Offset accounts in SAP

Offset account is an account that reduces the gross balance of another account to yield a net balance. An accounting transaction is complete when there are at least one debit and corresponding credit entries to that transaction. This example will explain the Offsetting Account: 

Purchased goods Accounting Entry:
Material Account Dr
GR/IR Account Cr

In this case, Material Account is the Offsetting Account for GR/IR Account and GR/IR Account is the offsetting Account for Material Account.

In some countries, the law requires you to break down all accounting documents so that each debit posting is matched to exactly one credit posting, and vice-versa. For example, when you record a vendor invoice in the system, there is only one credit item for two debit items: ( Look at the picture below)

Vendor Invoice
According to Russian law, you are required to break down the debit item to create pairs of debits and credits:

Vendor Invoice as Per Russian Law
In the system, accounts clerks post all accounting documents as normal, and determine the offsetting accounts later on. The system offers functions that automate this procedure. However,the above example is fairly simple, since you only divide one credit between two debits. The system also processes complex accounting documents that contain multiple debits and multiple credits, but you have to check them manually afterwards.