Frequently I am asked “What does dimensional accounting mean?” The best I can offer is to tell you what dimensional accounting means to me.
Dimensional Accounting is the ability to ask a general ledger account “What is in you?”
Isn’t it the question we always need answered? “What the heck is going on in this account?” or “Where did that balance come from?”
Below is a simple report run from the cumulative activity of a single account. Since all transactions in the account had been tagged with the Employee Dimension, a balance by employee could be established. Because additional values could be assigned to the Dimension Tags (Active or Terminated), additional classification and grouping was possible by building simple dimension structures for Active and Terminated.
All from a single ledger account, using a simple, check the box, built in financial report writer allowing for drill downable results to originating transactions. Report writing time: 5 minutes.
A simple example with powerful implications. Here are some other possibilities to consider:
- Prepaid Expenses by Vendor or by Class
- Deferred Revenue by Customer
- Work In Process by Project or Work Order
- Inventory by Item (very useful when your subsidiary does not tie to GL)
This is why I am excited about dimensional accounting. This is why I no longer see value in the general ledger of my past.
What could you do with such a ledger? How many spreadsheets are you currently maintaining that could be eliminated?
What do you think?
Share your thoughts in the comments.
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