FRx Calculation and the C in Normal Balance

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Posted on by Community Member Microsoft Employee

Hello, this may be a little complicated and hard to explain so please bear with me. I’m hoping some FRx gurus out there can help me understand something.

I’m trying to teach myself FRx so I’m reading the FRx user guide. On page 53 they instruct you to enter a row in a row format. This row description is Interest Income (Expense). On a single row you combine a debit account and a credit account. The accounts are 5650 = Interest Expense & 7000 = Interest Income. In column H (Link to GL column) the formula is 5650 + 7000. And it instructs you to put a C in the Normal Balance column, which reverses the sign of the amount displayed.

So here we are taking an expense account which is a debit and ADDING the revenue account which is a credit. Normally you subtract your expenses from your revenue.

So normally you have: Revenue – Expense = Net (or Gross whatever…)

Here we have: Expense + Revenue = Net (or Gross whatever…)

So I’m assuming since FRx treats credit balance revenue accounts as negative amounts you can’t subtract the expenses since subtracting a positive number from a negative number will always give you a negative amount. Eg: -10 – 5 = -15 and this is not what we want. So we are forced to reverse the logic.

And the C in Normal Balance will reverse the sign so:

If our expense is say $100 and our income is say $75 we have $100 + (-$75) = $25 but the C reverses it so we have -$25 which is right since our expenses are greater then our income.

If our income is greater we have $75 expense & $100 income so we have $75 + (-$100) = -$25 but again the C reverse it so we have a positive $25.

Do I have this right?

Also, I’m assuming the C gets applied AFTER the calculation in column H?

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PdT 1,035 on at

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Re: FRx Calculation and the C in Normal Balance

You are right in your example. It will first follow standard maths rules for adding and subtracting amounts, taking into account the sign and then just flip the sign around afterwards.
Community Member Microsoft Employee on at

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Re: FRx Calculation and the C in Normal Balance

Thanks. But what I’m really trying to figure out is, IF & WHEN I need to include a credit balance account AND a debit balance account in the same Link to GL column row, then the correct way to create the formula is to ADD the credit balance account to the debit balance account and put a C in the Normal Balance column?

In other words I’m looking for something like…”because FRx treats CR balance accounts as negative when you want to net the accounts out you should…..” i.e. I’m looking for a (general) rule.
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PdT 1,035 on at

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Re: FRx Calculation and the C in Normal Balance

Just as a side note....

It is not to say that your interest income is revenue, unless your business is to give loans and you collect interest. If the interest income is from investments, it is not seen as revenue and will not be shown in the revenue section of the P&L. Looking at your example, the interest income does not seem to be revenue and that is why it is netted off agains the interest expense (interest income in this case is an expense account that will carry a credit balance). Normally, you will only reverse the sign in the revenue secion of your P&L (use the C) but in the interest section you will just let it show as is so that if you earned more interests than what you paid, it will show as a negative which means that it is lowering your expenses.
callen 4,595 on at

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Re: FRx Calculation and the C in Normal Balance

That's just an example. You don't have to add the two accounts together. The C in the balance column is used when printing the balance on the report.

Think of debit-balance accounts as positives and credit-balance accounts as negatives.
Community Member Microsoft Employee on at

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Re: FRx Calculation and the C in Normal Balance

Thanks. But what about why we're adding the revenue to the expense account. Is the reason because of how FRx treats revenue as negative? And when does the C reverse the amount? After all calculations have been performed? I'm trying to get a grip on how to construct formulas in FRx and why they're done in certain order. Thanks.
callen 4,595 on at

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Re: FRx Calculation and the C in Normal Balance

Correct. The reason for putting the C is if you want to display the account amount as a positive. Thus, if the net balance is $100 Credit, then you want to display it as a positive on the income statement since income is thought of as a positive thing, pun intended.

You are correct that the system recognizes the balances of credit balance accounts as negative. If you don't put a C, the amount appears as a negative.

FRx Calculation and the C in Normal Balance

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