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Key Concepts 59

Figure 3-9: Posting key examples

of posting keys related to debit and credit postings to customer, vendor, and
general ledger accounts.

Demo 3.3: Review an FI document

PARALLEL ACCOUNTING
The general ledger is based on the operating chart of accounts. In fact, an
organization can implement multiple ledgers in parallel and use each ledger
for different purposes. This practice is called parallel accounting. In a typical
arrangement, an enterprise will implement one set of accounting principles
for all companies (company code) in the enterprise (client). These global prin-
ciples are consolidated in a single ledger known as the leading ledger. A lead-
ing ledger is required, and all transaction data are posted to it. In addition, the
enterprise will defi ne nonleading ledgers for each company (company code)
based on local accounting practices, such as US GAAP and German HGB. 3
GBI has implemented a leading ledger based on the GL00 COA. GBI
does not maintain additional ledgers. However, Figure 3-10 illustrates how
parallel accounting would be implemented within GBI should the enterprise
choose to do so at a later date. In addition to the leading ledger, each of the two
GBI companies has a nonleading ledger based on local accounting standards.
GBI uses the leading ledger to consolidate its fi nancial statements for the
global enterprise and the nonleading ledgers to meet local reporting require-
ments in Germany and the United States.

3 Most countries have their own standards for fi nancial reporting. In the United States, generally
accepted accounting principles, or GAAP, are used to prepare fi nancial statements. In Germany,
the German commercial law, German Handelsgesetzbuch (HGB) is the standard. A global stan-
dard, the international fi nancial reporting standard (IFRS), is available, but it is not adopted by
all countries.

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