Date 11-March-2004

Presenter

The only thing more powerful than a great

idea,
is a great idea powerfully executed.
- William Blake

Financials - An Introduction Oracle 11i

Team

Contents

Purpose of this Course

Financial Modules

Financial Modules - Overview

Integration-Financial Suite

Introduction to GL & Accounting

Chart of Accounts & Set of Books

Entering & Importing Journals

Multi-Currency

Financial Reporting

Budgeting

Introduction to Accounting in AP

Introduction to Accounting in AR

Introduction to FA and Accounting in FA

Financial Interfaces

Financial Closing Procedures

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Purpose

The purpose of this course is to make the WASE &

Rainbow students aware of the Oracle Application
Financial modules in brief and equip them to take up any
assignment
This course material does not cover all the details in
depth, you can use this as a starting point and learn
more by reading the user guides and training material
available for individual modules
This material covers GL in more detail which is
accounting back bone for Oracle Financial Modules
This documents assumes that the participants are
already trained in the basics of the Oracle Application
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Financial Modules

Oracle Financial comprises of the following main Finance

Modules

General Ledger
Accounts Payable
Accounts Receivables
Fixed Assets
Cash Management

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GL Integration With Other Oracle Financials Suite

Inventory
Purchasing

Payables
Cash Mgt

Assets

Receivables

Order

General Ledger
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Financial Modules-Overview
Oracle General Ledger (GL):
The central repository of all financial transactions.
At the heart of any accounting system.
A tool, for integrating sub-ledger activity,
consolidating group-wide accounts and releasing
statutory/analytical financial reports.
Accounts Payable (AP)
Payables, an expenditure management tool, used to
streamline the procure-to-pay process
Payable used to Manage Suppliers, Manage
Disbursements & Manage Payments
Saves money by enforcing various payment policies
Effective integration with Cash Management,
Purchasing, General Ledger, Assets & Projects
Accounts Receivables (AR)
An invoicing and collections management
application, used to streamlines order-to cash
process
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Financial Modules-Overview (Cont..)

Receivables manages invoicing, tax calculation, receipt

application, collections, and revenue recognition,
Effective Integration with Cash Management, Order
Management, General Ledger & Projects
Cash Management (CM)
CM helps one to effectively manage and control cash cycle of
the enterprise in order to ensure liquidity and improve
profitability.
Tool used to Manage the Cash Forecasting and reconciling the
bank transactions from Receivables, Payables and General
Ledger with the Bank Statements.
Fixed Assets (FA)
Asset management encompasses three primary activities:
Physical Upkeep: Comprises asset location, asset condition
and
assignment
Asset Tracking: Covers the whole gamut from controlling
leased, loaned and consigned items from
acquisition to asset maintenance.
Financial:
Involves asset value, depreciation and
taxation.
To maintain and calculate the depreciation to the Assets
Integrates with Purchasing, Payables , General Ledger &
Projects
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Introduction to Oracle
General Ledger &
Accounting in GL

GL & Accounting
Chart of Accounts
Chart of accounts uses Key Flexfield (Accounting Flexfield)
that, comprises Segments, Value sets, Values and Code
Combination ID.
Chart of accounts determine how the accounting information
is collected, categorized and stored for reporting purposes.
Set of Books
Ledger, an organization or group of organizations that share
a common chart of accounts, calendar, and currency. A set
of books is associated with one or more responsibilities.
COA, Calender and Currency commonly known as 3Cs which
decide the number of Set of Books in MSOBA (Multiple Set of
Books Architecture)
GL supports double entry accounting where every
accounting transaction results in one or more debits and
credits that are always balanced.
All transactions enter GL in Journal mode only, which on
being posted updates various GL tables. On posting, the
system keeps a record of the total debits and total credits
posted to each account in the period
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Defining Chart of Accounts

Defining the Chart of accounts:
Planning the Chart of accounts structure is the most important activity involving the structure,
segments, segment validation and additional features. Analyze the organizational structure and the
dimensions of the business before designing the Chart of accounts. By carefully evaluating the
Business needs, design the chart of accounts to take advantage of General Ledgers flexible tools
for recording and reporting the accounting information.
The account structure can comprise 30 segments with a maximum character length of 275 for the
Entire String. Each string of multiple-segments is called a code combination and stores a code
combination ID based on which balances are maintained in GL. An accounting chart normally
consists of Company code, Line of Business, Cost center, Natural Account, Intercompany and
Future.
Defining Key Flexfield Structures
Define descriptive information and validation information for each segment.
Determine the appearance of your key flexfield window, the number and order of the segments,
and the segment descriptions and default values.
Freeze flexfield definition and save the changes once set up or when the structures/segments are
modified. On saving, Flexfield compiles automatically to improve online performance.
Compile the flexfield every time when the changes are made to this form, including enabling or
disabling crossvalidation rules and when the changes are made to the shorthand aliases window.
Oracle Applications submits one or two Concurrent requests to generate database views of the
flexfield combinations table.
The flexfield changes immediately after freezing and recompiling. However, the changes affect
other users only after they change responsibilities or exit the application and sign back on.

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Defining Chart of Accounts (Contd)

To Determine the Account Structure That Best Suits Your Organization:
Examine the organization structure to identify how performance and profitability are normally
measured
Also multiple organizational structures may be needed to allow views of the organization from
multiple perspectives. Summary accounts can be used to roll up details.
Visualize each segment of the account as a unit dimension of the business. Combine units that
are based on similar dimensions to avoid using multiple segments that measure the same
dimension.
Identify the functions, products, programs, funding sources, regions, or any other business
dimensions that are to be tracked
Determine the reporting needs.
Consider the following questions before defining the account structure:
What information will better help one to manage ones organization?
What are the different ways in which one can look at ones operations?
What kinds of reports do managers ask for?
What reports one prepares now with some difficulty?
What reports are provided by other financial information systems?
What statistical reporting does one want to perform?
Is project reporting needed?
At what levels of detail does one produce reports?
To Determine Your Account Segment Needs:
Determine the segment that captures the natural account, such as assets, liabilities, expenses,
etc.
Define a separate Accounting Flexfield segment for each dimension of your organization on which
you want to report, such as regions, products, services, programs, and projects.
Group similar business dimensions into one segment. This allows a more simplified and flexible
account structure For example, you only need one segment to record and report on both districts
and regions. Because regions are simply groups of districts, you can easily create regions within
your district segment by defining a parent for each region with the relevant districts as children.
Use these parents when defining summary accounts to maintain account balances and reporting
hierarchies to perform regional reporting.

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GL & Accounting-Defining COA

To
Freeze/Unfreeze
Rollup Groups
To Enable
Dynamic Insert

Enter Short
Name, Title and
Description

To Enable Cross
Validation rules

To
Freeze/Unfreeze
the Flexfield
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To Compile Each
Time Changes Are
Made to the
Structure
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GL & Accounting-Defining COA

(Cont..)
Your segment name
Your segment
name
should
begin with
a
should
with a
letter
andbegin
use only
letter and
use only
letters,
numbers,
letters,
numbers,
spaces or underscores
or underscores
( _spaces
).
( _ ).

Enter the Order of

the Segments
(Sequential Only)

Enter the
Segment Name

Select the Column

(Out of 30)
Select the
Value Set

Enter Window
Prompt (Form)

Click Here to Define

the Value Set
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Click Here to Add

further Features to
the Value Set

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GL & Accounting-Defining COA

Check These
Boxes Based
on the Qualifier
to be Attached
to the Segment

Cost Center Segment: To be checked against the

Cost Center Segment: To be checked against the
segment defined for capturing Cost Centers
segment defined for capturing Cost Centers
Natural Account Segment: To be checked against
Natural Account Segment: To be checked against
the segment defined for capturing Natural Accounts
the segment defined for capturing Natural Accounts
Balancing Segment: To be checked against the
Balancing Segment: To be checked against the
segment at which a Balanced Trial Balance needs
segment at which a Balanced Trial Balance needs
to be generated
to be generated
Intercompany Segment: To be checked against
Intercompany Segment: To be checked against
the segment defined for ensuring that Balancing
the segment defined for ensuring that Balancing
Segment is balanced.
Segment is balanced.

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Defining Values

Enter the
Parameters
Here

Select the
Options Which
You Want to
Use for Finding
and Entering
the Values

Enter the
Parameters
Here

Click on Find
to Search

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Defining Values (Contd)

Click here for

Finding Further
Values
Enter the Value
Description Here
Enter the Journal
Effective Dates for
Which the Value
Needs to be
Enabled

Enter the Valid Value

Here
Could be
numbers,words,
abbreviation etc.Once
saved these cant be
deleted

For value set type Translatable

Independent or Translatable Dependent,
the Translated Value field is enabled. The
value from the previous step defaults in.
Translated Value for all installed
languages can be updated using the
Translation icon in the Toolbar.
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To be Checked for
Enabling / Disabling
the Value.

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Defining Values (Contd)

Select Whether
Budgeting and Posting
are to be allowed. Yes
/ No

Some key flexfields

Some
key flexfields
use
segment
use segment
qualifiers
to hold
qualifiers
to hold
extra
information
extraindividual
information
about
key
about individual
segment
values. key
segment values.
ex the Accounting
ex the Accounting
Flexfield
uses
Flexfieldqualifiers
uses
segment
to
segment the
qualifiers to
determine
determine
account
typethe
of an
accountvalue
typeor
of an
account
account value or

For Defining Child

Ranges under
Each Parent

For Moving Child

Ranges between
Parents
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Check for all

Parent Values

For Viewing
Hierarchies based
on Parent-Child
Relationship
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Defining Values (ContdParent-Child Relationship)

Enter the
Range of
Values

Select Whether the

Range to Include
Child Values or Parent
Values Only

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Defining Values (ContdMoving Child Ranges)

Select the
Destination to Which
Values Have to be
Transferred

Select the Source

From Which Values
Have to be
Transferred

Select the Child

Ranges That Need to
be Transferred
Click here to Initiate
the Movement

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Defining Values (ContdViewing Hierarchies)

Click for Drilling Down

or Up.

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Defining Values (ContdNatural Accounts)

Select the Roll Up

Values here

Select Whether
Budgeting and Posting
are to be allowed. Yes
/ No
Select the Natural
Account Qualifier

Types of Natural
Account Qualifier

Select Whether the

Account is to be
Reconciled or a Control
Account Yes / No

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Defining Calendar

Calendar definition involves two steps:

Defining Period Types:

Each set of books has an associated period type. While assigning a calendar to a set of books, the set
of books only accesses the periods with the appropriate period type.

One can define an accounting calendar with periods of more than one period type; however,each set of
books will only use periods of a single period type.

Period types in addition to the General Ledger standard period types Month, Quarter and Year can be
defined. These period types are used when the accounting calendar for the organization is defined.

Defining the Accounting Calendar:

Create a calendar to define an accounting year and the periods it contains.

One should set up one year at a time, specifying the types of accounting periods to include in each
year.Defining one year at a time helps in more accuracy and reduces the amount of period
maintenance done at the start of each accounting period.

One should define the calendar at least one year before the current fiscal year.

One can define multiple calendars and assign a different calendar to each set of books. Calendars
created are validated online. Full calendar validation is launched whenever you exit the Accounting
Calendar window.

Carefully consider the type of calendar for the organization, since it can be difficult to change your
calendar once youve used it to enter accounting data.

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Defining Calendar- Period Type

Enter the Period Type

Name This is What
Picked up when defining
Accounting Calendar

Enter the No of Periods

Per Year 4,12,52,366
etc.

Enter the Year Type

to specify whether
the period is part of
a fiscal
or calendar year.

General Ledger uses the year type to

General Ledger uses the year type to
assign a year
assign a year
in the accounting period system name
in the accounting period system name
when you set up your calendar.
when you set up your calendar.
Calendar: to use the year in which an
Calendar: to use the year in which an
accounting period begins for the system
accounting period begins for the system
name.
name.
Fiscal: to use the year in which your
Fiscal: to use the year in which your
fiscal year ends for the system name.
fiscal year ends for the system name.

Enter the
Period
Description

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GL & Accounting-Defining Calendar

Enter the
Calendar
Name and
Description

Enter Number of the

Period in the Year.
Ex. Jan 1, Feb 2,
Mar 3 etc.

Enter the
Period Name
Prefix

Enter the From

and To Date for
each Period

Assigned
automatically; The
Period Name = Prefix
+ Fiscal/Calendar Year
(YY)

Select the Period

Type from the
Period Types
defined earlier

Enter the
Year

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Enter the Quarter

No in Which the
Period Falls
Ex. Jan- Mar 1,
Apr-Jun 2 etc.

Check if Any Period

has been Defined as
an Adjusted Period.
(ex. 13 Periods: 12
periods + 1 Adjusted
Period)

Adjusted Period is
Adjusted Period is
normally the Period
normally the Period
where all year end
where all year end
accounting
accounting
adjustments are
adjustments are
passed before year
passed before year
closure. Normally this
closure. Normally this
Period will have the
Period will have the
last date of the Fiscal
last date of the Fiscal
year as the From and
year as the From and
to Date.
to Date.

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Oracle Applications has predefined all currencies specified in ISO standard #4217.

GL & Accounting-Defining Currency

Enter the Unique

Currency Code for the
Currency

Enter the Name and

Description for the
Currency

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Select the Currency

Issuing Authority

Precision:
to designate the
number of digits to
the right of the
decimal point used
in regular currency
transactions.
Extended
Precision: to
designate the
number of digits to
the right of the
decimal point used
in calculations for
this currency.
Enter the Currency
Symbol

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GL & Accounting-Defining SOB

Select the Chart of

Accounts Defined
Earlier

Enter the Name and

Description of the Set
of Books

Enable the Short

Name to Appear on
the Title Bar of
each Window.

Select the Functional

Currency Defined
Earlier
Select the Future
Enterable Periods (but
not post able)
Enter the Default
Retained Earnings
Account from the
Values Defined
earlier
Select the Default
Translation Account
where the /Year end
Foreign Currency
Translation
adjustments are to be
adjusted.

Select the Calendar

Defined Earlier

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GL & Accounting-Defining SOB

When Journal Approval is

enabled and a journal entrys
journal source requires
approval, the journal must be
approved by the appropriate
level of management before any
further action can be taken.

Allows users to post outofbalance

intercompany journal entries, and
automatically balance intercompany
journals against an intercompany
account specified in
the Intercompany Accounts window.
If one does not choose to balance
intercompany journals, then
intercompany journals will balance
only by balancing segment (usually
the company segment).

Allows to manually enter taxable

journal entries in General Ledger.
When this feature is enabled, the
system will automatically calculate
associated tax amounts and
generate tax journal lines.

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Allows users to post out-ofbalance journal entries and

automatically balance those
journal entries by posting the
offset against a suspense
account.
If this option is enabled, then one
must enter a suspense account
If this option is not enabled, only
journal entries that balance can
be posted.

Allows to track penny

differences in currency conversions.
If this option is enabled, a rounding
differences account must be entered

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GL & Accounting-Defining SOB

Budgetary control refers to the process of recording budget data and
tracking encumbrance and actual data against a budget.
Funds checking is the feature of budgetary control that helps prevent
overspending budgets by verifying available funds online before
processing a transaction. With funds checking, one can verify
transactions online against available budget, immediately update funds
available for approved transactions, and control expenditures at the
detail or summary level. If you use funds checking, you must use either
encumbrance accounting or the budgetary accounts method of tracking
budget data.

Select whether Budgetary

Control amounts are to be
entered only through Journals
or other Methods of entry.

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Defining Set Of Books - MRC

Use Multiple Reporting Currencies (MRC) to maintain

Use Multiple Reporting Currencies (MRC) to maintain
transactions and account balances in multiple currencies.
transactions and account balances in multiple currencies.
MRC is specifically intended for use by organizations that
MRC is specifically intended for use by organizations that
must regularly and routinely report their financial results
must regularly and routinely report their financial results
in multiple currencies.
in multiple currencies.
MRC is not intended as a replacement for GL translation
MRC is not intended as a replacement for GL translation
feature.An organization with a onceayear need to
feature.An organization with a onceayear need to
translate their financial statements to their parent
translate their financial statements to their parent
companys currency for consolidation purposes, but no
companys currency for consolidation purposes, but no
other foreign currency reporting needs, should use GL
other foreign currency reporting needs, should use GL
standard translation
standard translation

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Primary: The Functional

Currency set of books
which report to them
assigned Reporting books
Reporting: The main Book
to which all Primary books
report into converted into
the Reporting book
currency
None: MRC is not required

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Defining Journal Sources

Source appears in the

Source appears in the
Journal Header to identify the
Journal Header to identify the
JV to a feeder system / subJV to a feeder system / subledger
ledger
Enter the Source
Name and Description

Choose whether to Import

Journal References from
feeder systems to maintain a
mapping of summarized
transactions if summary
journal option is used at the
time of running Journal
Import.

If this is checked, journals from this

source cannot be changed in the Enter
Journals window. If one subsequently
unmark this checkbox, one can make
changes to journals from this source.

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(Average Balance Processing

only) select an Effective Date
Rule for this journal source:
Fail: Journal Import will reject
transactions when the
effective date is not a valid
business day. No posting
takes place.
Leave Alone: Journal import
will accept all transactions
regardless of the effective
date.
Roll Date: Journal Import will
accept the transaction, but roll
the effective date back to the
nearest valid business day
within the same period. If
there is no prior valid business
day within the same period,
the effective date is rolled
forward.

If journal approval is enabled

for the set of books and one
enters a journal whose journal
source requires journal
approval, the batch must be
approved before it can be
posted.
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Defining Journal Categories

Enter the Category

Name and Description

Category appears
Category appears
in the Journal
in the Journal
Header to
Header to
segregate JVs
segregate JVs
based on the
based on the
nature of JV
nature of JV
ex. Year End,
ex. Year End,
Provisions,
Provisions,
Adjustments etc.
Adjustments etc.

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Flexfield Additional Features Shorthand Aliases (Contd...)

Select the Application,

Flexfield Title and Structure
Name (COA)

Enable and enter the

Window Prompt. Enter
the maximum alias size,
which determines the
maximum length of the
shorthand aliases.

One can define the

One canor
define
the
complete
partial
set of
complete
or
partial
key flexfield segmentset of
key flexfield
segmentthat
values
(the template)
values
(the
template)
each shorthand alias that
each shorthand
represents.
Thesealias
values
represents.
These values
can be valid flexfield
can be valid or
flexfield
combinations
different
combinations
different
patterns
of validorsegment
patterns
of
valid
segment
values.
values.
Give the Alias Name,
Account Details in the
Shorthand Template
and Alias Description.

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GL & Accounting-Enter Journals

Journal entries with common attributes can be organized
into batches.
There can be multiple journals in one batch, or separate
batch for each journal entry.
All journal entries in a batch must share the same period.
A journal batch can be created for any Open or Future
Enterable Accounting period, but journal batches in Open
accounting periods can only be posted.
Journals can be entered directly also without the Batch
mode. GL will create a batch for the entry automatically.

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GL & Accounting-Enter Journals

(Cont..)

Enter The
Parameters Here
To Find An Existing
Journal Quickly.

Click Here To Find

An Existing Journal
Or Batch Based On
The Parameters
Entered Above

Click Here
To Enter A
New Journal
Or Batch

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GL & Accounting-Enter Journals

(Cont..)
Here the Budget
Name Needs to be
Selected

Enter the Unique Journal Name,

Journal Header Description,
Select the Period and Enter the
Effective Date

Select the Category.

Source will be Manual as
the JV is being created
Manually

Here the Transaction

Currency has to be
entered. If it is not
the SOB currency,
then the Conversion
Rate type and the
Conversion Rate
needs to Captured

Balance Type:
A: Actual
B: Budget

Enter the JV Line

Description here

Enter the JV
Line Nos

Click here to
enter the
Code
Combination

Enter the Debit /

Credit Amounts here
Enter the DFF here

Click here to Post, Change

Period/Currency or Reverse
a posted Journal
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GL & Accounting-Enter Journals

(Cont..)
Select the
Short Hand
Account Alias

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GL & Accounting-Enter Journals

(Cont..)

Select the Code

Combination

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GL & Accounting-Enter Journals

(Cont..)

A Posted JV
A Posted JV
can only be
can only be
Reversed
Reversed
Once.
Once.
Click here to
Reverse the
Posted
Journal

Click here to
Post the
Journal

Click here to Change

the Period of
Unposted Journal

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GL & Accounting-Enter Journals

(Cont..)
Click here to Select the
two options of Reversing Switch Dr/Cr or Change
the Signs

This shows
the Status of
the Reversal

Click here to Reverse the

Posted Journal and Select
the Period of Reversal

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GL & Accounting-Enter Journals

(Cont..)

Select the Batch for

Posting
Click here to Post the
Selected Batch
Click here to Review the
Batch before Posting and
Enter Additional JVs under
this Batch
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GL & Accounting-Enter Journals

(Cont..)

This shows the

Batch Details

Click here to Review the

Journals before Posting and
Enter Additional JVs

Click here to Post the

Batch/Change Period

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GL Interface With Feeder Systems and Sub-Ledgers

Sub-ledgers / Feeder System

GL Interface Data Table

Run Journal Import

Assets
General Ledger

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GL: Journal Import

Journal Import can be used to integrate information from other

applications such as payroll, AR, AP and FA with GL.
For each accounting period, one can import accounting data from
these feeder systems, then review, update and post the journal
entries.
One can also use Journal Import to import historical data from
previous accounting system.

GL_INTERFACE Table

The GL_INTERFACE table is where Journal Import receives

accounting data that is imported from other systems.
An import program can be defined to import data from a non
Oracle system, or to import historical data from previous
Accounting system. The import program should convert data from
the feeder system into a standard data format that Journal Import
can read from the GL_INTERFACE table.
When Journal Import receives this data, it validates and converts
the import data into journal entries within GL.
The GL_INTERFACE table is organized by columns in which GL
categorizes and stores specific accounting data.
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GL: Journal Import (Cont..)

Validation:
Journal Import validates all data before it creates journal entries.
Journal Import also prints error lines in the Journal Import
Execution Report.
Batch Level Validation:
Journal Import validates the following attributes to ensure that a
batch with the same name does not already exist for the same
SOB and period: SOB, Period name, Batch name.
Journal Import also checks to ensure that more than one journal
entry with the same name does not exist for a batch.
Journal Level Validation:
Journal Import validates the following attributes to ensure that
the journals contain the appropriate accounting data: SOB,
Period name, Source name, Journal entry name, Currency code,
Category name, Actual flag, Encumbrance type ID, User
conversion type, Accounting date, Budget version ID, Reversal
period.
Journal Entry Line Level Validation: Journal Import validates the following attributes to ensure that
your journal entry lines contain the appropriate accounting data:
Account Validation, Effective Date Validation, Descriptive
Flexfield Validation,
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Import Journals - Run

Select the Source
for Importing

One can import data for the same

or different sources in parallel by
specifying a unique Group ID for
each request.
Else, GL imports all data from the
specified source.

Enter a Date Range to import

only journals
with accounting dates in that
range. If date range is blank
GL imports all journals data.

Run Options:
If Suspense Posting is allowed in the SOB, one
can Post Errors to Suspense. With this option,
Journal Import creates journal entries with
suspense journal lines for account errors in the
source data. Else Journal Import rejects any
source/group ID combination that contains
account errors.
Create Summary Journals to summarize all
transactions for the same account, period, and
currency into one debit or credit journal line.

Choose whether to Import DFF .

One can import DFF With Validation
and generate journals only when
validation succeeds. Or, Without
Validation and generate all journals.

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Import Journals - Correct

Batches/Journals to correct journal batch and

journal entry data.
Accounts to correct the account segment values.
Journal Lines to correct journal entry line data,
including the Value-Added Tax DFF.
DFF to correct segment values for the DFF.
References to correct reference information for
the Journal Import data.

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If Journal Import
If Journal Import
run resulted in
run resulted in
relatively few
relatively few
errors, the data
errors, the data
rejected by Journal
rejected by Journal
Import can be
Import can be
corrected. After
corrected. After
making the
making the
corrections, Journal
corrections, Journal
Import can be rerun
Import can be rerun
to create journals
to create journals
from the corrected
from the corrected
accounting data.
accounting data.

Enter the parameters

here to search the
Journal Import batch
to be corrected.

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Import Journals - Delete

If there are many Journal

If there are many Journal
Import errors for a specific
Import errors for a specific
journal entry source and
journal entry source and
group ID, one can delete all
group ID, one can delete all
erroneous data for the
erroneous data for the
source and group ID from the
source and group ID from the
GL_INTERFACE. One can
GL_INTERFACE. One can
then repopulate the import
then repopulate the import
table with corrected data and
table with corrected data and
rerun Journal Import.
rerun Journal Import.

Enter the Parameters

here to search the
Journal Import Batch
and Click on Delete.

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How GL Tables Are Affected?

GL_JE_BATCHES

GL_PERIODS

GL_SOURCES

GL_CATEGORIES

GL_JE_HEADERS

FND_CURRENCIES

GL_JE_LINES

GL_DAILY_RATES

GL_CODE_COMBINATIONS

GL_BALANCES
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Recurring Journals

Define recurring journal formulas for transactions that are repeated every accounting
period, such as accruals, depreciation charges, and allocations. Each formula can use
fixed amounts and/or account balances, including standard, endofday, or average
balances, actual or budget amounts, statistics, and periodtodate or yeartodate
balances from the current period, prior period, or same period last year.

Recurring journal formulas can be defined for functional currency, foreign currencies
which have a fixed relationship with your functional currency, and statistical currency.

Recurring journals are used to create three types of journal entries:

Skeleton Journal Entries:

Standard Recurring Journal Entries:

Skeleton entries affect the same accounts each period, but have different posting amounts. After
generating skeleton journal entries, one can edit the unposted journal batch. Skeleton journal
entries are useful with statistical information whenever one wants to record journals for actual
transactions based on statistical amounts, such as headcount, units sold, inflation rates, or other
growth factors.
Standard recurring journal entries use the same accounts and amounts each period.

Recurring Journal Formula Entries:

Formula entries use formulas to calculate journal amounts that vary from period to period.

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Defining Recurring JVs

Enter the Batch name

and Header Description

Auto Copy JV Details

from an existing JV to
this JV

Enter a range of Effective

Dates that includes only those
periods for which the recurring
JV is to be used.

Enter the JV name, Select

Category and Currency

Choose Lines to enter

the GL accounts as
well as the formula to
be used.

Click to Generate and

Schedule the Batch

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Enter the JV Line No to set the

Defining Recurring JVs (Contd)
order of recurring JV lines; enter
Account Code Combination and
Line Description
Choose the foll:
Balance Type:
Actual or Budget.
Amount Types
PTD/YTD/PATD/YAT
D/EOD.
Period types:
Current Period,
Previous Period or
Same Period a Year
Ago.
Currency Type:
Monetary or Stat

Enter a Step number to

specify the order in which to
process the steps in formula.

Specify the type of calculation

to perform by entering a
mathematical Operator for the
formula step. The valid
operators are based on
EasyCalc a GL mathematical
notation feature.

Enter a factor for the

formula step.
1. Enter a fixed
Amount.
2. Specify an Account
to use a balance in the
formula calculation.

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Generating Recurring JVs

Select the Recurring JV, the

Period for which the JV has to
be generated and the Budget
for which this JV is to be run.

Click to Submit the

JV

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Mass Allocation

Use Mass Allocation to allocate revenues and expenses across a group of cost centers,
departments, divisions, and so on. By including parent values in allocation formulas, one can
allocate to the child values reference d by the parent without having to enumerate each
child separately.

Mass Allocation Steps:

Creating Mass Allocation Batches

Creating Mass Allocation Formulas

Entering Mass Allocation Formula Lines:

All Mass Allocation formulas use the following equation to determine allocation amounts:

COST POOL * (USAGE FACTOR / TOTAL USAGE)

GL uses the following format to represent the equation. Each factor in this equation relates to a separate formula line.

A * B / C.

One can enter any combination of fixed amounts and accounts in formula lines A, B, or C.

Formula Line Steps are as under:

Enter the account for the A, B, or C line of your formula.

Enter accounts with parent segment values to create a formula that references accounts with the
corresponding child segment values.
Assign a segment Type for each account segment. The combination of parent/child segment values and
types tells GL which related accounts are affected or used by that portion of the formula. One can
assign one the following segment types to each segment:
Looping (L): Assign this type to only a parent segment value to include each child value assigned
to the parent value in the formula.
Summing (S): Assign this type only to a parent segment value to sum the account balances of all
the child segment values assigned to a parent.
Constant (C): Assign this type to a child segment value to use the detail account balance
associated with the child.
Enter the Amount Type you want
to use:
PTD, QTD, YTD, ProjecttoDate, PATD, QATD, YATD, EOD
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Mass Allocation (Contd)

Enter the Relative Period for the account balance you want to use: Current Period, Previous Period, Same
Period A Year Ago
Enter the account Balance Type to use for the formula line: Actual, Budget or Encumbrance.

Enter the Currency. For Allocation generally A,T and O will be the functional currency, B and C will
be Statistical Currency. The allocation values say area occupied etc are captured via Recurring JVs
with Currency being Stat.

Once A, B, and C formula lines have been entered, enter the Target and Offset accounts

Entering a Target Account:

Entering an Offsetting Account:

Enter an account in the Offset line to specify the account to use for the offsetting debit or credit from the
allocation.
The Offset account is usually the same account as formula line A to reduce the cost pool by the allocated
amount.
When the result of the allocation formula is a positive number, the resulting journal entry debits the target
accounts and credits the Offset account.
When the result of the allocation formula is a negative number, the resulting journal entry credits the target
accounts and debits the offset account.

Validating Mass Allocation and Mass Budget Batches:

Enter an account in the Target line to specify the destination for allocations.
When the result of the allocation formula is a positive number, the resulting journal entry debits the target
account and credits the offset account.
When the result of the allocation formula is a negative number, the resulting journal entry credits the target
account and debits the offset account.

After defining a new allocation batch, or change an allocation formula, one must validate the batch by running
the Mass Allocation/ Mass Budget Validation program. The program verifies that the allocation formulas
conform to the allocation formula definition rules.
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Generating Mass Allocation Journals

55

Mass Allocation Example

Say Electricity Expense of Rs.1,00,000 pertaining to EAS Practice E-City is to be allocated

between EAS Oracle and EAS SAP based on area occupied. EAS Oracle 600 sq ft and EAS
SAP 400 sq ft. Total Area = 1,000 sq ft ( C )
Ans.
Entry On incurring Expense:
EAS Practice-E City-Electricity Expenses A/c Dr
1,00,000
INR - A
To KSEB A/c
Cr
1,00,000
INR

Define a Stat JV as under to record the area occupied in GL through Statistical currency:

EAS Oracle E City Stat EAS E City A/c

EAS SAP E City Stat EAS E City A/c

Dr.
Dr.

600
400

STAT - B
STAT - B

Generate and Post the JV in GL. This has no financial implication as the JV is not in functional
currency.

Define a Mass Allocation to allocate the expense as under:

A - Sum of Expense
*
B - Individual Area
/
C - Sum of Area Occupied
T - Target A/c
O - Offset A/c

EAS Practice-E City-Electricity Expenses INR

C-C-C
EAS Parent-E City-Stat EAS E City
STAT
L-C-C
EAS Parent-E City-Stat EAS E City
STAT
S-C-C
EAS Parent-E City-Electricity Expenses
INR
L-C-C
EAS Practice-E City-Electricity Expenses INR
C-C-C

On validating, generating and posting the Mass Allocation Batch, the following entry is generated:
56

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EAS Oracle E City Electricity Expenses A/c

Dr.

60,000

INR (1,00,000*600/1000) {Target T}

Defining Mass Allocation

Enter the Mass Allocation Batch

Name and Description.
Select the Balance Type:
Actual/Budget/Encumbrance

Auto Copy Mass Allocation

Details from an existing
Batch to this Batch

Click to Generate
the Mass Allocation
Batch
Click to enter the
Formula Lines

Click to Validate all

the Formula Lines

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Defining Mass Allocation (Contd)

Select the JV Category;
The status mentions as
already Validated or Not
Validated.

To have any rounding

difference added to the
allocations with the largest
relative balance. Else, any
rounding differences will
remain in the original account.

Full Balance: GL allocates the

entire account balance, which
is comprised of amounts
entered in functional currency,
as well as amounts converted
to functional currency.
Single Entered Currency: GL
allocates the portion of
account balance entered in
the Currency specified.

Select the Currency,

Amount Type,
Relative Period and
Balance Type

Enter the Amount or the Account

Ranges with the Segment Type
(L,S,C) against the Mass Allocation
Equation.
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Inquiring Accounts

Select the accounting

Periods, Single / All
currencies and the
Currency Type

Select the Factor in

which to view the
Balances/Details

Click to show
Variance between
Actual and Budget

Select Actual/Budget as
Primary/Secondary
Viewing

Click to Show the

Balances against
each account

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Click to Drill down

to the Journal
Details.

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GL: Multi-Currency
What is Multi-Currency

A company can have a functional currency used for reporting purposes, transaction currencies
and a primary currency translated / converted to a reporting currency. One might observe that
the needs for a global company is varied and complex as multiple currencies are involved in a
global economy.
Oracle GL has full multi-currency functionality to meet these requirements. As sub-ledgers share
the same rate tables of GL, foreign-denominated transactions originally entered and settled in
them can be converted using those rates.

Multi-Currency Accounting

Enter transactions and report in any currency

Enter exchange rates online / automatically.
Perform currency conversion on line and in real time.
Perform revaluation.
Calculate realized and unrealized gains and losses.
Translate actual and budget balances.
Use daily, period end, average and historical rates.
Comply with GAAP.
Review entered, converted and translated balances.
Produce foreign currency financial statements

Multi-currency concepts:

Conversion:
Conversion refers to foreign currency transactions that are immediately converted at the time of
entry to the functional currency of the SOB in which the transaction takes place.

Revaluation:
Revaluation adjusts asset or liability accounts that may be materially understated or overstated
at the end of a period due to a significant fluctuation in the exchange rate between the time the
transaction was entered and the end of the period.

Translation:
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Translation restates an entire
SOB
or balances for a company from the functional currency to a60
foreign currency.

Enter the Period for which the Revaluation is to

MRC
Revaluing
Balances
be
done and
the Unrealized Gain
/ Loss account
to which the difference is to be posted. The
default is the account entered for the previous
revaluation.

Single Currency:
to revalue a particular foreign currency.
EURO+EMU:
to revalue all currencies whose currency
derivation is EURO, EMU, and Interim EMU.
All Currencies:
to revalue all foreign currencies.

Single currency: enter the Currency to use

for the revaluation. If SOBs functional currency
has a currency derivation of Other, you can only
enter a currency that also has a currency
derivation of Other. Enter the Rate to use for the
revaluation
All currencies: GL revalues each foreign
currency balance only if a period-end rate exists
for each currency and accounting period.

If the GL: Revaluation Auto Query Last Run Range profile

option is set to Yes, the Revalue Ranges region of the window
automatically
displays the GL account number ranges last entered.
If the profile option is set to No, the Revaluation Ranges region
displays blank account number fields. Enter the account ranges
afresh

Click to launch the Revaluation process.

GL automatically generates the Revaluation
Execution Report which reflects the status of
revaluation

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GL: Financial Reporting

Oracle Financials has Set of Standard reports which

can be generated/scheduled in application from each
of the modules
The standard reports can be run/scheduled from SRS
(Standard Request Submission) screen
The below are the list of some of the commonly used reports in GL
module

Account Analysis, Trial Balance (Detailed, Summary,

Expanded), Budget Reports, Chart of Accounts
Reports and Listings, Currency Listings Reports, FSG
Reports on Row/Column Set Details, GL Report,
Journal Reports and Execution Reports.
11i has Rxi reports which can be tailored to the
requirements from the application itself, such as
order, column listing etc.
FSG reports are again a reporting tool in the GL
module to configure
and produce the Financial
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statements such as Balance Sheets and P&L

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GL: Budgeting
Use budgeting to enter estimated account balances for a
specified range of periods. These estimated amounts can be
used to compare actual balances with projected results, or to
control actual and anticipated expenditures. GL gives a
variety of tools to create, maintain, and track budgets,
including the ability to upload budget amounts from
spreadsheet software.
The Process Chart for creating Budgets is as under:

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Budgeting (Contd)

Steps in Budgeting:

Define a budget to represent specific estimated cost and revenue amounts for a range of accounting periods.
Multiple budget versions can be created for a SOB. Budget hierarchies can be created by assigning a master
budget to lower-level budgets to track budgeted amounts against a control budget.

Define budget organizations to represent the departments, cost centers, divisions, or other groups for which
budget data is required. A general budget organization can be defined to include all accounts.

The various methods of entering budget amounts are as under:

Copy budget amounts from an existing budget.

Enter amounts directly into the budget, replacing any existing budget amounts. Budget rules can be used to
calculate and distribute amounts automatically across several periods

Create and post budget journal entries to maintain an audit trail of budget entries. Use budget rules to calculate
budget journal amounts automatically. After generating budget journal entries, one can review, change, and delete
them.

Define budget formulas to calculate budgets based on other budget amounts or on actual account balances.

Define Mass Budget formulas to allocate revenues and expenses across a group of cost centers or departments.

Transfer budget amounts from one account to another.

Create an Excel budget spreadsheet using the Applications Desktop Integrator tool and upload the budget
information.

Upload budget amounts from the budget interface table.

Calculate budget amounts to update budget balances from budget and Mass Budget formulas.

Perform online inquiries to review budget information.

Use the Financial Statement Generator (FSG) to design a wide variety of reports that include budget information.

Define and run a consolidation to consolidate budget balances between SOBs.

Freeze budgets to prevent accidental or unauthorized changes.

Translate budget balances to create budget versus actual reports in reporting currency using FSG. One can also
generate reports comparing different versions of budgets in reporting currency.
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Global Consolidation System

Consolidation is the periodend process of combining the financial results of separate

subsidiaries with the parent company to form a single, combined statement of financial
results.

One can consolidate any number of subsidiaries that use different SOBs and having different
COA, currencies and calendars.

There are basically two consolidation tools which can be used for consolidation.

Financials Statement Generator (FSG):

Global Consolidation System (GCS):

Used for consolidating financial information for businesses using a single SOB or using different SOB that share the
same calendar and COA.

GCS is a multi-source consolidation solution that can accumulate information from diverse financial systems,
geographic locations, including Oracle and non-Oracle Applications. With GCS one can consolidate data from multiple
SOBs, multiple instances and non-Oracle applications.

What Can Be Consolidated?

With GCS, one can consolidate any business dimension at any level of detail from any point of
view:

Any Source: Data from any source system, including ledger, databases, or other accounting systems can
be consolidated
Any Chart of Accounts: Subsidiaries can use separate COA from the parent to address unique
operational accounting practices and meet local statutory requirements. GCS enables you to consolidate
across diverse charts of accounts.
Any Calendar: Subsidiaries can use different accounting calendars from the parent. GCS enables you to
consolidate across calendars.
Any Currency: Subsidiaries can use a functional currency which differs from the functional currency of
the parent. GCS revalues and translates all subsidiary balances to ensure consistent consolidated
results.
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Any Level of Detail: Consolidate detail transactions, detail balances and summary balances.
Any Balance Type: Consolidate any balance type; including actual, average, translated, budget, and

Global Consolidation System (Contd)

Implementation Considerations:
Do all subsidiaries share the same SOB? If yes, then FSG can be used to
meet the requirement.
Do all subsidiaries have different SOB? If yes, then:
They share the same COA and calendar Use FSG
They reside in the same instance Use FSG
Do all lines of business use GL as their operational accounting system?
Is a separate consolidation SOB required to keep consolidation data
separate from transactional data or can the companies be consolidated in
the parent SOB?
Is a separate elimination company required to segregate eliminations or
can it happen in the parent company?
Are companies to be consolidated at Balance level or Transaction level?
Other Uses of GCS:
Changing Chart of Accounts (COA) after implementation.

GCS can be use to map values from old COA to new COA and
balances from old SOB can be transferred to new set of books.

Changing the Accounting Calendar after implementation.

GCS can be used to map and transfer account balances from

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the old period to theWipro
new
period.

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BACK-UP SLIDES

Introduction to Accounting
in
Oracle Accounts Payable

AP: Accounting Methods

While setting up AP, a primary and an optional secondary

accounting method is required.
The accounting method determines the number and nature of
the journal entries Payables creates when the transactions
are transferred to GL.
There are three accounting methods which are as under:

Cash:
When an item is purchased, the expense or the increase in
asset value of an FA item, is recognized when the item has
been paid for. Only payments are posted to GL and not the
liability. The payment distributions typically debit the expense
or asset a/c and credit the cash/bank/cash clearing a/c.

Accrual:
When an item is purchased, the expense or the increase in
asset value of an FA item, is recognized when the invoice is
received from the Supplier. At that point a liability is recorded
to pay the invoice. Both invoice and payments are posted to
GL The invoice distributions typically debit the expense or
asset a/c and credit a liability a/c.
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AP: Accounting Methods

Combined:
One can maintain one set of books for cash accounting
and another for accrual accounting. The primary and
secondary set of books are to be determined. Invoice
distributions are entered in the accrual set of books and
the payment distributions are recorded in both cash and in
the accrual set of books.

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AP: Accounting Entries

Accounting entries are based on accounting events. The various
accounting events are:
Invoice entry, issuing payments, adjusting invoices, creating
expense reports and processing prepayments.
Invoices: An invoice increases the suppliers account balance
by the invoice amount. The expense (or asset) and tax
accounts are to be entered in the invoice distribution lines.
The nature of the accounting transactions for an invoice
depends on whether liability has been posted for goods
received and whether Oracle Purchasing is used to initiate
the invoice.
Prepayments: Prepayment is payment before the receipt of
invoice from a supplier. A prepayment could be sent with PO
as deposit for goods / services. On applying a prepayment to
an invoice, the amount due on the invoice is reduced.
Cr. and Dr. Memos: A memo increases the supplier balance
by the memo amount. Both Cr. And Dr. memo reduce the
amount that is owed to a Supplier. They are used to record a
credit against an invoice for goods/services purchased. They
are netted off against the original invoice at payment time,
resulting in a payment being issued for the reduced amount.
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AP: Accounting Entries

Cr. Memo: Negative amount invoice created by a supplier

and sent to the company to notify a credit
Dr. Memo: Negative amount invoice created by the
company and sent to the supplier to notify the supplier of
a credit the company is recording.
Payments: A payment decreases the Suppliers a/c
balance by the payment amount. Payments do not give
raise to tax postings.
GL Transfer:

A program has to be run from AP for transferring the accounting entries of

all transactions in a batch mode to the interface table that is ready to be
imported to the GL as a journal. These journals are identified based on
the Batch name, journal name and sources.
One can choose to transfer invoice, payment or both. The level of detail
can be at a summary level or at a detailed level
AP also creates distributions for discounts taken and foreign currency ex
gain/loss incurred between invoice and payment time.
An AP Trial Balance has to be generated and the control a/c balances
have to be matched with the corresponding balances as per GL. Any
differences should be identified in AP and rectified.
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AP: Accounting Entries (Contd)

Accounting
Event

Account Head

Debit

Entering Invoices

Expense / Asset A/c

100$

Making Payments

Tax A/c (say 10%)

10$

Supplier Liability A/c

90$

Supplier Liability A/c

90$
Cash/Bank A/c

Cr. Or Dr. Memos

Supplier Liability A/c

Expense / Asset A/c
Tax A/c (say 10%)

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Credit

90$

50$
45$
5$

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AP: Accounting Entries (Contd)

Accounting Event

Account Head

Debit

Entering Prepayments

Advance A/c

100$

Adjusting Prepayments

Tax A/c (say 10%)

10$

Supplier Liability A/c

90$

Expense / Asset A/c

200$
Advance A/c

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Credit

100$

Tax A/c (say 10%)

10$

Supplier Liability A/c

90$

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Introduction to Accounting
in
Oracle Accounts
Receivables

AR: Accounting Methods

Accounting Methods
Receivables supports two methods of accounting: Cash Basis
and Accrual.
Cash Basis accounting recognizes revenue and expense when
cash is actually spent or received. For example, revenue from
sale of goods is recognized when payment is received from
the customer, not when an invoice is created.
The Accrual accounting method recognizes revenue when it is
earned and expenses when they are incurred. In the above
example, revenue from sale of goods is recognized when the
invoice is created.

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AR: Accounting for Transactions

Accounting Event

Account Head

Entering Regular Invoice

Receivables A/c

Debit

Credit
100$

Revenue A/c

85$

Tax A/c

10$

Freight A/c

5$

Entering Invoice with Arrear Rule

First Period of Rule

Unbilled Receivable A/c

100$

Revenue A/c
Final Period of Rule

Receivables A/c

100$
100$

Unbilled Receivable A/c

100$

Entering Invoice with Advance Rule

First Period of Rule

Receivables A/c

100$

Unearned Revenue A/c

Final Period of Rule

Unearned Revenue A/c

100$
100$

Revenue A/c
Entering Credit Memo

100$

Revenue A/c

85$

Tax A/c

10$

Freight A/c

5$

Receivables A/c (Cr. Memo)

Receivables A/c (Cr. Memo)
Receivables A/c (Invoice)
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100$
100$
100$
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AR: Accounting for Transactions (Contd)

Accounting Event

Account Head

Debit

Credit

Entering Commitments
Deposit / Guarantee Entry

Receivables A/c (Deposit)

100$

Deposit Control A/c

Receipt of Cash against Deposit

Cash / Bank A/c

100$
100$

Receivables A/c (Deposit)

Entering Invoice Against Deposit /
Guarantee

Receivables A/c (Invoice)

100$
100$

Revenue A/c
Deposit Control A/c

100$
100$

Receivables A/c (Invoice)

Entering Receipts

Cash / Bank A/c

100$

100$
Receivables A/c

Unidentified Receipts

Cash / Bank A/c

100$
100$

Unidentified Receipts A/c

On Account Receipts

Cash / Bank A/c

100$
100$

Unapplied A/c
Unapplied A/c

100$
On Account A/c

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100$

100$
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AR: Accounting for Transactions (Contd)

Accounting Event

Account Head

Discount with Receipts

Cash / Bank A/c

Debit

Credit
85$

Receivables A/c
Earned Discount A/c

85$
15$

Receivables A/c
Entering Debit Memos

Receivables A/c

15$
20$

Finance Charges
Applying On-Account Credits

On-Account Credit

20$
100$

Receivables A/c
Creating Charge backs

Cash / Bank A/c

100$
75$

Receivables A/c (Invoice)

Receivables A/c (Chargeback)

75$
25$

Receivables A/c (Invoice)

Entering Adjustments Negative Amounts

Write-off A/c

15$
Receivables A/c (Invoice)

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25$

15$

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AR: Period Close Process

Period Closing Process

At the end of each accounting period, companies must complete the closing process in Receivables.

Review,
balance, and
reconcile AR
transactions

Transfer to
Oracle
General Ledger

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Review transfer
results, and
resolve transfer
issues

Post journal
entries in GL

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AR: Period Close Process

Balancing Accounts Receivable Transactions

Reconcile
transactions
and receipts

Reconcile
outstanding
customer balances

Reconcile
transaction and
receipt accounting
flexfield balances

Opening balance
+ Transactions
- Receipts
= Closing balance
Sales Journal by
customer
Transaction register
Receipts Journal
report
Receipt register

Submit GL Interface
process

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Journal Entries
Report
Sales Journal by
GL Account
Receipts Journal
Report
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AR: Period Close Process

Generating Reconciliation Reports

Generate the Aging Report as of the last day of the month to get the month-end balance.
Use the AR Reconciliation Report to help you reconcile your accounts receivable activities.
This report summarizes all customer, receipt, transaction, and account balances for the
period you specify to simplify the internal reconciliation process.

Reconciling Customer Balances

Month-end balance =
Outstanding balance at beginning of month
+ transactions - receipts

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AR: Period Close Process

Transferring Transactions to Oracle GL

Transactions
out of balance

Unposted
Items Report

Submit GL
Interface program

GL Interface
Table

Transactions
balance

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Posting
Execution Report

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AR: Period Close Process

Transferring Transactions to Oracle GL

GL interface
table

Run Journal
Import from
GL or AR

Journal
entry

Post journal
entries in GL to
update account
balances

GL_JE_BATCHES
GL_JE_HEADERS
GL_JE_LINES

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AR: Period Close Process

Reconciling the GL Transfer Process

The General Ledger Interface produces an execution report that shows you the total
debits and credits transferred from Receivables to the General Ledger Interface
table.

Compare this report to your Sales and Receipt Journal totals and verify that they
match.

Note: Be sure to use the same General Ledger Date ranges for the two journals and
the GL transfer.

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Introduction to Oracle
Fixed Assets &
Accounting in FA

Introduction to FA
Fixed assets, constitute the durable capital base of an enterprise, traditionally the property, plant and equipment
necessary to deliver products and services expanded to include investments in non-tangible assets like software.
Asset management encompasses three primary activities:
Physical Upkeep: Comprises asset location, asset condition and assignment
Asset Tracking:

Covers the whole gamut from controlling leased, loaned and

consigned items from acquisition to asset maintenance.

Financial:

Involves asset value, depreciation and taxation.

Administration
There are basically two types of Asset Books:
Corporate Books: Where are all assets are created or captured, accounted, depreciated and retired as per the GAAP
rules.
Tax Books: Tax books use the asset data of the Corporate book but account, depreciate and retire as per the tax
rules.
Depreciation Overview:
Capital Assets such as building and machinery typically lose their value over time. The loss of value during any
given period is called depreciation and it is charged as an expense in that period. The value of the asset at any
point in time usually cost minus accumulated depreciation is called the net book value.
When an asset is acquired / built, the asset is assigned an initial book value, an economic life and a calculation to
determine the value of the asset at each period during that economic life. An asset may have a residual value
beyond which it will not depreciate.
At the end of its economic life, the initial cost of the asset (less residual value if any), will have been expensed. The
depreciated book value appears on the balance sheet as an asset. The asset is taken off the books when it is sold.
The diff between the sale price and the book value at the time of the sale is the gain/loss on sale.
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Introduction - FA Cycle

Purchasing

Assets

Projects

General Ledger
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Payables

FA Process Flow

Enter
Enter Purchase
Purchase
Order
Order
Enter Purchase Orders
for the asset items in
Purchasing Module.

Create
Create Assets
Assets in
in
FA
FA

Create
Create Invoices
Invoices
in
in AP
AP

Transfer
Transfer AP
accounting
accounting lines
lines
to
to GL
GL

Transfer
Transfer Asset
lines
lines from
from
AP
AP to
to FA
FA

After the accounting lines

Enter the PO default invoices After validation and
in Accounts Payable module.
approval of the invoice in
are transferred, run the
Capture the PO number in the AP, run Payables
Mass Additions Create
procedure for transferring
Invoice which defaults the PO Accounting Process to
transfer all the accounting
all Asset lines from AP to
details in AP.
In the Invoice Distributions
lines from AP to GL.
FA. View report for status.
The asset lines will be
enter the same code
combination as that has been
transferred only if the
defined in FA.
conditions in second
Ensure that track as an asset
process are met.
Run the Mass Additions
is flagged for expense items
in invoice distributions.
Create Report to view the
Ensure that the GL date is in
details of lines transferred
to FA.
an open period in FA

Manage
Manage Assets
Assets

Run
Run
Depreciation
Depreciation and
and
Close
Close

Review the Mass Additions

Reclassify, retire,
Run the depreciation for an open
Prepare Mass Additions to enter all the transfer, change, revalue period with the option to close
details of the asset by changing the
assets individually or in
the period.
queue from new to hold to post.
Rollback depreciation if period
Mass form.
Split, merge, adjust Mass Additions or
Purge asset information was not closed.
Add Mass Additions to existing assets.
Make the changes as required
based on the org
Run Post Mass Additions to create the
requirements
and once finalized, again run
assets in FA which have been finalized.
depreciation closing the period.
Delete / purge unwanted Mass addition
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Transfer
Transfer
Accounting
Accounting lines
from
from FA
FA to
to GL
GL
Transfer journal entries
from FA to GL after
closing the period.
Rollback the entries in
case of issues.
Finalize and again
transfer the entries.
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Asset Identifiers
Tagging with Asset Identifiers:
There are four unique identifiers with each asset as enlisted below:
Identifier

Optional?

Use

Source

Purpose

Asset Number

No

External; forms and

Reports.

User-assigned or
generated; may be
imported. Same as
Asset ID if generated.

Identifies the asset in

FA forms and reports.

Tag Number

Yes

External; bar codes.

User-assigned;
usually imported.

Provides bar code

tracking of assets.

Asset ID

No

Internal

Generated

Links asset records

with depreciation and
other transactions.

Serial Number

Yes

External

User-Assigned

Provides an
additional asset
identifier; usually
assigned by the
manufacturer.

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Asset Flexfields

There are three very important Asset Flexfields that drive FA.
The Asset Key Flexfield: This supplements the asset number with descriptive information that can used to
meet the
companys needs. Asset Key Flexfield groups assets by non- financial identifiers (Co, A/c No, Dept. etc). Upto
ten
segments can be defined. This is used for custom reporting
The Category Flexfield: An assets category determines its financial treatment in Oracle Assets determining
factor
for depreciating an asset. The depreciation is derived as under:

Asset in Mass
Additions

Asset Category
Asset life and
Depreciation
method
Depreciation per
period
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Asset Flexfields (Contd)

Depreciation computations depend on such factors as the type of depreciation, depreciation life and the
depreciation method. The full lifetime depreciation treatment of an asset can be established by the cost of
the item and the
Asset Category assigned to it as it enters the system. Asset Category specifies a default depreciation method
to be used with
an asset. Upto seven segments can be used for the Category Flexfield. Ex Major Category (Segment1):
Computers | Minor
Category (Segment 2): Laptop. The advantage of multiple segments is that each segment can be validated
independently as
new categories are created.
The Location Flexfield:
It is used for recording the physical location of assets and for property tax reporting. Its segments usually
comprises
Country, State/ Province/ Department/ Land, county and city in which an asset is located. Here again upto
seven segments
can be defined.

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FA: Journal Entries

Creating Journal Entries for the GL:
FA creates journal entries for depreciation expense, asset cost, and other accounts. FA automatically creates transaction journal
entries for GL, if one has set up the journal entry category for that transaction type for that book. FA creates journal entries that
summarize the activity for each account for each transaction type.
Asset Accounting
Creating journal entries is a two step process:
1.
At the end of each accounting period, run the depreciation program for each book which closes the current period and opens the
next period.
2. Run the Create Journal Entries program to create journal entries to GL.
Journal Entries The create journal entries process creates journal entries for the appropriate GL SOB. One can review these
journal entries in GL and post them.
Depreciation Adjustments
FA creates separate journal entries for adjustments to depreciation expense and current period depreciation.
FA Accounts
FA creates journal entries for the following GL accounts: Accumulated Depreciation,Asset ClearingAsset Cost, CIP Clearing,
CIP Cost, Cost of Removal Gain, Loss, and Clearing, Deferred Accumulated Depreciation, Deferred Depreciation Expense,
Depreciation Adjustment, Depreciation Expense,Intercompany Payables,Intercompany Receivables,Net Book Value Retired
Gain and Loss,Proceeds of Sale Gain, Loss, and Clearing, Revaluation Amortization, Revaluation Reserve, Revaluation
Reserve Retired Gain and Loss
Reviewing Journal Entries
After sending journal entries from FA to general ledger, one can review or modify journal entries in ones general ledger
before posting them. If one integrate FA with Oracle GL, use the Enter Journals window in Oracle GL to review, change or
correct ones entries. If one use a different general ledger, one can review or change entries in that general ledger.
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FA: Journal Entries (Contd...)

Accounting Event

Account Head

Entry in AP

Asset Clearing A/c

Debit

Credit
100$

Supplier Liability A/c

Additions in FA (Mass/Quick/New)

Fixed Asset A/c

100$

100$

Asset Clearing A/c

Depreciation

Depreciation Expense A/c

100$

10$

Accumulated Depreciation A/c

Construction-in-Process Addition
(CIP) in FA
(The Entry in AP is same except
for Asset Clearing)

CIP Cost A/c

10$

150$

CIP Clearing A/c

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150$
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FA: Journal Entries (Contd...)

Accounting Event

Account Head

Asset type Adjustments Changing Asset

type from Capitalize to CIP

CIP Clearing A/c

Debit
100$
Asset Clearing A/c

Retirement
1. Entry in GL for monies received

Cash / Bank A/c

100$

95$

Sale Clearing A/c

2. Entry in FA on retirement (one needs to

enter the sales proceeds and the cost of
removal if any in the Retirement Screen)

95$

Accumulated Depreciation
(Assumed that the asset is sold immediately after last
depreciation and there is no cost of removal)

10$

Sale Clearing A/c

95$

Fixed Asset A/c

100$

Gain on Sale of Asset

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Credit

5$

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Financial Interfaces

Financial has interfaces to bring in the data from the

legacy/external system in most of the modules, Following
are the Interfaces available in each finance module with
the interface table information. The next few slide will
discuss the details on the GL Interface in detail.

General Ledger Journal Entry

GL_INTERFACE
Payables - Invoices
AP_INVOICES_INTERFACE &
AP_INVOICE_LINES_INTERFACE
Receivables - Customers
RA_CUSTOMERS_INTERFACE_ALL ,
RA_CUSTOMER_PROFILES_INT_ALL
RA_CONTACT_PHONES_INT_ALL,
RA_CUSTOMER_BANKS_INT_ALL
RA_CUST_PAY_METHOD_INT_ALL ,
HZ_PARTY_INTERFACE
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Financial Interfaces
Receivables - Invoices
RA_INTERFACE_LINES_ALL ,
RA_INTERFACE_DISTRIBUTIONS_ALL
RA_INTERFACE_SALESCREDITS_ALL
Receivables Lock Box
AR_PAYMENTS_INTERFACE_ALL
Receivables - Tax
AR_TAX_INTERFACE
Cash Management Bank Statements
CE_STATEMENT_HEADERS_INT_ALL
CE_STATEMENT_LINES_INTERFACE
Fixed Assets
FA_INV_INTERFACE

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Closing Procedures

Closing Procedure:
Set the status of the first accounting period in the new
fiscal year to Future Entry.
If the business rules require reversing entries at the
beginning of every period, generate and post accruals
from the prior period. If prior period reversals were not
generated and posted at the beginning of this period, then
generate reversals
Transfer data from all of sub ledgers and feeder systems
to the GL_INTERFACE table. Review and Post the imported
journal entries. Close the period for each sub ledger. This
prevents future sub ledger transactions from being posted
to GL in the same period. Perform reconciliations of
subsidiary ledgers by reviewing and correcting balances.
Generate all recurring journals and stepdown allocations.
Revalue balances Wipro
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update foreign currency journals to 98
functional currency equivalents.

Closing Procedures (Cont..)

Post all journal entries, including: manual, recurring, step
down allocations, and reversals.
Update any unpostable journal entries and then post them
again.
Run GL reports, such as the Trial Balance reports, Account
Analysis reports, and Journal reports.
Translate balances to any defined currency if report in
foreign currencies is required.
Consolidate subsidiary SOBs in case of multiple companies.
If using a calendar with an adjusting period that represent
the last day of the fiscal year, close the current period and
open the adjusting period. Create and post adjusting
entries and accruals in the adjusting period.
Run Trial Balance reports and other GL Reports in the
adjusting period after adjustments are made.
If local accounting rules require balance sheet to be closed,
submit the Create Balance Sheet Closing Journals program.
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Balance sheet willWipro
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Closing Procedures (Cont..)

If it is required to have an actual closing journal entry
that shows the closing of income statement accounts
to retained earnings, submit the Create Income
Statements Closing Journals program. This program
creates an auditable closing journal entry. The income
statement will reflect zero balances on posting
Close the last period of the fiscal year and Open the
first period of the new fiscal year to launch a
concurrent process to update account balances.
Opening the first period of a new year automatically
closes income statement and posts the difference to
retained earnings account specified in the SOB form.
Perform YearEnd Encumbrance Procedures (if
applicable).
Run FSG reports for the last period of the year.
If balance sheet is closed at yearend, reverse the
Balance Sheet Closing
Journals to repopulate balances
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of balance sheet accounts for the new year.

100

Thank you