using Multiple Balancing Segments (MBS), it is possible to generate Financial Statements for each unique
combinations of Segments.

This offers greater insight into visibility of operations to monitor and measure financial performance of a
company.
Multiple balancing segments ensures that account balance comes from journal entries where Debits equal Credits and
financial reports are properly generated for each account combination across all the balancing segments. This helps
users and company to get more granular reporting however this requires more resource and steps to achieve granularity.

When to decide using Multiple Balancing Segments-

It s very important to decide on the use of multiple Balancing Segment for the first time. Start using these segment labels
for your Chart of account from the beginning and should be used regularly.This helps to ensure that Balances are
maintained consistently for financial Reporting.
Multiple Balancing Segments if not maintained from the beginning, requires manual balance adjustments to catch up as
well as to match the balances in accordance with MBS if we start using them in between.

Precaution should be taken not to assign balancing segments to already existing and qualified natural accounts or
Intercompany segments to avoid discrepancy later on.

In other words, once enabled a segment as balancing segment it should not be removed or disabled throughout the use
of Chart of Account in an enterprise.