Accounting technology / Glossary / Accounting dimensions

What are accounting dimensions?

Definition

Accounting dimensions are tags, such as department, location, entity, project, product or customer, attached to each transaction line in the general ledger. They let a company report the same accounts in many ways, for example travel costs by team or revenue by product, without creating a separate account for every combination in the chart of accounts.

Also calleddimensional accountingtracking categoriessegmentsanalysis codes

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Examples: Department, location, project, product
Replaces: Long account code strings
Xero name: Tracking categories

How accounting dimensions work

In older ledgers, each reporting need was built into the account code: a separate travel account for every department and site. That multiplies the chart of accounts and makes changes slow. Dimensional ledgers keep a short chart of accounts and store the extra detail as separate fields on each line. Reports and budgets can then be cut by any dimension or combination. Dimensions are usually required or defaulted by rule, for example every expense needs a department, to keep the data complete. Software names vary: Sage Intacct and NetSuite use dimensions and segments, Xero uses tracking categories and QuickBooks uses classes and locations. Planning tools import the same dimensions so budgets and actuals line up.

Common questions

What is the difference between an account and a dimension?+

The account says what the transaction is, such as travel or revenue. Dimensions say where or for whom it happened, such as the sales team, the London office or a project.

How many dimensions should a company use?+

Only as many as it will report on and keep accurate. Each one adds a field to fill in on every transaction, so most companies start with department and location and add more as needed.

Can dimensions be added after go-live?+

Yes, in most ledgers, but history will not be tagged. Adding them at implementation, or back-tagging key accounts, gives comparable reports over time.