What is a mirror account in banking?

Answer 1

Mirror accounting is used in European countries that require

changes in inventory to be immediately reflected in the

income statement. With mirror tables, you can combine the

creation of balance sheet inventory entries with the creation

of related entries to income statement accounts by

associating a pair of source accounts with a pair of mirror

accounts.

Mirror accounting only applies to inventory (IC)

transactions. Whenever an inventory transaction creates a

general ledger (GL) entry for a specified combination of

source accounts, the system automatically creates GL entries

to the related mirror accounts:

Debit Source Account 1

Credit Source Account 2

Credit Mirror Account 1

Debit Mirror Account 2

For example, when there is a work order issue, the system

reflects the change on the balance sheet as well as on the

income statement, creating two transactions:

Debit WIP (Source Account 1)

Credit Inventory (Source Account 2)

Credit COP (Mirror Account 1)

Debit Material Usage (Mirror Account 2)

Source Account 1 maps to Mirror Account 1. Source Account 2

maps to Mirror Account 2. If you are entering a standard

journal entry manually in Standard Transaction Maintenance

and are using mirror accounting, enter the debit or credit to

Source Account 1, then the reversing action to Mirror Account

1. Do the same for Source Account 2 and Mirror Account 2.

Sub-account and cost center codes can also be mirrored and

reflected on the income sheet statement.

Set All Sub-Accounts and All Cost Centers to Yes to

streamline the creation of source and mirror account

relationships. The values entered in the source sub-account

and cost center fields are re-used in the mirror sub-account

and cost center fields.

When All Sub-Accounts is Yes, leave the source and mirror

sub-account blank. Similarly when All Cost Centers is Yes,

leave the source and mirror cost centers blank. The blank

source field is treated as a wildcard. Mirror sub-accounts

and cost center fields use the codes from the GL transaction.

When All Sub-Accounts or All Cost Centers is No, the system

only creates mirror transactions when an exact match is found

on the source account, sub-account, and cost center values in

the mirror accounting table.

If Verify GL Accounts is Yes in Domain/Account Control, each

account component you enter must be valid on its own and in

combination with other account number components. Sub-account

codes and cost center codes must be valid for all ranges of

accounts and sub-accounts used in mirror accounting. Set up

ranges in Sub-Account Code Maintenance and Cost Center Code

Maintenance.

MIRROR ACCOUNTING SETUP EXAMPLES

For example, you set up a mirror table with the following

values:

Entity: 1

Source 1: 1000 blank blank

Source 2: 1500 blank 30

All Sub-Accounts: Yes

All Cost Centers: No

Mirror 1: 2000 blank blank

Mirror 2: 2500 blank blank

Based on value of All Sub-Accounts and All Cost Centers, all

sub-account fields must be blank. The blank sub-accounts in

Source 1 and 2 are treated as a wildcard (any value matches).

If the following inventory transaction occurs:

Dr 1000 5000

Cr 1500 4000 30

The system creates the following mirror account transaction:

Dr 2500 4000

Cr 2000 5000

For the following inventory transaction, no mirror

transaction is created:

Dr 1000 5000 10

Cr 1500 4000 20

Although the system found a record in the mirror table that

matched the account (exactly) and sub-account (using the

wildcard), an exact match for the cost center was not found.