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Many accountants working on external projects are quite happy with just having a grouped, detailed chart of accounts and nothing else. Others are used to having “Department” and/or “Project” dimensions in their accounts. Really, “dimensions” are a question of IF or HOW you need to filter income and expenses in reports. Let me give you an example:

 

You set up a car rental company. Buildings are built or leased, you buy inventory, and hire employees. Eventually, you fill the premises with different types of cars for rental. And once all of this is up and running, you (hopefully) start making money from the rentals. At the same time, you have expenses like salaries for employees working on the different types of cars, and also maintenance for both buildings and cars. You are happy with just having a simple account that shows you income and expenses for the ENTIRE business through a simple chart of accounts. So at this point, you may not need any additional dimensions.

 

But, since you offer your customers a full range of car types to rent: Sedans, trucks, RVs, sports cars, SUVs, and vans. The big trucks cost a lot more, and they need much larger buildings for maintenance, parking, and cleaning than the small sedans. But this simple chart of accounts only shows total expenses and income for ALL your car types. Which parts of your business are making a lot of money and which ones are almost losing money? Without dimensions in your accounts, it is almost impossible to know what you are making or spending on, for example, car type.

 

So you decide to add a “Car Type” dimension. You add sedans, trucks, RVs, sports cars, SUVs, and vans to this dimension. When you record vouchers, your accountant “tags” each expense/income with the correct “Car Type” dimension ID. So from now on, you have the option to generate reports for one or more car types, so you can see your accounting figures in more detail.

 

Later, you want to know more about fuel types, and you add the dimension “Fuel” with the following choices: Gasoline, Diesel, Hydrogen, Electricity. Now all your expenses and income are also labeled with the fuel type. Now you can even choose reports for different vehicle types and fuels. This way, you can find out if you earn more on electric vans than on diesel trucks.

 

When you expand your business to other cities, you can add a department or location dimension, so you can see the profit or loss for each location.

 

THIS is what “Dimensions” can do for you. But don’t ask for more dimensions than you actually need. Most of our customers normally only use two: “Department” and “Project”. Others want “Location” and “Project”.

 

IMPORTANT: If your accounting receives contributions from large support organizations, you need to discuss with them which dimensions they would like you to use in your accounting.

 

Short example from a traditional Chart of Accounts, WITHOUT dimensions:

You must have many separate accounts to cover all combinations of departments and projects. You have no option to report numbers from individual projects.

 

6210 Office Expenses, Production Department Sedan Project

6211 Office Expenses, Production Department Truck Project

6203 Office Expenses, Sales Department Sedan Project

 

Same example, with only ONE account, (6200 Office Expenses), but with the following dimensions:

 

Department (1st dimension):

10 Purchasing

11 Production

12 Sales

 

Project (2nd dimension):

100 Sedan

110 Truck

 

The same four transactions using dimensions:

Account Dept. Project

6200 11 100

6200 11 110

6200 12 100

 

The last example shows how accountants can create reports for any combination of the different dimensions!