Can I get an explanation of the eliminate intercompany entries works during month-end close? Are lines that are labelled as intercompany elimination meant to tie back to the amounts that are ultimately eliminated?

AI generated answer (using internal Slack threads):

Intercompany eliminations are used to remove from the financial statements any transactions that occurred between the company's entities. This process is crucial to avoid any distortions in the financial statements that could mislead the users of the statements. In NetSuite, the process of eliminating intercompany entries during the month-end close is typically automated, but it can also be done manually. The automated process is triggered at the account level, meaning that all transactions associated with the flagged accounts will be eliminated. However, if you want to eliminate only select transactions, you will need to manually create elimination journal entries. Here's a simplified step-by-step process: 1. Create a new journal entry. 2. Debit the Intercompany Accounts Receivable (AR) account and credit an Intercompany Clearing account. This will eliminate the AR balance. 3. Create another journal entry. 4. Debit the Intercompany Accounts Payable (AP) account and credit the Intercompany Clearing account. This will eliminate the AP balance. The lines that are labelled as intercompany elimination are indeed meant to tie back to the amounts that are ultimately eliminated. They represent the transactions that have been removed from the financial statements due to the elimination process. In terms of the elimination subsidiaries, it's not as simple as the subsidiary hierarchy. It's transaction-based. If an intercompany transaction occurs between two subsidiaries, it will first use the elimination subsidiary closest to them in the hierarchy, then move up the hierarchy as needed. This could result in multiple elimination journals for a single transaction. ****** Disclaimer: This response was generated by an artificial intelligence assistant based on previous conversations from multiple Slack channels, and may contain inaccuracies or mistakes. ******