Basics of Accoutning

Financial statements (or financial reports) are formal records of a business' financial activities. it provide an overview of a business' financial condition in both short and long term. There are four basic financial statements

   1. Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and net equity as of a given point in time.The balance sheet is the snapshot of the assets and liabilities the company has acquired since the first day of business.
See example of a balance sheet @
http://investor.google.com/releases/2009Q2_google_earnings.html

   2. Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. in simple words its a summation of the income and expenses from the first day of this accounting period (probably from the beginning of this fiscal year).

   3. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

   4. Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.

In British English, including United Kingdom company law, financial statements are often referred to as accounts, although the term financial statements is also used, particularly by accountants.

In order understand the financial statements one should understand the below terms

Standrad Oracel has following 5 accoutning types

Debit/Credit are the most fundamental concepts in accounting, representing the two records that one party in a transaction makes on its records, transferring a money balance from one account to another, one representing a reduction of liability or increase in asset, and the other representing a balancing increase in liability or reduction of asset.

Asset/Liability, Expense/Income are the four baisc type of accounts.



Debit/Credit:

Oracle Flexfield

A flexfield is a field made up of sub–fields, or segments. There are two types of flexfields: key flexfields and descriptive flexfields. A key flexfield appears on your form as a normal text field with an appropriate prompt. A descriptive flexfield appears on your form as a two–character–wide text field with square brackets [ ] as its prompt. When opened, both types of flexfield appear as a pop–up window that contains a separate field and prompt for each segment. Each segment has a name and a set of valid values. The values may also have value descriptions.

KFF, DFF, Structure, Segemnt, Value, Value Set, Value Description, Aliases, Rules, Groups, Security.

Key Flexfields
Most organizations use ”codes” made up of meaningful segments (intelligent keys) to identify general ledger accounts, part numbers, and other business entities. Each segment of the code can represent a characteristic of the entity. For example, your organization might use the part number PAD–NR–YEL–8 1/2x14” to represent a notepad that is narrow–ruled, yellow, and 8 1/2” by 14”. Another organization may identify the same notepad with the part number ”PD–8x14–Y–NR”.
Both of these part numbers are codes whose segments describe a characteristic of the part. Although these codes represent the same part, they each have a different segment structure that is meaningful only to the organization using those codes.

The Oracle Applications store these ”codes” in key flexfields. Key flexfields are flexible enough to let any organization use the code scheme they want, without programming. When your organization initially installs Oracle Applications, you and
your organization’s implementation team customize the key flexfields to incorporate code segments that are meaningful to your business. You decide what each segment means, what values each segment can have, and what the segment values mean. Your organization can define rules to specify which segment values can be combined to make a valid complete code (also called a combination). You can also define relationships among the segments. The result is that you and your
organization can use the codes you want rather than changing your codes to meet Oracle Applications’ requirements.
For example, consider the codes your organization uses to identify general ledger accounts. Oracle Applications represent these codes using a particular key flexfield called the Accounting Flexfield. One organization might choose to customize the Accounting Flexfield to include five segments: company, division, department, account, and project. Another organization, however, might structure their general ledger account segments differently, perhaps using twelve segments instead of five. The Accounting Flexfield lets your Oracle General Ledger application accommodate the needs of different organizations
by allowing them to customize that key flexfield to their particular business usage.

Descriptive Flexfields
Descriptive flexfields provide customizable ”expansion space” on your forms. You can use descriptive flexfields to track additional information, important and unique to your business, that would not otherwise be captured by the form. Descriptive flexfields can be context sensitive, where the information your application stores depends on other values your users enter in other parts of the form. A descriptive flexfield appears on a form as a single–character, unnamed field enclosed in brackets. Just like in a key flexfield, a pop–up window appears when you move your cursor into a
customized descriptive flexfield. And like a key flexfield, the pop–up window has as many fields as your organization needs.
Each field or segment in a descriptive flexfield has a prompt, just like ordinary fields, and can have a set of valid values. Your organization can define dependencies among the segments or customize a descriptive flexfield to display context–sensitive segments, so that different segments or additional pop–up windows appear depending on the values you enter in other fields or segments.

1. KFF & DFF
2. Structure, Segment & Qualifier
3. Value (Parent, Group, Hirearchy & Qualifier) , Value Description & Value Set
   
4. Security Rule, Cross-Validation & Alias
5. Accounting Flexfield (Chart of Account & Account Generator processes)

General Ledger

The Oracle General Ledger is the central repository of accounting information. The main purpose of a general ledger system is to record financial activity of a company and to produce financial and management reports to help people inside and outside the organization make decisions.

•  Record and Review Accounting Information
•  Import data from subsidiary ledgers, or enter journals to record actual or budget transactions directly into Oracle General Ledger.
• Enter encumbrance journals to track encumbrances through the purchase process and to control spending against budgeted amounts.
• Review account balances online or through reports.
• Manipulate Accounting Information
• Correct actual, budget, and encumbrance information.
• Revalue and translate balances denominated in foreign currencies.
• Consolidate balances from multiple sets of books.
• Analyze Accounting Information
• Integrate Oracle General Ledger with Oracle Financial Analyzer, Oracle Discoverer, or Applications Desktop Integrator to simplify the budgeting and forecasting process.
• Quickly prepare what if analyses and pro forma reports

1. Setup/ Open period 2. Create/reverse journal entries, Post &  Review 3. Conversion, Revaluation, Translation, Re generate &  Consolidate 4. Review/correct balances & Run accounting reports 5. Close accounting period

Functions & Features

Entering Journals

Journal Batches
You can organize journal entries with common attributes into batches. For example, you might group your journal entries by type or date. You can have multiple journals in one batch, or you can have a separate batch for each journal entry.

All journal entries in a batch must share the same period. You can create a journal batch for any Open or Future Enterable accounting period, but you can only post batches in Open accounting periods. If you do not want to enter batch information, you can enter a journal directly. General Ledger will create a batch for the entry automatically, using the source (Manual) combined with a unique batch ID and the system date.

Multiple Reporting Currencies
If you use Multiple Reporting Currencies, General Ledger automatically generates converted journal batches in your reporting
sets of books when you post the original journals in your primary set of books. You may occasionally want to modify an unposted converted journal batch in a reporting set of books to override the journal’s reporting currency conversion rate or amount.

If you do find it necessary to change a journal batch in your reporting set of books, use the Enter Journals window to make your changes. You must log in to General Ledger using the reporting set of books’ responsibility.

Entering Journals
To manually enter a journal navigate to the Enter Journals window. we can enter journal with an existing batch, or create a new batch or can can enter journal without batch.
1. To enter journals for a new batch, choose New Batch from the Find Journals window and create a new batch.'

 

Journal Approval Overview

The GL Journal Approval Process obtains the necessary management approvals for manual journal batches. The process validates the journal batch, determines if approval is required, submits the batch to approvers (if required), then notifies appropriate individuals of the approval results.

The process has a result type of GL Journal Approval Process Result that gives one of four results:

• Validation Failed: The journal batch failed the validation process and was never submitted to the approver.
• Approval Not Required: The journal batch does not need approval.
• Approved: The journal batch was approved by all necessary approvers. In some cases, this may be the preparer.
• Rejected: The journal batch was rejected by an approver.

Allocating Amounts with Recurring Journals and MassAllocations

You can allocate amounts from any cost pool (revenues, expenses, assets, or liabilities) to various accounts using recurring journals and Mass Allocation formulas.

With a recurring journal entry formula, you define a separate journal entry for each allocation. You can group related allocation entries together in a recurring journal batch. Use recurring journal entries to perform simple or complex allocations. For example,
you can allocate a portion of your rent expense to another division, or, you can allocate a pool of marketing costs to several departments based on the ratio of department revenues to total revenues.
You define a separate recurring journal entry formula for each allocation, and you can group related allocation entries even if they are for different ledgers, together in a recurring journal batch. Each line of the recurring journal entry contains a target account, as well as the formula you want to use to calculate the allocation amount. Reserve the last line of each entry for the offsetting account. Enter line number 9999 and the offsetting account to have General Ledger automatically generate the offsetting amount. You do not need to enter a formula to calculate the offset.

With MassAllocations, you define one formula to generate allocation journal entries for a group of cost centers, departments, divisions, and so on. You define the allocation pool, the allocation formula, and the target and offset accounts for each MassAllocation formula. You can also group combine related MassAllocation formulas into batches.

Using recurring journal entry and MassAllocation formulas, you can perform a variety of allocations, including:

• Net Allocations
• Step–Down Allocations
• Rate–Based Allocations
• Usage–Based Allocations
• Standard Costing Allocations

Journal Processing

GL supports a variety of journal entry types to meet your business & accounting reqirements.In GL there are four basic journal entry types.





Basic Processes           Total debits must equal total credits for journal entry.
The basic processes involved in journal entry are
1. Enter manual journal entries, including:
• Standard journal entries.
• Foreign and dual currency journal entries.
• Statistical journal entries.
• Intercompany journal entries.

2. Import journals from subledgers. If you encounter an error when trying to import a subledger journal, you can correct the import data and rerun journal import.

3. Define recurring journal formulas for transactions that have a common format or that you enter frequently. You can also create recurring journal formulas to create allocation entries.
You can use recurring journals to create three types of journal entries:
• Skeleton entries affect the same accounts each period, but have different posting amounts.
• Standard recurring journal entries use the same accounts and amounts each period. See: Creating Standard Recurring Journal.
• Formula entries use formulas to calculate journal amounts that vary from period to period.

4. Define MassAllocation formulas to allocate a cost pool across a group of departments, companies, etc.
 Generate recurring journal and MassAllocation journal batches based on formulas you defined.

5. Review the details of your unposted journal batches. Edit unposted journals to change information about an unposted
batch or its journal detail, including the batch period and the journal currency and finally post your journal batches manually or automatically.

Journal Components

Recurring Journals

Define recurring journal formulas for transactions that you repeat every accounting period, such as accruals, depreciation charges, and allocations.

• Your formulas can be simple or complex. Each formula can use fixed amounts and/or account balances, including standard, end–of–day, or average balances, actual or budget amounts, statistics, and period–to–date or year–to–date balances from the current period, prior period, or same period last year. You can quickly create new recurring formulas by copying and modifying existing formulas.
• You can define recurring journal formulas for your functional currency, foreign currencies which have a fixed relationship with your functional currency, and statistical currency.

Accounting Setups

Use the Accounting Setup Manager in Oracle General Ledger to define accounting setups that include the following common financial components:
One or more legal entities (optional)
Primary ledger
  • Reporting Currencies (optional)
  • Balancing segment value assignments (optional)
  • Subledger Accounting Options
Operating Units (available if legal entities are assigned)
  • Intercompany Accounts (available if legal entities are assigned)
  • Intracompany Balancing Rules (optional)
Sequencing (optional)
Secondary Ledger (optional)

To use multiple organizations, you must define an accounting setup with at least one legal entity, a primary ledger that will record the accounting for the legal entity, and an operating unit that is assigned to the primary ledger and a default legal context (legal entity). It is also recommended that balancing segment values be assigned to the legal entity to help you identify legal entity transactions during transaction processing and reporting and to take advantage of Intercompany Accounting.
Note: If your enterprise structure requires that you define a business group, you should define accounting setups before business groups.



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Installation step 1.1 - Create legal entity
Once the installation of R12 is complete, log into the system with user id and password as sysadmin/sysadmin and create the user who 'll handel the Accounting part. Assign Grants Accounting Super User to the user



Go to the grants accouting super user responsibility and define a new legal entity.
Navigation : Grants accouting super user ->Set up -> Financials -> Accounting setup manager -> Accouting setups


Installation step 1.2 - Accounting Setup

Installation step 1.2.1 - Chart of Account 
For details check http://www.oracleug.com/user-guide/oracle-flexfield/accounting-flexfield-chart-account 
Lets define a six segment chart of account as shown below
Navigation : Grants accouting super user ->Set up -> Financials -> Flexfields-> Key ->Segments

 Installation step 1.2.2 - Calendar
 


  Installation step 1.2.3 - Currancy

Installation step 1.3 - Primary Ledger



After defining the primary ledger, attach the Legal entities to it

Entering Statistical Journals

General Ledger provides two ways to enter statistical journals. You can enter journals with only statistical debit and credit amounts. If your user profile permits, you can also combine monetary and statistical amounts in the same journal line.
Note: Statistical journal entries do not require balanced debits and credits.
Note: If you use Multiple Reporting Currencies, statistical journals will be copied to your reporting sets of books, but the journals are not affected by the currency conversion process.

Bills of Receviables, Bills of Exchange & Promissory note

Factoring
Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business. Factoring differs from a bank loan in three main ways. First, the emphasis is on the value of the receivables (essentially a financial asset), not the firm’s credit worthiness. Secondly, factoring is not a loan – it is the purchase of a financial asset (the receivable). Finally, a bank loan involves two parties whereas factoring involves three.

It is different from the forfaiting in the sense that forfaiting is a transaction based operation while factoring is a firm based operation - meaning, in factoring, a firm sells all its receivables while in forfaiting, the firm sells one of its transactions.

Factoring is a word often misused synonymously with invoice discounting - factoring is the sale of receivables whereas invoice discounting is borrowing where the receivable is used as collateral.

Forfaiting
In trade finance, forfaiting involves the purchasing of receivables from exporters. The forfaiter will take on all the risks involved with the receivables. It is different from the factoring operation in the sense that forfaiting is a transaction based operation while factoring is a firm based operation - meaning, in factoring, a firm sells all its receivables while in forfaiting, the firm sells one of its transactions.

Benefits for using forfaiting include eliminating risks (political, transfer and commercial risks) and improving cashflows. Increases cash flow. Forfaiting converts a credit-based transaction in to a cash transaction.

The characteristics of a forfaiting transaction are:
   1. Credit is extended by the exporter for period ranging between 180 days to 7 years.
   2. Minimum bill size should be US$ 250,000/- (US$ 500,000/- is preferred)
   3. The payment should be receivable in any major convertible currency.
   4. An L/C or a guarantee by a bank, usually in importer's country.
   5. The contract can be for either goods or services.

At its simplest the receivables should be evidenced by any of the following debt instruments:
   1. Promissory note.
   2. Bill of exchange.
   3. Deferred payment letter of credit.
   4. A letter of guarantee.

Account Classification

Broadly Accounts are classified as

   Account Classification: Broadly Accounts are classified as

•    Personal - Related with the Persons E.g. Mr. Paul’s A/C account at ABC Org
•    Nominal - Pertaining to Income and Expenses E.g. Interest, Wages etc.
•    Real - Pertaining to things / Properties E.g. Cash , building, Machinery etc .

•     For Real A/C – Debit that whatever Comes in , Credit whatever goes out.
•     For Nominal A/C– Debit expenses, losses and credit incomes and profits.
•     For Personal A/C- Debit the Receiver, Credit the Giver.

Budgeting

A budget is a forecast (estimate) of cost, expenditure or /and revenue for a specified period of time. it may include one or mare accounting years. It is used to major the achievement of the company's goal or objectives.

An encumbrance is part of the budgeted amount that prevents the user from exhausting their budget amounts. when a user's expense is extending into the encumbrance amount an alert will be generated so that management can adjust the budgeted amount.

• to compare actual balances with projected results, or
• to control actual and anticipated expenditures.

JE : Budget Journals, MassBudget Journals, Journal Wizard and Transfer budget Amounts
Not JE : Budget Amounts, Budget Formulas, Budget Wizard and Upload Budgets

• Creating Budget Formulas to Allocate Budget Amounts
• Creating a Flexible Budget
• Using Mass Budgeting
• Using Top-Down, Bottom-Up, and Middle-Out Budgeting
• Creating Master/Detail Budgets
• Uploading Budgets from a Spreadsheet

Creating Recurring Journal Entries

You can define an unlimited number of journal entry lines for each recurring journal entry. The journal entry lines specify the accounts to update with the recurring journals. Each line also contains the amount to post to the designated account, or a formula to calculate the journal amounts.

 

Creating Skeleton Journal Entries

Create skeleton journal entries for journal entries that affect the same accounts each period, but have different posting amounts. After you generate skeleton journal entries, edit the unposted journal batch using the Enter Journals window and enter the debit and credit amounts for the journal lines.

To create a skeleton journal entry:

Defining Budgets

Pracitce

Define a Budget
Responsibility = General Ledger, Vision Operations
1.    Navigate the Define Budgets form:
    * (N) Budgets > Define > Budget

2.    Enter the following:
    * Name = XXCONSULTING
    * Status = Open
    * First = Jan-YY (Use current year)
    * Last = Dec-YY (Use current year)

3.    (B) Open Next Year.

4.    (B) Yes in the Decision window.

5.    (B) OK in the Note window.

Define a Master/Detail Budget
Responsibility = General Ledger, Vision Operations

1.    Navigate the Define Budgets form:
    * (N) Budgets > Define > Budget

2.    Enter the following:
    * Name = XXADMIN
    * Status = Open
    * First = Jan-YY (Use current year)
    * Last = Dec-YY (Use current year)
    * Master Budget = XXCONSULTING (From the List of Values)

3.    (B) Open Next Year.

4.    (B) Yes in the Decision window.

5.    (B) OK in the Note window.

Budget Organizations

• Contain ranges of accounts that make up the budget.
• Represent departments, cost centers, divisions, or other groups for which you enter and maintain budget data.

• To define a new budget organization that includes only specific ranges of accounts, enter a unique name.
• If you have one or more budget organizations defined already, you can create a budget organization named ”ALL” that automatically includes all accounts that are assigned to any budget organization. To do this, enter ”ALL” as the budget organization Name.

5. Assigning Account Ranges to a Budget Organization

• Enter a Line number and an account Low and High for each range you want to assign to your budget organization. The ranges cannot overlap other account ranges with the same currency for any budget organization in that set of books.
• Select the budget entry Type for the account range:

• Enter the Currency for each account range. For accounts with abudget entry type of Calculated, you must enter either thefunctional currency for your set of books, or STAT.To enter only statistical budget amounts for the account range, enter STAT.
• You can review, add, or temporarily delete individual accounts assigned to your budget organization by choosing Range Assignments.
• Save your work. General Ledger launches a concurrent program to assign all the existing accounts within the designated ranges to the budget organization. You can review the Status of each range.

• Set the budgetary control options for the range
• If your funds check level is set to None, you can assign any Currency and a budget entry Type of Entered to the account range. If your funds check level is set to Absolute or Advisory, you must assign your functional Currency and a budget entry Type of Entered to the account range. 

Setting Budgetary Control Options for an Account Range

If you are using budgetary control for your set of books, you can set budgetary control options for an assigned account range. You can only assign budgetary control options to account ranges with your functional currency and a budget entry type of Entered.

• If the amount type is PTD, boundary can be Period.
• If the amount type is QTD, boundary can be Period or Quarter.
• If the amount type is YTD, boundary can be Period, Quarter or Year.
• If the amount type is PJTD, boundary can be Period, Quarter, Year, or Project.

Budget Formula

You define budget formulas to calculate budget amounts. Your budget formulas can be simple or complex. You can use any combination of fixed amounts and account balances, including actual or budget amounts, statistics, and period-to-date or year-to-date balances from the current period, prior period or same period last year.

When you define budget formulas, you create a budget formula batch. The batch contains one or more budget entries, and each entry contains one or more formulas. Use budget batches and entries to group your budget formulas. For example, you might combine all formulas for a single department or division into one batch, or group all formulas for certain types of calculations into separate entries. When you calculate budgets using a budget formula, General Ledger replaces any existing budget amounts directly; it does not create a budget journal.

Prerequisites

•  Define your budget organizations and assign the budget entry type ”Calculated” to the accounts to which you want to budget.
•  Define your budgets.

 

Entering Budget Amounts

Enter budget amounts for your accounts to replace any existing budget balances. You can enter budget amounts for each account in the budget organization one–by–one, or you can use worksheet mode to enter budgets for several accounts at once.

• Budget rules enable you to distribute budget amounts for all periods.
• General Ledger does not create journal entries when you use the Enter Budget Amounts window. Use the Enter Budget Journals window if you want to create journal entries to maintain an audit trail for your budget amounts.
• You cannot enter budget amounts for a budget that is frozen.

Budget rules

• Divide Evenly: Evenly distribute the amount you enter across all accounting periods. You can set rounding options to handle any undistributed amount resulting from rounding calculations.
• Repeat Per Period: Repeat the amount you enter in each accounting period.
• Prior Year Budget Monetary*: Multiply the amount you enter by the prior year budget monetary balance of the account you enter.
• Current Year Budget Monetary*: Multiply the amount you enter by the current year budget monetary balance of the account you enter. To include budget amounts you entered in the current session, save your entries before choosing this budget rule. You do not have to post the entries.
• Prior Year Budget Statistical*: Multiply the amount you enter by the prior year budget statistical balance of the account you enter.
• Current Year Budget Statistical*: Multiply the amount you enter by the current year budget statistical balance of the account you enter. To include budget amounts you entered in the current session, save your entries before choosing this budget rule. You do not have to post the entries.
• Prior Year Actual Monetary*: Multiply the amount you enter by the prior year actual monetary balance of the account you enter.
• Current Year Actual Monetary*: Multiply the amount you enter by the current year actual monetary balance of the account you enter.
• Prior Year Actual Statistical*: Multiply the amount you enter by the prior year actual statistical balance of the account you enter.
• Current Year Actual Statistical*: Multiply the amount you enter by the current year actual statistical balance of the account you enter.

Entering Budget Journals

GL Setup

General Ledger provides you with the flexibility to manage your financial information within any company structure. You can maintain multiple companies with similar or different accounting structures, and consolidate their results for meaningful financial reporting.

With a multi–company structure, you can:

• Maintain actual, budget, encumbrance, and average balance information for each of your companies.
• Control security over each company’s financial information so that only properly authorized individuals can review or change accounting information.
• Create intercompany accounts for combinations of source, category, and balancing segment value to automatically keep your companies properly balanced and provide detail for reconciliation.
• Produce consolidated reports.

• You have companies that require different account structures to record information about transactions and balances. For example, one company may need a 6–segment account, while another needs only a 2–segment account.
• You have companies that use different accounting calendars. For example, although companies may share fiscal year calendars, you may want a weekly calendar for one company and a monthly calendar for another.
• You have companies that require different functional currencies. Consider the business activities and reporting requirements of each company. If you must present financial statements in another country and currency, consider the accounting principles to which you must adhere. Based on such considerations, choose the appropriate functional currency for each company.
• You use multiple Oracle Applications instances for your companies.

1. Performing system–wide setup tasks such as configuring concurrent managers and printers
2. Managing data security, which includes setting up responsibilities to allow access to a specific set of business data and complete a specific set of transactions, and assigning individual users to one or more of these responsibilities.
3. Setting up Oracle Workflow

Shorthand Aliases

Value Set Windows

The value sets you define using these windows appear in lists of values you see when you define flexfield segments using the Key Flexfield Segments window or the Descriptive Flexfield Segments window. If you are defining reports that your users run from the Submit Requests window, use this window to define value sets for your report arguments. The value sets you define using this window also appear when you define report parameters using the Concurrent Programs window.

•  Poplist – fewer than 10 values expected
•  List of Values – between 10 and 200 values expected
•  Long List of Values – more than 200 values expected

• No Security – All security is disabled for this value set.
• Hierarchical Security – Hierarchical security is enabled. With hierarchical security, the features of value security and value hierarchies are combined. With this feature any security rule that applies to a parent value also applies to its child values.Warning: Within a hierarchical tree of values, a value is subject to a security rule if any parent above it is subject to that security rule.
• Non-Hierarchical Security – Security is enabled, but the rules of hierarchical security do not apply. That is, a security rule that applies to a parent value does not ”cascade down” to its child values.

Segment Values Window

Use this window to define valid values for a key or descriptive flexfield segment or report parameter. You must define at least one valid value for each validated segment before you can use a flexfield. These validated segments provide users with a list of predefined valid segment values, and have a validation type of Independent, Dependent, Translatable Independent, Translatable Dependent, or Table.

You should use this window to define values that belong to Independent, Dependent, Translatable Independent, Translatable Dependent, or Table value sets. You can define new segment values, specify value descriptions for your values and to enable or disable existing values as well.



1. The values you define for a given flexfield segment automatically become valid values for any other flexfield segment that uses the same value set. Many Oracle Applications reports use predefined value sets that you may also use with your flexfield segments.

2. If your flexfield segment uses a value set associated with a Standard Request Submission report parameter, creating or modifying values also affects that parameter. If you use the same value set for parameter values, the values you define here also become valid values for your report parameter.

3. You also specify segment value qualifiers, rollup groups, and child value ranges.
You can also view and maintain segment value hierarchies for the Accounting Flexfield or for any custom application flexfields that use the value hierarchies feature.
Attention: Because the Accounting Flexfield is the only Oracle Applications key flexfield that uses the parent, rollup group,hierarchy level and segment qualifier information, you need only enter this information for values that are associated with your Accounting Flexfield.

4. For certain types of changes to value hierarchies, a concurrent request is submitted to rebuild the value hierarchies. One request per value set that the change affects (the value set attached to the segment for which you are defining or maintaining values) may be submitted. For example, if you make hierarchy structure changes for five different key
flexfield segments, all of which use different value sets, up to five concurrent requests may be submitted.
A concurrent request is submitted for the following changes to value hierarchies:
• A new hierarchy range is defined, or an existing hierarchy range is updated or deleted.
• A hierarchy range is moved to another value.
• The value definition for non–parent values is updated in some way. For example, the description is changed.

Rollup Groups

Rollup Group is a collection of Parent values for a given segment.

To be used in a rollup group there are a few requirements:
1.  The value MUST be a Parent value.
2.  The Parent Value MUST contain Child values.
3.  The Parent and Child Values MUST belong to the same Value Set.

Users can summarize on any information in any segment using Rollup Groups.

To define rollup groups
1. Enter a code for your rollup group. The code is required and used internally.
2. Enter a name and description for your rollup group.
3. Save your changes.
4. Apply your rollup group name to particular values using the Segment Values window

Chart of Accounts

Balancing Segment, Cost Center, Natural Account, Secondary tracking segment and Inter compnay.

• Designate one of your segments as the natural account segment and another as the balancing segment. You can optionally designate a cost center segment and/or intercompany segment. If you are using Oracle Assets, Oracle Projects, or want to run revaluations by cost center, it is highly recommended that you specify a cost center segment.
• Assign the Secondary Tracking Segment qualifier to one of the segments in your chart of accounts. You cannot use the primary balancing, intercompany, or natural account as the secondary segment.
• Assign an intercompany segment. If your subsidiaries share the same set of books, you can use the intercompany segment to identify subsidiaries involved in intercompany transactions.

Designing Your Account Segments

The account structure helps you categorize your accounting information as you record it. You create an account structure by defining Accounting Flexfield segments that comprise the account. You should design your accounts to determine the number and characteristics of the segments you need. 

Below are some common entities that many organization define with separate account segments. You can also identify one of these as a secondary tracking segment except the primary balancing, intercompany, and natural account segments.

Period Types

You can define your own period types to use in addition to the General Ledger standard period types Month, Quarter and Year. You use these period types when you define the accounting calendar for your organization.

Defining Period Types
Each set of books has an associated period type. When you assign a calendar to a set of books, the set of books only accesses the periods with the appropriate period type. Thus, you 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.
Note: If you close your balance sheet using the Create Balance Sheet Closing Journals program, define 14 accounting periods for your period type.

 
 

• Choose Calendar to use the year in which an accounting period begins for the system name.
• Choose Fiscal to use the year in which your fiscal year ends for the system name.

Calendars

Create a calendar to define an accounting year and the periods it contains. You 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 you be more accurate and reduces the amount of period maintenance you must do at the start of each accounting period. You should define your calendar at least one year before your current fiscal year.

Defining Calendars
You can define multiple calendars and assign a different calendar to each set of books. For example, you can use a monthly calendar for one set of books, and a quarterly calendar for another. Calendars you create are validated online. Full calendar validation is launched whenever you exit the Accounting Calendar window. Navigate to Help>View My Requests to view or print the Calendar Validation Report. You may also choose this report from the Standard Reports list to identify any errors associated with the calendar you created.

 

• Accounting periods cannot overlap, except for adjusting periods.
• If any of your non–adjusting accounting periods overlap, General Ledger reports an error.
• Adjusting periods must overlap non–adjusting periods.
• Periods of the same period type must be consecutively numbered in ascending order without gaps.
• All periods must have period numbers assigned between 1 and the maximum number for that period type.
• All periods must have quarter numbers assigned between 1 and the maximum number.
• Period ordering must be based on the period starting dates.
• The starting fiscal year must start no earlier than one year before the calendar year and end no later than one year after the calendar year.
• You cannot report on a year with no periods defined.

Transaction Calendars

Each set of books for which average processing is enabled, must be assigned a transaction calendar, which is used to control transaction posting. When you define the transaction calendar, you choose which days of the week will be business days. You can also specify other non–business days, such as holidays, by maintaining the transaction calendar.

Currencies

Use the Currencies window to define non-ISO (International Standards Organization) currencies, and to enable/disable currencies. Oracle Applications has predefined all currencies specified in ISO standard #4217.
To use a currency other than U.S. Dollars (USD), you must enable the currency. U.S. Dollars (USD) is the only currency that is enabled initially.

Sets of Books

A set of books determines the functional currency, account structure, and accounting calendar for each company or group of companies. If you need to report on your account balances in multiple currencies, you should set up one additional set of books for each reporting currency. Your primary set of books should use your functional currency. Each reporting set of books should use one of your reporting currencies.

1. When defining a set of books, you can also choose to enable average balance processing. If you choose this option, General Ledger will track and maintain average and end–of–day balances.
2. When you define a set of books, you can also choose to enable budgetary control for the set of books. If you choose this option,encumbrances will be created automatically for your transactions in General Ledger, Oracle Purchasing and Oracle Payables. Enabling budgetary control is the first step in setting up funds checking.
3. If you need to report on your account balances or at the transactions level in multiple currencies, define a primary set of books using your functional currency and additional sets of books using your reporting currencies.
4. Before you can use a newly defined set of books, your system administrator must associate the set of books with one or more responsibilities. This is done using the profile option GL Set of Books Name. Your responsibility determines which set of books you use.

Closing Tab

Identifies closing options and accounts for your Set of Books. Complete the following as necessary:
When you define your set of books, you always specify a Retained Earnings account, and you can also set up other special accounts depending upon the functionality you plan to use.

Journalling Tab

Enable Standard Options for your Set of Books. Each set of books has a number of flags that indicate the accounting practices you want to follow for that set of books.

Average Balance Processing Tab

You can choose to enable average balance processing for a set of books. When enabled, General Ledger will track and maintain average and end–of–day balances. Assign the default Net Income account for your average balance set of
books.

Budgetary Control Tab

Using budgetary control requires funds reservation for any transactions you enter in General Ledger, Oracle Purchasing or Oracle Payables. You can only post journal entries that pass funds reservation. If you enable this option, you must enter a reserve for encumbrance account for the set of books. If you do not enable budgetary control, you cannot perform funds
check or reservation in General Ledger, Oracle Purchasing or Oracle Payables.

Journal Approval

Use General Ledger’s Journal Approval feature to ensure that journal entries and batches are approved by appropriate management personnel before the journals can be posted to your account balances. Journal Approval uses Oracle Workflow to control and monitor the approval process, sending notifications to journal batch preparers and approvers when needed. Some of the Journal Approval components can be customized to meet your organization’s specific needs.

Before you use Journal Approval, you must enable journal approval for your set of books. You must also set up your journal sources to use journal approval. Finally, you must create an approval hierarchy and define your approver authorization limits.

1. To enable Journal Approval for your set of books:
When you define your set of books, mark the Enable Journal Approval check box on the Set of Books window.

2. To specify journal sources that require journal approval:
On the Journal Sources window, mark the Require Journal Approval check box for each journal source that should be subject to approval. When a journal entry or batch is created using one of these journal sources, the journal must be approved before it can be posted.

3. When you enter an employee, you also enter the employee’s supervisor or manager name. The supervisor is the default next approver for journal entries and batches. Likewise, the supervisor’s manager is the next approver after the supervisor.

If your organization uses a full installation of Oracle Human Resources, you must log in with a Human Resources responsibility
to enter your employees in the People window. The Enter Person window will not be available from General Ledger.

If your organization does not have Oracle Human Resources installed, you will use some of the Human Resources windows
available through Oracle Applications. Some of the fields in these windows are for Oracle HRMS security only.

4. To define authorization limits:

• Navigate to the Journal Authorization Limits window.
• Enter the Employee name, or select it from the list of values.
• Enter the amount of the employee’s Authorization Limit.
• Repeat the previous two steps for each employee for whom you want to define authorization limits.
• Save your work.

Journal Sources

Journal sources identify the origin of your journal entries. General Ledger supplies a number of predefined journal sources. In addition, you should define at least one journal source for each of your own, non–Oracle feeder systems to help you track imported journal entries.

Defining Journal Sources
For each journal source, you can choose:

• To import detail reference information for summary journals you import from your feeder systems. If you choose this option, you can also use the Account Inquiry window to drilldown to subledger transactions, transferred from subledgers in summary or detail, for a specified source.
• To freeze the journal source, preventing users from making changes to any unposted journals from that source.
• To require that journals with a specific journal source be approved by higher management levels before the journal can be posted. Journal Approval must be enabled for your set of books.
• Define intercompany and suspense accounts for specific sources, run the AutoPost program for specific sources, import journals by source, and report on journals by source using the Foreign Currency Journals or General Journals reports.

 

• In the Account Inquiry window, you can drilldown to subledger transactions, transferred from subledgers in summary or detail, for this source.
• Journal References will be imported from your feeder systems to maintain a mapping of summarized transactions when you run Journal Import and choose to create summary journals. This information is stored in the GL_IMPORT_REFERENCES table.
• You can request a mapping report from your feeder systems after Journal Import completes. Or, you can write your own report referencing the GL_IMPORT_REFERENCES table which stores the mapping information.

• 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.

Journal Categories

Journal categories help you differentiate journal entries by purpose or type, such as accrual, payments or receipts. When you enter journals, you specify a category.

Defining Journal Categories
You can define intercompany and suspense accounts for specific categories. You can also use document sequences to sequentially number journal entries by category. Journal categories appear in standard reports, such as the General Journals report. General Ledger provides the predefined journal categories shown in the following table:

Encumbrance Types

Encumbrance types let you classify and track expenditures according to the purchasing approval process. You can define encumbrance types in addition to the General Ledger standard encumbrance types or disable existing encumbrance types.
General Ledger has the following predefined encumbrance types:

• Commitment An encumbrance you record when you complete a purchase requisition.
• Obligation An encumbrance you record when you turn a requisition into a purchase order.

AutoPost - Posting Journal Batches Automatically

You can automatically post journal batches that meet specific criteria you've defined in an AutoPost criteria set. You can define multiple criteria sets that include a range of journal effective dates and multiple AutoPost priorities. AutoPost priorities include combinations of journal source, journal category, balance type, and period.

Once you define an AutoPost criteria set, run the AutoPost program to select and post any journal batches that meet the criteria defined by the criteria set. You can also schedule the AutoPost program to run at specific times and submission intervals. You can submit the AutoPost program or schedule AutoPost runs directly from the AutoPost Criteria Sets window. Alternatively, you can use the Submit Request window.

When you enter the AutoPost priorities for a criteria set, you can enter All for one or more of the selection fields. Use this feature to select all journal sources or categories, all balance types, or all accounting periods. For example, suppose you enter journals every period that adjust your budget balances for subsequent periods. You can define a criteria set that selects all unposted journal batches with a source of Manual and a balance type of Budget for all periods. You can then schedule the AutoPost program to run at the beginning of every period, automatically post your budget adjustments, and update your budget balances.

If you use budgetary control, you can define a criteria set that posts the encumbrance journal batches that are created after the funds have been successfully reserved.

Automatic Journal Reversal

If you routinely generate and post large numbers of journal reversals as part of your month end closing and opening procedures, you can save time and reduce entry errors by using Automatic Journal Reversal to automatically generate and post your journal reversals.

• First you define journal reversal criteria for journal categories. Journal reversal criteria lets you specify the reversal method, period and date. You can also choose to enable automatic generation and posting of journals.
• When you create a journal entry you want to automatically reverse, specify a journal category that has assigned reversal criteria. Your journal will be reversed based on the method, period and date criteria you defined for that journal category.

1. Automatically generate reversals when a new period is opened.
2. Manually launch a reversal program which finds and generates all journals marked for reversal for a specific period, including any journals that were manually selected for reversal.
3. Automatically post any reversal journals including reversals that were not automatically generated.

• The journal balance type is Actual.
• The journal category is enabled to be Autoreversed.
• The journal is posted but not yet reversed.
• The journal reversal period is open or future enterable.

• The journal category is enabled to AutoPost reversals.
• The reversal period is open or future enterable.

• Run the Open Period program to launch the Automatic Reversal program.
• Navigate to the Submit Request window and select the program, Automatic Reversal.

Suspense Accounts

If you allow suspense posting for your set of books, General Ledger uses suspense accounts to balance journals for specific sources and categories.

Summary Accounts

A summary account is an account whose balance is the sum of balances from multiple detail accounts. Use summary accounts to perform online summary inquiries, as well as speed the processing of financial reports, MassAllocations, and recurring journal formulas.

Determining Your Summary Account Needs
The first step in defining your summary accounts is to determine your summary account needs. Summary accounts provide you with significant benefits when you produce summary reports and perform allocations.
1. Consider the summary information you need for reports.
Although you can easily define financial statements that sum a number of accounts together for a given row, you can use summary accounts for faster access to summarized balances.

2. Identify the summary balances you need for online inquiries.
For example, you may need ”flash” inquiries on the total of all cash balances for your domestic organizations to make daily decisions about investments or foreign currency hedging. You may also want to review the amount of working capital (current assets less current liabilities) for each division or department on a weekly basis.

3. Consider how you want to use summary accounts in formulas and allocations. You can use summary accounts as factors when defining journal formulas and allocations.

• Use summary accounts to reference summary balances in a recurring journal formula. For example, to estimate a sales commission accrual based on the total of all product sales for each division, you can use a summary account that totals all product sales in each division.
• Use summary accounts to reference summary budget balances in a budget formula. For example, to base the budget for employee benefits in each company on the total of all budgeted employee salaries, use summary accounts that total all employee salaries in each company.
• Use summary accounts when entering budgets with budget rules. For example, you can base your budget for the current year’s Salary account on a percentage of the prior year’s total Overhead expense, a summary account.
• Use summary accounts to indicate the total amount you want to allocate when defining your allocation formulas. Also, use summary accounts to help you calculate the allocation ratios to use in your allocation formulas.

General Ledger uses summary templates to create summary accounts, whose balances are the sums of multiple detail accounts. Use summary accounts to perform online summary inquiries, as well as to speed the processing of financial reports, MassAllocations, and recurring journal formulas.

You specify when you want General Ledger to begin maintaining your summary account balances. You can also assign budgetary control options to a summary template for which you want to perform summary level budgetary control.
When you delete a summary template, General Ledger deletes all summary accounts created from that template and their associated balances.

To define a new summary account template:
1. Navigate to the Summary Accounts window.
2. Enter a Name for the summary account template.
3. Enter the Template.
4. Enter the Earliest Period for which you want General Ledger to maintain your actual, encumbrance and budget summary account balances. General Ledger maintains summary account balances for this accounting period and for subsequent periods.
5. If you are using budgetary control for your set of books, set the budgetary control options for the summary template.
6. Save your work. General Ledger submits a concurrent request to add the summary accounts, and displays the Status of your summary template.
Current: The summary accounts are active.
Adding: The concurrent request to create summary accounts is pending or running.
Deleting: The concurrent request to delete summary accounts is pending or running.

To enter a summary account template:
From the Summary Accounts window, enter the summary account Template using one of the following values for each segment:
D: Your template creates and maintains a summary account for every detail segment value. This value creates the most summary accounts of any template value.
Note: General Ledger will not allow you to define a summary account template using only D template values.

T: Your template creates and maintains a summary account that sums balances of all detail segment values. This value creates the fewest summary accounts of any template value.
If you enter T for a segment, all summary accounts created by the template will have the value T for the segment. Therefore, the value T must be defined and enabled for the segment. Also, the segment value must be a parent and detail posting and budgeting are not allowed.
Note: Do not define a summary account template using only T template values. A template using T values for every segment will have a zero balance if your general ledger is in balance.

[Rollup Group Name]: Your template creates and maintains a summary account for each parent segment value assigned to the rollup group you specify. The more parent segment values in a given rollup group, the more summary accounts your template creates.

Summary Account Example
Use the following formula to determine the number of summary accounts any given template will create:

Statistical Units of Measure

Define statistical units of measure if you want to enter both statistical and monetary amounts for the same account within a single journal entry. You can maintain any type of statistical account, including headcount, number of units produced or sold, and so on. You associate a single unit of measure with an account segment value. You must also enable the profile option Journals:Mix Statistical and Monetary.

Note: To enter both statistical and monetary amounts for budget journals, you must assign accounts to your budget
organization using both monetary and STAT currencies. Also, you cannot enter statistical amounts for budget journals if you
are using budgetary control.
Use the Units of Measure Report to review your statistical units of measure and the account segment values to which you assigned them.

To define a statistical unit of measure:

1. Navigate to the Statistical Units of Measure window.
2. Enter the Account segment value that you want to associate with a statistical unit of measure. You can only enter detail account segment values (no parent account segment values), and you can enter only one unit of measure for each account segment value.
You can change the unit of measure associated with an account segment value at any time.
3. Enter a Unit of Measure name and Description. For example, you might enter a unit of measure ”Hours” with a description ”Hours Worked.”
4. Save your work.

Document Sequences

Create a document sequence to uniquely number each document generated by an Oracle application. In General Ledger, you can use document sequences to number journal entries, enabling you to account for every journal entry.

Attention: Once you define a document sequence, you can change the Effective To date and message notification as long as the document sequence is not assigned. You cannot change a document sequence that is assigned.

• Import Journals
• Reverse Journals
• Revalue Balances
• Generate Recurring Journals
• Generate MassAllocation Journals
• Consolidate Sets of Books

System Controls

You can set the concurrent program controls to improve the performance of the Journal Import, MassAllocation/MassBudgeting, and Open Period programs. For example, you can speed Journal Import by increasing the number of journal lines it holds in memory.
By increasing concurrent program control values, you increase the amount of memory the Journal Import or MassAllocation/
MassBudgeting programs can use, thereby increasing their throughput.

Opening and Closing Accounting Periods

Open and close accounting periods to control journal entry and journal posting, as well as compute period– and year–end actual and budget account balances for reporting.

1. Never Opened: Journal entry and posting are not allowed. General Ledger assigns this status to any period preceding the first period ever opened in your calendar, or to any period that has been defined, but is not yet future–enterable. You cannot change this period status.
2. Future–Entry: Journal entry is allowed, but posting is not. Your period is not yet open, but falls within the range of future-enterable periods you designated in the Set of Books window. You cannot change this period status without using the concurrent process to open the period.
3. Open: Journal entry and posting allowed.
4. Closed: Journal entry and posting not allowed until accounting period is reopened. Reporting and inquiry allowed.
5. Permanently Closed: Journal entry and posting not allowed. You cannot change this period status. Reporting and inquiry allowed.

Budgetary Controls

Budgetary Controls allows you to check to see if the expenditure is within your budget constraints, i.e. if there are funds available for that expenditure. That is to say, “do we have enough money (funds available) to incur this expenditure”? Budgetary controls help to control and analyze spending practices.

Budgetary Controls consists of two processes: Funds Checker and Funds Reservations.

Funds Checker
Funds Checker is a feature of budgetary controls that helps prevent overspending budgets by verifying available funds online
before processing a transaction. Funds Checker both checks and reserves funds and is shared by Oracle Payables, Oracle Purchasing and Oracle General Ledger.You can elect to do funds checking with encumbrance accounting. Funds Checking used with Encumbrance Accounting immediately updates the accounts and verifies that funds are available.

Funds Reservations
Funds Reservation reserves the funds for the expenditure and immediately updates the funds available. You can view Funds Available in GL (Inquiry –> Funds Available) this screen is automatically updated when funds are reserved.
The formula for funds availability is:

 

• Budgetary Controls have three levels:Absolute, Advisory and None.

1. Absolute – funds reservation will not take place unless there are funds available. This prevents overspending the budget.
2. Advisory – funds reservations will take place even if there are insufficient funds. This will produce a warning message on the screen advising that this expenditure will cause you to exceed the budget.
3. None – funds reservation will take place even if there is insufficient funds, although no message will be produced. This level  is the most likely to allow overspending.

Encumbrance Accounting

Encumbrances are obligations for future expenditures made to an employee or made to an outside vendor. Encumbrances are tracked to help departments forecast their expenditures so that they do not exceed their budget available.

In business, an encumbrance is created when a Purchase Order is issued to buy goods or services. The money has not yet been spent, but is "earmarked" for that purchase and no one else can use it. In real life, if you put money into an envelope to hold it to pay a bill, you have encumbered that money. You probably don’t use budget codes, but if you have an envelope in your dresser drawer marked “ELECTRIC BILL”, the money you stash away for the next bill is your encumbrance. How much should be encumbered? How much do you THINK your bill is going to be? That’s the encumbrance.

The primary purpose of  tracking encumbrances is to avoid overspending a budget. Encumbrances can also be used to predict cash outflow and as a general planning tool.

To use the full capabilities of encumbrance accounting, you must enable the budgetary control flag for a set of books. When you enable the budgetary control flag, the system automatically creates encumbrances from requisitions, purchase orders and other transactions originating in feeder systems such as Purchasing and Payables.

When you do not enable the budgetary control flag, you can still enter manual encumbrances via journal entry, but you cannot generate encumbrances from requisitions and purchase orders. You have two options for using encumbrance data to monitor over–expenditure of a budget: After actuals and encumbrances have been posted, you can generate reports to show over–expenditures. You can also use funds checking to prevent over–expenditures before they occur.

The following figure shows the encumbrance accounting process with the budgetary control flag enabled.

Financial Reporting

General Ledger provides you with a variety of reporting capabilities, including the Financial Statement Generator, online inquiries, and standard reports and listings.

• The enables you to build your own custom reports without programming. You can define reports with complete control over the rows, columns, contents, and calculations in your report.
• You can perform online inquiries to search for detailed information quickly. For example, you can perform an online inquiry of your account balances or journal entries. You can also review any of your financial statements, accounting reports, or listings online.
• General Ledger’s standard accounting reports and listings include trial balances, journals, general ledgers, account analysis reports, chart of account listings, and more. You can set the runtime options for detail or summary information, sort sequence, and the selection of data you want to see on the report.

• Generate financial reports, such as income statements and balance sheets, based upon data in your general ledger. Note that If you have average balance processing enabled in your set of books, you can report on functional, foreign–entered, or translated average balances.
• Generate presentation quality financial reports with XML Publisher so you have more control with report formatting options, including changing font characteristics, inserting graphical images or logos, and adding color.
• Define segment value security rules to restrict financial information contained in FSG report output generated by specific users and responsibilities.

• Define your reports with reusable report objects, making it easy to create new reports from the components of reports you’ve already defined.
• Print the same report for multiple companies, cost centers, departments, or any other segment of your account structure, in the same report request.
• Schedule reports to run automatically.
• Produce ad hoc reports whenever you need them.
• Print reports to tab–delimited files for easy import into client–based spreadsheet programs
• Create XBRL instance documents for easier exchange and analysis of your reporting information.

FSG Basics

In Financial Statement Generator, you build a report by defining, then combining, various reusable report objects. Some objects are required for every report you intend to build. You can use others to apply special formatting to reports. Finally, there are objects you can use to control report content, distribution, and scheduling. The objects you need for a specific report depend on the report’s complexity. In the next three sections, we discuss report objects in terms of:

1. Simple reports
2. Special format reports
3. Report distribution

• Produce special report variations, such as separate reports for each value of an account segment or for different account ranges.
• Produce multiple reports in a specified order, from one report definition.
• Produce ”breakdown” reports where the segment breakdowns are on separate reports rather than on the same report (as with the segment override feature).
• Produce report variations which omit sensitive organization information.
• Create report ”sets” by grouping multiple report definitions, to run multiple reports by requesting one report set.
• Schedule reports for automatic production.
• Download reports into spreadsheet programs, for subsequent editing, formatting, and printing.

Row Sets

• Assign accounts — to indicate which general ledger account balances you want to include in the row. You can assign an individual account or range of accounts to each row.

• Define calculations — to perform a variety of complex computations in your report. The calculations can refer to any previous rows in a report, including rows you choose not to display.
•  Specify formatting — to control page breaks, indentation, line spacing, and underline characters.

Column Sets

A column set defines the format and content of the columns in an FSG report. In FSG, the commonly assumed attribute for a column definition is a time period (amount type), whereas the attribute for a row definition is an account assignment. Therefore, typical column sets include headings and subheadings, amount types, format masks, currency assignments, and calculation columns for totals.

1. Specify account balance types — to include in the column. For example, you can define a column with actual, budget, or encumbrance amounts. Amount types
   determine whether your report includes:
   – Actual, budget, or encumbrance amounts.
   – Period–to–date, quarter–to–date, year–to–date, or project–to–date account balances.
2. Create Headings — for your columns. You can also create relative headings, which change depending on the period of interest specified when you run the report.
3. Define calculations — to perform a variety of complex computations in your report. The calculations can refer to any previous columns in the report, including rows you choose not to display.
4. Specify formatting — using format masks, which determine how numbers in your report are displayed.

Row Orders

There are three key things which you can do in your reports, using FSG’s Row Orders feature

• Change the account segment order. There may be times when you want to change the order in which your account segments print.This is achieved by sequence number. For example, your natural account might be defined as the third segment, but you want it to print first then enter a row order with natural account as sequence and attach the row order to the FSG.
•  Display account segment values and their descriptions. There is a Display option on the Row Order window where you can tell FSG to display the value, description, or both for your account segments. So, instead of 01.200.1000, you can have FSG display 01 ABC Company. 200 Headquarters. 1000 Cash. Optionally, you can display the description or account segment value by itself.
  Sort detail rows based on values in a column. You can tell FSG to sort your report’s detail rows based on the values in one of your columns. For example, let’s say you’ve built a sales report which displays current month sales figures for each of your 150 sales offices. If you want to sort this report from highest to lowest sales amount, you simply define a Row Order to tell FSG to sort the sales column in descending order.
• Sort detail rows by account segment values or segment value descriptions. To sort detail rows by an account segment’s values or descriptions, the segment’s display type in the related row definition must be either Expand or Both. Optionally, you can use a content set whose display type is set to Row/Expand or Row/Both.
  

Using the Column Set Builder

With the Column Set Builder, you can define a column set by laying it out graphically. You can also modify existing column sets.
Column Set Builder is primarily a layout and design tool. It does not include all of the options available from the Columns window. As a result, you cannot assign accounts, calculations, or exceptions within the Column Set Builder. However, you can add these things from the Columns window after you’ve designed your column set with the Column Set Builder.

The number of columns the The Column Set Builder can view depends on the character width of each column. You can view a maximum of 20 columns with a limited character width. However, the Column Set Builder can view only one column with a character width of 500.

Exception Reports

Exception reports are very easy to build in FSG. When you define a column set, you can also define exception conditions for any or all of your column definitions. FSG will apply these exception conditions to any report which uses the column set.

For example, assume you’re building a variance report and you want to flag any variance amount which exceeds $50,000. In the variance amount column definition you simply create an exception condition which tells FSG, ”if the amount in this column is greater than 50000, print an asterisk character.”

Content Sets

Display Group and Set

Defining Display Groups
A display group defines a range of rows in a row set or columns in a column set. Display groups are assigned to display sets to control which rows and columns appear on a report.

Financial Reports & Report Sets

A report is defined by specifying the report objects FSG should use to build the report. The simplest reports are defined by a row set and a standard column set. Optionally, you can specify your own custom column set. Also, you can add a content set, row order, and/or display set to enhance the report or refine the information in the report. You can also specify the budget, encumbrance types, and currencies to include on a report.

Once you define and save a report, you can use it any time — to run the report, define a report set, or copy and save it as a new report.
Note: You can also define ad hoc financial reports, as necessary, to meet one–time reporting needs. You create ad hoc
reports from the Run Financial Reports window.

Intercompany within & across SOB

Accounting for Multiple Companies Using a Single Set of Books
You can maintain one set of books for multiple companies as long as the companies share the same account structure, accounting calendar, and functional currency. When setting up the account structure for your set of books, use the segment representing all your companies as the balancing segment (Company = OU = BS = Finance Statement). This ensures that each company is always in balance, which makes it easy for you to maintain and report on multiple companies as stand–alone entities when you maintain all their accounting records in the same set of books.

Optionally, you can define an intercompany segment in your chart of accounts. You can use this segment to track intercompany transactions by company or trading partner. The intercompany segment helps your reconciliations by identifying all transactions for each subsidiary company.

You can also create summary accounts that maintain balances for faster reporting and online inquiry. For example, you can see summarized cash balances, or nonexempt salaries across all companies. If you set up your accounts to capture the appropriate information, you can use the Financial Statement Generator (FSG) to report separately on different companies, foreign operations and export sales, and major customers in accordance with national accounting standards, including SFAS #14 (U.S.).

• When you define the account structure, identify your company segment as the balancing segment.
• (Optional), Define an intercompany segment to help you track intercompany transactions during period end reconciliations.

• Perform online summary inquiries when viewing the sum of all your subsidiaries’ balances
• Improve performance when generating consolidated financial reports

• You can create consolidated reports only in your parent set of books. If you define a separate consolidation set of books with a unique chart of accounts, you will have to define new reports in that consolidation set of books.
• Anyone with access to your parent set of books will be able to view consolidated data from your subsidiary sets of books.
• If your subsidiary has local currency reporting needs, consider using General Ledger’s Multiple Reporting Currencies (MRC) feature to define both a primary and reporting set of books for the subsidiary. Use your parent company’s functional currency as the reporting currency for the reporting set of books.

Global Consolidation System

Consolidation is the period–end process of combining the financial results of separate subsidiaries with the parent company to form a single, combined statement of financial results. The Global Consolidation System (GCS) provides the flexibility to help you manage your consolidation needs regardless of your company structure.

 

•  Reporting Consolidations: Define an FSG report which consolidates data stored in a single set of books or which sums data across separate sets of books on the same applications instance.
•  Data Transfer Consolidations: Serves global enterprises with multiple sets of books or multiple applications instances. With data transfer consolidations, you move your financial data from diverse sets of books and data sources into a single  consolidation set of books. You can report on and analyze consolidated financial information from this consolidated set of books.

• If the source and target budgets do not share the same calendar, you must consolidate a specific period to a specific period.
• If the source and target budgets do not share the same start period, you must consolidate a specific period to a specific period.
• If the source and target budgets share the same calendar and start period, you can consolidate all periods or a specific period to a specific period.

• Any Source: Data from any source system, including ledger, databases, Oracle and non–Oracle applications can be consolidated with GCS. For Oracle Applications, use Cross Instance Data Transfer to transfer consolidation data to your parent on a remote instance. Fornon–Oracle applications use a customizable spreadsheet front–end or the open consolidation interface to upload your data into GCS.
• Any Chart of Accounts: Subsidiaries can use separate chart of accounts 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.
• 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 statistical balances

4.2 Flexfield Value Security

Consolidation Process

Implementation Options
The consolidation you choose depends upon how many sets of books you use to satisfy the requirements of your global accounting operation.

1. Accounting Operations Using a Single Set of Books
If your subsidiaries all share the same set of books with the parent company and all reside on the same applications instance, you can consolidate financial results using the Financial Statement Generator reporting engine.

2. Accounting Operations Using Multiple Sets of Books - Single Applications Instance
If you have some subsidiaries that use their own set of books, you must perform a data transfer consolidation using the Global Consolidation System to manage your consolidation process.

3. Accounting Operations Using Multiple Sets of Books - Multiple Applications Instances
If your subsidiaries manage their accounting operations using Oracle applications and different sets of books on separate instances, you can transfer consolidation data using the Global Consolidation System to manage your consolidation process. You do this through your corporate intranet using Cross Instance Data Transfer

Consolidation Process Steps
Every company must complete common consolidation steps in order to consolidate financial results. The following table details each consolidation implementation option:

Consolidated Statements and Eliminating Entries

Consolidated financial statements are required when there are two or more affiliated companies. When a parent company either directly or indirectly controls a majority interest of a subsidiary, consolidated financial statements must be presented. Consolidated financial statements present the results of operations, statement of cash flows, and financial position of the combined entity. Separate accounting records are kept for each separate company, but not for the consolidated entity. To determine the consolidated amounts, the amounts for the individual affiliated companies are added together. Elimination entries are made to remove the effects of inter-company transactions.
        
When one company acquires another company, a consolidated balance sheet needs to be prepared. The first step is to eliminate the effects of any inter-company transactions. There are three basic types of inter-company eliminations. The first type is the elimination of inter-company stock ownership. This entry eliminates both the asset and the stockholders’ equity accounts for the parent company’s ownership of the subsidiary.

The second type of inter-company elimination is the elimination of inter-company debt. When the parent company makes a loan to a subsidiary, the parent company would have a note receivable and the subsidiary a note payable. When the two companies are consolidated, or combined, the loan is just a transfer of cash, so both the note receivable and note payable are eliminated.

The third type of inter-company elimination is the elimination of inter-company revenue and expenses. These inter-company revenues and expenses are eliminated since they are really just transfers of assets from one affiliated company to another and have no effect on consolidated net assets. Some examples of inter-company revenues and expenses are sales to affiliated companies, cost of goods sold as a result of sales to affiliated companies, interest expense or revenue on loans to or from affiliated companies, and rent or other revenue received or paid for services either rendered to or received from affiliated companies.

An important item to understand in regard to consolidated financial statements is the concept of minority interest. A minority interest exists when a parent company owns a majority interest in a subsidiary, but not 100% of the outstanding shares. In this case, the minority interest would be shown on the balance sheet as a type of ownership equity. The minority interest is the ownership interest in the subsidiary that is held by stockholders other than the parent company. Since there are minority stockholders, just the amount of the stockholders’ equity that is owned by the parent company is eliminated.

One of the GAAP guidelines related to consolidated financial statements states that the retained earnings of a subsidiary company that were created before the date of its acquisition can’t be included in the consolidated retained earnings of the parent company and its subsidiaries. In addition, any dividends declared from those retained earnings can’t be included in the parent company’s net income. GAAP also states that comparative financial statements are preferred for annual reports.
Eliminating Entries
The purpose of eliminating entries is to reflect the amounts that would appear if all the legally separate companies were actually a single company.

Elimination entries appear only in the consolidating workpapers and do not affect the books of the separate companies.

For the most part, companies that are to be consolidated record their transactions during the period without regard to the consolidated entity.

• Transactions with related parties tend to be recorded in the same manner as those with unrelated parties.
•  Elimination entries are used to increase or decrease (in the workpaper) the combined totals for individual accounts so that only transactions with external parties are reflected in the consolidated amounts.
•  Some eliminating entries are required at the end of one period but not at the end of subsequent periods.
• For example, a loan from a parent to a  subsidiary in December 20x1, repaid in February 20x2, requires an entry to
• eliminate the intercompany receivable and payable on December 31, 20x1, but not at the end of 20x2.
•  Some other elimination entries need to be placed in the consolidated workpapers each time consolidated statements are prepared  for a period of years.
• For example, if a parent company sells land to a subsidiary for $5,000 above the cost to the parent, a workpaper entry is needed to reduce the land amount by $5,000 each time a consolidated balance sheet is prepared, for as long as the land is held by an affiliate.
• It is important to remember that elimination entries, because they are not made on the books of any company, do not carry over from period to period

Consolidation Workbench

The Consolidation Workbench provides a central point of control for consolidating an unlimited number of subsidiaries to your parent, while keeping you informed about each subsidiary’s consolidation status. The workbench also monitors subsidiary account balances for any changes that occur after the subsidiary data has already been transferred to your parent set of books.

 


 

 

•  You must post the original consolidation journal
•  You must generate a reversal of the original consolidation journal
•  You must post the generated reversal consolidation journal

State Controller

Mapping Subsidiaries to Your Parent

To consolidate multiple sets of books that have different functional currencies, accounting calendars, or charts of accounts, you must first map your subsidiaries’ charts of accounts to your parent’s chart of accounts.

• When specifying a rollup rule, you must enter the Parent Segment Detail Value, Transfer Level, and Using fields. If you select the Detail/Parent or Summary/Parent rules, you must also enter a Subsidiary Segment Parent Value. If you select the Detail/Detail Ranges or Summary/Parent Ranges rules, you must enter Low and High values for the Subsidiary Segment Ranges.
• You can enter multiple rollup rules for a single segment as long as the segment values specified in each rule do not overlap.
• You can enter more than one subsidiary segment range as long as the segment values included in the ranges do not overlap.

Using Summary Accounts (Role up rule)

You can choose to consolidate balances from your subsidiaries’ summary accounts when you do not want to consolidate detail accounts. A summary consolidation will generally run faster than a detail consolidation because there is less data to transfer. Note: You can only consolidate summary accounts if you are using the balances consolidation method.

When you transfer your subsidiary data for a summary consolidation, General Ledger checks for overlapping accounts. If overlapping accounts are defined solely within your segment rules, the consolidation transfer will fail and the system generates an exception report showing which accounts overlapped. If accounts defined by your segment rules overlap with accounts defined by your account rules, the account rules override the segment rules. General Ledger corrects any double–counted balances that result from the overlapped accounts. If your subsidiary account has more segments than your parent, the additional subsidiary segments are left unmapped. During a summary consolidation, the unmapped segment is treated as a summary account segment with a value of ”T”.

To map subsidiary summary accounts

3. Consolidation Run Options

When you create a consolidation mapping or mapping set you can select any of four run options listed below and transfer your consolidation journals to the parent set of books. You can override these selections when you transfer subsidiary data to your parent.

Transferring Subsidiary Data to Your Parent

3. Consolidation Run Options

When you create a consolidation mapping or mapping set you can select any of four run options listed below and transfer your consolidation journals to the parent set of books. You can override these selections when you transfer subsidiary data to your parent.

Transferring Subsidiary Data to Your Parent

Preparing Subsidiary Data

Prepare your subsidiary data by revaluing and translating balances before you transfer the balances to your parent.

Revalue Balances
If any of your subsidiary sets of books have balance sheet accounts that are denominated in a foreign currency, revalue the balances to reflect the impact of any changes in exchange rates. Post the resulting revaluation journal.

Translate Balances
If any of your subsidiary sets of books uses a functional currency different from your parent, you should translate the account balances before you transfer the subsidiary data to your parent. You should translate into the parent set of books’ functional currency.

You can use the Global Consolidation System to check the translation status of any subsidiary set of books. Also, from the Translation Statuses window you can submit a request to rerun a translation.
Note: From the Consolidation Workbench, you can only rerun translations that have already been run at least once for the
period. You cannot modify a translation or define new translations. To define new translations, use the Translate
Balances window.

Multiple Reporting Currencies
If you use Multiple Reporting Currencies, you may be able to bypass the translation step by consolidating directly from a subsidiary’s reporting set of books to your parent set of books. You still need to run revaluation on the primary and reporting set of books before you consolidate.

Account Generator in Oracle Assets

Oracle Assets uses the Account Generator to generate accounting flexfield combinations for journal entries. The Account Generator allows you to designate a specific source for each segment in the account for which Oracle Assets creates a journal entry. The Account Generator gives you the flexibility to create journal entries according to your requirements. You can specify to what detail to create journal entries, and you can specify the detail level for each book and account type.

For example, when creating journal entries for asset cost, you can specify that the cost center segment comes from the depreciation expense account of the distribution line you entered for the asset in the Assignments window. Or, you can specify that the cost center comes from the default value you defined for the depreciation book.

• Generate Default Account process
• Generate Distribution Detail Account process
•  

Release R12

Ledgers

• You define ledgers when you create accounting setups in Accounting Setup Manager.
• Each accounting setup requires a primary ledger and optionally one or more secondary ledgers and reporting currencies.

1. For example, if a legal entity must perform corporate and statutory reporting, you can use the primary ledger to satisfy corporate reporting requirements and then use a secondary ledger to satisfy statutory reporting requirements.
2. If a legal entity is a subsidiary of a parent company and must produce its financial results according to the parent company's reporting requirements in addition to its own local reporting requirements, then a secondary ledger may be used to satisfy the additional reporting requirement.

Ledger and Data access Sets

Ledger Sets

• A ledger is created
• A ledger set is defined

• Full Ledger: Grants access to all the data in a ledger. For example, in a data access set with two ledgers, A and B, you can grant read-only privileges to all the data in Ledger A and grant read and write privileges to all the data in Ledger B.
• Balancing Segment Value: Grants access to all or specific ledger/balancing segment value (BSV) combinations. For example, you can have a data access set with Ledger A, and grant read-only privileges to balancing segment value 01, grant read and write privileges to balancing segment value 02, and grant no access to balancing segment value 03 in the same ledger. This is useful for companies that use a small number of ledgers with a high number of balancing segment values to represent multiple companies or legal entities.
• Management Segment Value: Grants access to all or specific ledger/management segment value (MSV) combinations. For example, you can have a data access set with ledger A and grant read only privileges to management segment value 100, grant read and write privileges to management segment value 200, and grant no access to management segment value 300. This can only be used if you have specified a management segment in your chart of accounts

Definition Access Sets

Definition Access Sets are an optional security feature that allow you to secure shared General Ledger definitions such as MassAllocations, Recurring Journal Formulas, and Financial Statement Generator (FSG) components. Definition Access Sets allow you to:
• Assign a user or group of users access to specific definitions.
• Specify what actions can be performed on secured definitions for a user or group of users.

For example, you can secure FSG reports to allow some users to modify the report definition, other users to only view the report definition, while other users can modify, view, and submit the report. To use Definition Access Set security you:


1. Create a Definition Access Set.
2. Assign it to one or more responsibilities.
3. Create a definition.
4. Secure the definition in its respective window and assign it to a Definition Access Set with the proper privileges.

Intercompany Invoicing Setups

1. For a single process flow (one procure-to-pay cycle or order-to-cash cycle), you can model Oracle to generate intercompany invoices between two or more operating units. The building block of intercompany invoicing is the setup of intercompany transaction flow.

 

 
 

 

Standard Reports and Listings

General Ledger gives you a complete set of standard reports such as journal reports, general ledgers, account analyses and trial balances. You can also request standard listings to review key non–financial information, including your chart of accounts, row sets, column sets and content sets, reporting hierarchies, consolidation definitions, recurring journal formulas, and more.

General Ledger provides the following categories of standard reports and listings:

• Account Analysis: These reports list the accumulated balances of a range of accounts and all journal entry lines that affect that range. The same segment security rules defined for your chart of accounts extend to account analysis reports.
• Budget: These reports and listings contain information about your budgets and budget organizations, including account assignments and budget hierarchies.
• Chart of Accounts: These reports and listings provide information about the accounts in your chart of accounts, including segment values, rollup ranges and suspense accounts.
• Multi–Company Accounting and Consolidation: These reports and listings provide information about your multi–company
• accounting and consolidation activities. You can request reports about intercompany transactions made using General Ledger’s CENTRA feature.
• You can also request reports about a specific consolidation, including how your subsidiaries’ accounts are mapped into your parent accounts. You must use the audit mode run option in order to request the Consolidation Audit Report and the Consolidation Exception Reports, and you can only request the Consolidation Journals Report for consolidations using the Transactions method.
• Currency: These listings show the daily, period and historical rates you defined for foreign currencies.
• Financial Statement Generator: These listings provide summary or detail information about the definitions of your Financial Statement Generator report components, reports and report sets.
• General Ledger: These reports list beginning and ending account balances, and all journal entry lines affecting each account balance in your functional and foreign currencies. The same segment security rules defined for your chart of accounts extend to general ledger reports.
• Journals: These reports provide journal information in functional and foreign currencies, including posted, unposted and error journals. You can also review journal activity for particular periods and balancing segments. The same segment security rules defined for your chart of accounts extend to journals reports.
• Trial Balance: These reports list account balances and activity for functional and foreign currencies, budgets, encumbrances and actuals. You can request this information by currency, accounts, and so on. The same segment security rules defined for your chart of accounts extend to trial balance reports.
• Other: These reports and listings provide information about MassAllocation/MassBudget definitions, actual or budget recurring journal formulas, statistical units of measure and value–added taxes received and paid.
• Execution: These reports are automatically generated when you submit and complete a concurrent process.

Shorthand Aliases Window

Define account shorthand aliases to speed entry of account segment values. If you enable shorthand alias flexfield entry when you define your account structure, then you can define aliases, or codes, which stand for complete or partial accounts.

 

Defining Intercompany Accounts

If multiple companies in your enterprise share the same set of books, you can automatically balance intercompany journals. To do this, you define intercompany accounts for different combinations of source, category, and balancing segment value.
When you define your set of books, check the check box, Balance Intercompany Journals in the Set of Books window. General Ledger then creates balancing entries for out of balance intercompany journals that are based on templates you have defined in the Intercompany Accounts window.

• Require a user to specify a clearing company when entering an intercompany transaction in the Journals window.
• Require all intercompany transactions to balance with the company clearing the intercompany transaction.
• Require all intercompany transactions to balance against a specific intercompany account.

 

 

• Single to Single: If you transfer an asset from one company to another, you create a single to single transaction that debits one company and credits another company.
• Many to Single: If one company charges many companies for engineering services in a single transaction, you create a single to many transaction that debits multiple companies and credits a single company.
• Single to Many: If many companies transfer inventory items to one company, you create a many to single transaction that debits a single company and credits many companies.
• Many to Many: If many companies are cross charging one another, you create one many to many transaction that reflects all the business transactions between the many companies. A single transaction debits many companies and credits many companies.

 

Segment Qualifier

When you define a segment value for your natural account segment in the Segment Values window, you must also assign qualifiers which determine the account type (asset, liability, expense, revenue, or
equity), whether budgeting is allowed, whether posting is allowed and other information specific to the segment value. For segments other than the natural account segment, you must specify if budgeting or
posting are allowed for each value.

When you change the Budget Entry or Posting Allowed qualifiers for segment values that you already defined, you should also make a corresponding change to all accounts that include the value in the
account code combination.

You can run the Segment Value Inheritance program to propagate these changes to all accounts that contain the changed segment value instead of changing all affected account code combinations individually in the GL Accounts window.

Note: Segment qualifiers can be defined for other Oracle Applications. These are listed in each Oracle Applications User’s Guide. Additional segment qualifiers can be defined for use by your custom programs.

• Account Type: Defines the account type for the natural account segment value. You can enter only valid account types.
• Budget Entry Allowed: Indicates whether General Ledger should allow detailed budgeting to accounts with this segment value.
• Posting Allowed: Indicates whether General Ledger should allow detailed posting to Accounting Flexfields with this segment value.
• Reconciliation Flag: Indicates whether General Ledger should allow reconciliation for natural accounts that should balance to zero. You can enable or disable reconciliation for an account segment value or for specific accounting code combinations.
• Control Account: Control accounts are General Ledger accounts accessed from Oracle Payables, Receivables, and Inventory, for which the Global Accounting Engine automatically creates detailed balances. The control account segment qualifier lets you indicate which account segment values represent control accounts. You must define the control account segment qualifier before you can define accounting segments as control accounts.
• Other Segment Qualifiers: You can define additional segment qualifiers that are used by other Oracle Applications and your custom programs.

Parent and Child Values and Rollup Groups

Intercompany Accounting for Multiple Companies with a Single Set of Books

Depending upon your company and subsidiary business needs, General Ledger offers a number of solutions to automatically account for intercompany transactions within a single set of books.

General Ledger can automatically balance intercompany journals based on accounts you define in the Intercompany Accounts window. General Ledger creates balancing journal lines when you post, using the appropriate intercompany accounts you specify for the source, category, and balancing segment.

For General Ledger to automatically balance intercompany journals, you must enable the Balance Intercompany Journals option in the Set of Books window. (Optional) You can create an intercompany segment in your chart of accounts structure. The intercompany segment shares the same value set as the balancing segment and is used in the account code combination General Ledger creates to balance intercompany journals.

The intercompany balancing segment provides more detail for reporting and reconciliation.

1. Standard Intercompany Balancing
General Ledger can create generic balancing lines against the intercompany accounts that you have defined for specific sources and categories. This method does not track payable and receivable balances for specific trading subsidiaries.
Assume you define the intercompany accounts shown in the table below for a specific source and category:

 

• Consolidate the accounts payable activities for the entire company
• Automatically balance multi company intercompany transactions
• Track the amounts each individual subsidiary owes to each other subsidiary

 

Consolidating Multiple Companies using a Single Set of Books

To consolidate multiple companies with a single set of books, first complete your eliminating entries, and then create reports on the consolidated parent.

Creating Automatic Eliminating Entries
To complete your eliminating entries for multiple companies using a single set of books, you can use the following General Ledger features:

• Automatic Eliminating Entries
• Recurring Journals
•  

• Standard, end–of–day, or average balances
• Actual or budget amounts
• Statistics and period–to–date or year–to–date balances from the current period, prior period, or same period last year
• You can quickly create new recurring formulas by copying and modifying existing formulas.
•  

Intercompany Transactions for Multiple Companies Using Multiple Sets of Books

General Ledger’s Global Intercompany System (GIS) feature helps you manage your intercompany transactions through a highly centralized process. With GIS, your parent and subsidiaries can send intercompany transactions to one another for review and approval, before the transactions are posted in each company’s set of books.

We generally recommend that you use GIS for your intercompany transaction needs. However, if you prefer a decentralized approach where each subsidiary enters intercompany transactions autonomously, you can choose not to use GIS. In this case, each subsidiary enters intercompany transactions directly into their set of books.

To enter intercompany transactions without using GIS:
You must enter separate transactions in each subsidiary set of books to reflect each subsidiary’s portion of a multi–company transaction. For each subsidiary:
1. Choose the subsidiary set of books by selecting a responsibility that has access to the set of books.

2. Enter the subsidiary’s portion of the multi–company transaction, making sure to balance the entry against an intercompany account. Post the transaction when complete.
For example, to record a cash sale from Company A to Company B (subsidiaries of the same parent), you might make the entries shown in the next two tables:

Multi–Currency(MRC)

You must post subledger transactions to General Ledger in the primary set of books and in each reporting set of books.
After you have posted your subledger transactions to General Ledger in the primary set of books and in each associated reporting set of books, you can log into a General Ledger reporting responsibility, post the newly created journals, and report the journals and the account balances of the reporting set of books.

Remember you need to setup MRC only if you want to maintain and report all the transactions in a different currency from your primary currency. If you only need to report balances in a currency other than your primary functional currency, you can use General Ledger translation.

Translating Balances


You can translate your actual and budget account balances from your ledger currency to another currency. You can launch translation from the Translate Balances window or from the Standard Request Submission (SRS) window. Translated balances are stored in balance-level reporting currencies. Balance level reporting currencies are defined in the Accounting Configuration using the Accounting Setup Manager or automatically generated during translation.

After completing Translation you can Translation Trial Balance Report to view the balances of all the accounts in the translated currency.

Multiple Reporting Currencies Overview

Multiple Reporting Currencies (MRC) is a set of unique features imbedded in Oracle Applications that permits an organization to report in multiple functional currencies. Using MRC, you can maintain and report accounting records at the transaction level in more than one functional currency. You do this by defining one or more reporting sets of books, each associated with a primary set of books. Each set of books has its own functional currency. The following Oracle Applications support Multiple Reporting Currencies:
a) General Ledger
b) Payables
c) Purchasing
d) Receivables
e) Cash Management
f) Projects
g) Assets
h) Cost Management
i) Global Accounting Engine

Use of MRC:
MRC is intended for use by organizations that must regularly and routinely support statutory and legal reporting of both transactions andGeneral Ledger account balances in multiple currencies, other than the primary functional currency. If you only need to report balances in a currency other than your primary functional currency, you can use General Ledger translation.

MRC Features
a) Transaction–Level Conversion
When you enter transactions in Oracle Applications that support MRC, they are automatically converted into your primary functional currency and each of your reporting functional currencies, in accordance with the following:

• Primary functional currency transactions: All transactions denominated in your primary functional currency are recorded in this currency. The transactions are also converted automatically into each of your reporting functional currencies.
• Foreign currency transactions: Transactions denominated in a foreign currency are automatically converted into your primary functional currency and into each of your reporting functional currencies as wellunless the foreign currency matches the reporting functional currency (conversion not required).

Reporting SOB

Selec the Set of BOOks type as reporting set of books

Setting Up MRC

1. Define currency - http://www.oracleug.com/user-guide/general-ledger/currencies
2. Conversion type
3. Primary SOB - http://www.oracleug.com/user-guide/general-ledger/sets-books
4. Reporting SOB - http://www.oracleug.com/user-guide/general-ledger/reporting-sob
5. Responsibility and Profile Options.
6. Define the first period for Reporting SOB.
7. Assign the reporting SOB to primary SOB. (Conversion options and rules)

5. Responsibility and Profile Options
Create the responsibilites for GL to assign the reporting SOB data. Assign the below profiles.
GL Set of Books Name:        Reporting SOB
MRC: Reporting Set of Books  Reporting SOB

Its not mandatory to create AP/AR responsibilites in 10.5.2 as we can check the accounting in reporting SOB from the primary SOB responsibility itself.The subledger responsibilities like AP, AR, PO, etc now do not require a separate responsibility to reflect the subledger data. After the data has got accounted in AP and AR, you can check on the subledger data by navigating to the View accounting form and then clicking on the ‘Alternate Currency’ button. You then have to choose the desired set of books to check the converted data

6. Define 1st period of R/SOB


   a. Use the MRC General Ledger responsibility.
   b. Setup -> Open/Close
   c. Define the first period. The first ever calendar periods in the primary set of books does  not have to be the same as the associated reporting book.

7. Assign the reporting SOB to primary SOB
Use the Assign Reporting Sets of Books window to assign each reporting set of books to its related primary set of books. Note the following rules:

• You can assign up to eight reporting sets of books to a single primary set of books. Most organizations will find no need to assign more than three.

• You can assign the same reporting set of books to more than one primary set of books, provided they all have the same calendar and chart of accounts. You might want to do this if you need to consolidate transactions from multiple primary sets of books (with the same or different functional currencies) into the same reporting currency.
• You cannot assign a primary set of books to another primary set of books, or to a reporting set of books.
• If you use combined basis accounting in Oracle Payables, you only need to assign the related reporting set of books to your Payables primary set of books in this step. The relationship for the Payables secondary set of books will be made in the next step when you define the Payables conversion options.

Define Conversion Options for Each Application

For each reporting set of books assignment you make, you must define conversion options for each combination of Oracle Application and operating unit for which you want to convert transactions to your reporting functional currencies. You can set conversion options for these applications:
General Ledger, Assets, Payables, Receivables, Projects & Purchasing

Conversion options you can set include the reporting conversion type, the action to take when a conversion rate cannot be found, and the range of effective dates for which transactions should be converted to reporting currencies. Also, you need to set some application specific options, such as

          o Oracle Assets: specify the Asset Book (depreciation book).
          o Oracle Payables: optionally specify the AP Reporting Secondary Book if you use combined basis accounting.
          o General Ledger: specify GL Conversion Rules, which control journal conversion at the journal source and category level.

• Report Error: If MRC cannot find an exchange rate for converting to the reporting functional currency, you will receive an error when you try to save the transaction.
• Use Last Rate: If MRC cannot find an exchange rate for converting to the reporting functional currency, it retrieves the most recently entered exchange rate. If MRC cannot find a stored exchange rate, you will receive an error when you try to save the transaction.
•  

Define General Ledger Conversion Rules

You can define conversion rules for all predefined journal sources except these:

• Revaluation, Move/Merge, and Move/Merge Reversal -- MRC will not convert journals that have these journal sources. Instead, you need to run each of these processes in both your primary and reporting sets of books.

• Receivables, Assets, Projects, AX Payables, and AX Receivables -- MRC converts transactions from these sources directly in the subledgers and stores the related reporting currency amounts in those subledgers.

 To assign conversion rules to General Ledger:

1. From the Conversion Options window, select the Oracle General Ledger entry from the region below the poplist, then choose the GL Conversion Rules button.

2. Mark the Convert check box if you want journals with the specified journal source and category to be converted to your reporting currency. Leave the check box unmarked if you do not want journals with the specified journal source and category to be converted.

3. Enter the journal source and category for which you want to set conversion rules.

Note: You can enter a specific journal source or category or enter Other to select a source or category other than those you have specifically defined.

4. Select the Reporting Conversion Type and No Rate Action to use when converting journals with the specified journal source and category.

5. Save your work.

Journal Source/Category Combinations

When you post journals in your General Ledger primary set of books, MRC notes each journal's source and category as it is posted. MRC then searches your defined conversion rules for a matching source and category combination. MRC searches the conversion rules in the following order, regardless of the order you entered the rules on the GL Conversion Rules window:

Note: If MRC cannot find a matching source/category combination, or if you have not defined any GL conversion rules, the journal will not be converted.

Below are three examples that illustrate how journals are converted based on different conversion rules.

Example Assumptions

The following six conversion rules are defined:

Example 2

The following three conversion rules are defined:

Example 3

The following two conversion rules are defined:

Note: In this example, Journals #1, 2, and 4 are NOT converted, since there is no conversion rule defined with a source of Other and a category of Other.

Changing Conversion Rules

Revaluing Balances

Use the Revaluation window to define, run, update, and delete revaluations for foreign currency–denominated balances. Revaluation launches a process that revalues the functional currency equivalent balances for the accounts and currencies you select, using the appropriate current market rate for each currency. Resulting gain or loss amounts are posted to the gain/loss or cumulative translation adjustment accounts you specify and balanced by balancing segment values. This process creates a revaluation batch containing separate journal entries for each revalued foreign currency.

You can revalue a single account or ranges of accounts, for both income statement and balance sheet accounts. Income statement accounts are revalued on the basis of their period–to–date or year–to–date balances, in accordance with the Income Statement Accounts Revaluation Rule profile option. Balance sheet accounts are always revalued on the basis of their year–to–date balances.

When you revalue balances in an average balance set of books, General Ledger only revalues standard balances. When you post the revaluation journal entries to update your standard balances, the system recomputes your average balances automatically. If you use Multiple Reporting Currencies, revaluation journal entries generated and posted in your primary set of books are automatically replicated and converted to each of your reporting sets of books. You must separately post these replicated journal batches in each of your reporting sets of books.

Secondary Tracking Segment
You can use the secondary tracking segment to track revaluation results using the primary balancing segment and secondary tracking segment. Revaluation gain or loss amounts will be posted to the gain/loss or cumulative translation adjustment account you specify and balanced by each balancing segment value and secondary tracking segment value pair.

Defining, Saving, and Running Revaluations

• To define a new revaluation, complete the fields in the revaluation window and save your work.
• To update an existing revaluation, query a revaluation, change the fields in the window as necessary and save your work.
• To delete a revaluation, query a revaluation and choose View>Delete from the menu.
• To run a revaluation from the Revaluation window, enter a new revaluation or query a revaluation and choose the Revalue button. Complete the Period, Effective Date, and Rate Date fields in the Submit Request window.
• To run a revaluation or group of revaluations from the Submit Request Window, choose the Revaluation program. In theParameters window that appears, specify the Revaluation Name or Request Set Name for a group of revaluations, Period, Effective Date, and Rate Date.

Segment Value Inheritance

The Segment Value Inheritance program automatically propagates the attributes of a segment value to all account combinations that contain that segment value.

To protect account combinations from changes when you run the Segment Value Inheritance program, check the Preserve check box in the GL Accounts window. You can assign attributes at two levels:

• The individual segment value in the Segment Values window.
• The account combination in the GL Accounts window.

Letter Of Credit