General Ledger

General Ledger

It is the Central repository for all the accounting transactions. It is a reporting entity in which we record day to day transaction of an organization. It consists of 4 C’s. they are

1. Currency
2. Calendar
3. Chart of accounts.
4. Convention Method.

Along with 6 mandatory accounts.

1. Retained Earnings (Ownership a/c)
2. Suspense ( Expense A/c)
3. Cumulative translation adjustment (Ownership a/c)
4. Net income (Ownership A/c)
5. Reserve for encumbrance (Ownership A/c)
6. Rounding difference ( Expense A/c)

Chart of Accountants: It determines the accounting Flex field structure and segment Values.

Calendar

It is used to identify the dates of the accounting transaction

• Accounting calendar: There are two types of years. There are calendar year and Fiscal year.
• Transaction calendar: It is used for average balance concept to identify the working days and non working day of an organization

Convention Method

It determines which accounting method we are using in oracle to generate accounting for transaction. There are two types of methods.

• Accrual: In this method journal entities will be created by application for each and every transaction irrespective of cash.
• Cash Method: In this method journals will be created by application when cash is taking place.

Accounting Structure

It is the representation of the organization structure and the dimension of the business. It is the collection of segments and collections of code combinations.

Flexfield: These are used to capture the information of an organization. Flexfield have flexible structure for storing key information like cost center & Accounts.

There are two types FF in oracle finanacials.

1. Key FF.
2. Descriptive FF.

Key FlexFields: They are unique identifier for storing key information used for entering and displaying key information which is related to your business. it is mandatory one, it capture the information of your organization about your organization like cost center, Account etc. Keyflexfield are 3 types

1. Accounting Flexfield
2. GL Ledger Flexfield
3. Reporting Attributes Flexfield.
   Keyflexfield has two types of qualifiers, they are segment qualifier and flexfield qualifier.

Flexfield qualifier: it is used to identify what type of segment it is. There are 6 types of flexfield qualifiers.

1. Balancing segment qualifier
2. Natural account segment qualifier
3. Cost centre
4. Inter company
5. Secondary Tracking
6. Management segment qualifier

Balancing Segment: It means all the accounting transactions of all debit and credit balances should be match always at a particular level. i.e at company level.

Natural account segment Qualifier: This segment determines whether an account is assest, liability, Ownership equity, revenue and Expenses.

Cost Center: If you use you other modules such as oracle assets and oracle projects you must assign this segment. If indicates the functional area of your organization such as accounting, facilities,…etc..It will help to calculate depreciation.

Secondary Tracking: If we want to report from other levels other than company level. Then we can use of secondary tracking flexfield qualifier.

Management segment qualifier: this is one for security purpose. It controls the values. We can’t assign this segment qualifier to company and accounts.

Segment Qualifier: this is used to identify the segment values. There are five types

1. Allow budgeting
2. Allow posting
3. Control account
4. Reconciliation flag
5. Account type.

Descriptive Flexfields: Where as descriptive flexfields are the optional one. It captures additional information about your organization like name of the company M.D etc. Where Descriptive FF has “Context” (optional one). Key flexfield did not give any “Expansion Space” where as descriptive FF will provide the “Additional Space” to flex field.

Manual Journal

Entering Journal manually in the oracle application is called as manual journal creation. These can be entered in two ways.

1. Single Journal/ Individual Journal.
2. Journal Batch.

Balance Types: There are 3 types of balances.

1. Actual
2. Budget
3. Encumbrance.

Journal Reversal

It means cancelling of journal. There are two types.

1. Switch Dr/Cr: It means appilication will create new reversal journal entity with opposite lines of original journal entity.
2. Change Sign: In this method application will create new reversal journal entity with negative amounts by running “Journal: override reversal method” program.

Journal Source

It is used to identify the origin of your journal entry transaction. Ie where it is coming from. It is used when inter Company, suspense accounts, mass allocation and consolidation and also when you import journals from your sub ledgers like AP, PO, AR, CM and FA.

Journal Categories

It is used to identify the purpose and nature of your journal entry. In payable they include invoices, payment or receipt, adjustments and purchasing.

Journal

They are used to record the day to day business transaction of an organization. It contains Dr and Cr lines. It contains two levels of information.

1. Header
2. Lines.

Suspense Journal

Suspense Journal is used to post unbalance journal entries.

Steps:

1. Define suspense a/c at COA level.
2. Enable suspense a/c feature at ledger level.

Recurring Journal

Journals which are repeating in each and every accounting period is known as recurring journal. These are 3 types. They are

1. Standard Recurring Journals: Journals which are created with same amount and same accounts is standard recurring journals.
2. Skeleton Recurring Journals: Journals which are repeating with partial information is called as skeleton recurring journal.
3. Formula Recurring Journals: For this kind of journals, Journal amount will be calculated by using formulas.
   
   
                           Sequential Numbering

It is used to assign unique no’s to the various oracle concepts. We can define sequential numbering for journal, AP invoice/payment, AR invoice/Receipt etc. we can even call it as Voucher number or document Category. The following are steps for sequential numbering.

1. Define profile option “Sequential Numbering” at responsibility level.
2. Define Sequential numbering.

Nav: System administrator  application  Sequential  Numbering  Define.

3. Assign sequential numbering to the category.

Journal Approval

It is used to define authorization limit to approve the journals for employees.

1. Enable journal approval at ledger level.
2. Enable journal approval at journal Source.

Nav: Setup  Journal  Sources.

3. Define approval limits for employee.

Nav: Setup  Employee  Limits.

4. Define User name for employee.

Nav: system administrator  Security  User  Define.

5. Enter journal and check the result.

Aliases

It is used to define short name for Code combinations.

1. Define Aliases.

Nav: Setup  Financial  Flexfield  key  Aliases.

2. Recompile the COA/ Accouting Struture.
3. Enter journal and check the result.

Mass Allocation:

It means allocation of Revenues or cost expenses across cost center/Department/ Divisions by using one simple formula.

Formula: T= A * B/C

“A” means Cost pool Amount.

“B” means Usage Factor.

“C” means Total Usage Factor.

“T” means Target Amount.

Segment Types:

1. Constant: This is used Detail account balances associated with the child.
2. Looping: Includes each child Value assigned to the parent values in the formula and the allocation programs run each formula once for each corresponding child segment values.
3. Summing: This is the sum of all account balances of all child values assigned to parent.

Mass Allocation Methods:

1. Full Type allocation: It is used only when we run the mass allocation method for the first time. In this method we generate journals that reverse previous allocations or to post new allocations amount.
2. Incremental Allocation: this method is used for further generation of mass allocation journal other than first time. This method is used when you want to update allocated balances without reversing the previous allocation batches.

Steps:

1. Define cost pool(Exp) a/c and usage factor (Exp) a/c at account segment value.
2. Define Parent value and assign to child ranges.
3. Enter and post cost pool journal.
4. Enter and post Stat journal.
5. Define mass allocation formula( Constant(C ), Looping (L), Summing (S).
6. Validate the formula.
7. Generate the mass allocation formula and submit it
8. Query the journal and Post it.

Note: In real time, Step 1 and Step 3 are not required.

                    Difference between Intra and Inter Company

Intra Company:A transaction which takes place between the two balancing segment values within the legal entity is called a Intra company transaction.

Inter Company: A transaction which takes place between the two balancing segment values between two legal entities is called intercompany transaction.

Illustration:

Intra Company: Companies “A” & “B” are examples for Intra Company because transaction within the legal entity.

Inter Company: Companies “A” & “C” or “B” & “C” are the examples for inter company because transaction between two legal entities.

Steps.

1. Define intercompany receivables (revenues) and intercompany payables (Expenses) a/c at account segment value.
2. Define intercompany flexfield qualifier to the segment at company segment level.
3. Define Legal Entity.
4. Assign the legal Entity to the ledger.
5. Enable “Intra company Balancing” feature at ledger level.
6. Complete Setup step for Operating units, intercompany accounts and intra company balancing options in ledger.
7. Enter intra company journal and post it.
8. Query the intra company journal to check the result.

Budget

It is used for better planning and controlling. We can define budget up to maximum 60 periods. They are two types of budget. They are

• Planning Budget: In this planning budget we just plan the expenditures but there will not be any control over it.
• Funding Budget: In this funding budget we can plan the expenditure or Revenue and also we can keep the control on budget journal amount.

	Planning	Control	Budget Journal
Planning	Y	N	N
Funding	Y	Y	Y

Budget periods: There are three types of periods.

1. Open
2. Current
3. Freeze (Close)

First period in the organization is with current Status when define the budget next time you will get only Open Status. Freeze Status means closing of the budget.

Fund Check levels: There are three types for fund check level.

1. None - It is for planning budget
2. Absolute - We can’t enter amount beyond the budget amount.
3. Advisory – It will pop up a warning message when we enter amount beyond budget amount.

Funding Budget Steps:

1. Define Reserve for encumbrance (Ownership) account and requires expenses account A/c at account segment level.
2. Enable “Budgetary control” at ledger level.
3. Define and create Budget.

Nav: Budget  Define  Budget.

4. Query the budget to check the last open period.

Nav: Budget  Define  Budget.

5. Define Budget organization.

Nav: Budget  Define  Organisation.

6. Enter Budget Journal.

Nav: Budget  Define  Journal.

7. Query the budget journal and post it.
8. Enter journal

Nav: Journals  Enter.

9. Check the funds availability.

Nav: Inquiry  Funds.

Translation

It is used for reporting purpose. It is used to translate balances from functional currency to foreign currency at account balances level. The difference in translation will be transferred to “Translation adjustment account”. In translation we use period end rate, historical rates and average rates.

Rates	Applicable to
Average Rates	Expenses/ Revenues
Period End Rates	Assets/ Liabities
Historical Rates	Ownership Equity

Rules:

• Translation should be done in subsidiary companies only.
• Translation should be done periodically.
• When you are translating a period the first and after period should be open.
• Translation can’t be performed for the first period.

Steps:

• Define “Cumulative translation adjustment A/c” at account segment value.
• Define Exchange rate type.

Nav: Setup  Currencies  Rate  Types

• Define Exchange Rate.

Nav: Setup  Currencies  Rate  Daily

• Complete Translation options at ledger level.
• Run Translation

Nav: Currency  Translation.

• Run “Trail balance: Translation” program.

Nav: View  Request  Submit a new request  single request.

Revaluation

It is used to identify unrealized gain/loss amount which occurred due to foreign exchange rate fluctuations. The difference in revaluation will be transferred to unrealized gain/loss a/c. We run revaluation in two modules- i.e., GL & FA. In GL we run the revaluation to know the current asset & liabilities due to fluctuation in the currencies and In assets we run the revaluation to revalue the assets.

Note: Revaluation can be done only before making the payment or before receiving the amount in GL.

Steps:

1. Define “Unrealized Gain (revenue) a/c & Unrealized Loss (Expenses) a/c” at account segment level.
2. Assign profile option “GL: Revaluation: Validate Gain & Loss A/c” at responsibility Level.
3. Define exchange rate type
4. Define Exchange rate.
5. Enter foreign currency journal & post it.
6. Change the Exchange Rate.
7. Run Revaluation
8. Nav: Currency  Revaluation.
9. Query revaluation journal and post it.

Reporting Currency

It is used to translate balances from functional currency to foreign currency at transaction level. Here we use Daily rates. There are three levels are there.

1. Balances level- All the balances will be translated.
2. Journal Level-All the journal entries will be translated
3. Sub –ledger Level- All the journals from AP, AR will be translated.

Steps:

1. Define “Rounding Difference Tracking A/c” at account segment value.
2. Define Exchange rate type
3. Define Exchange rates.
4. Assign rounding difference a/c to ledger.
5. Define Reporting currency Setup’s in setup step at ledger level.
6. Define Reporting GL Responsibility.
7. Assign reporting Ledger to Reporting GL Responsibility.
8. Assign Reporting GL Responsibility to User.
9. Enter Journal in primary ledger and post it.
10. Query the journal in Reporting ledger to check the result.

Roll Up Group

Roll up Groups is used to group the parent values.

Steps:

1. Disable roll up group at COA.
2. Define Roll up group .

Nav: Setup  Financials  Flexfields  Key  Groups.

3. Assign Roll up Group to parent Values.

Nav: Setup  Currencies  Rate  Values

Summary Template

For enquiring balances, in this method we group the accounts with the help of roll up groups.

1. Disable roll up group at COA.
2. Define Roll up group .

Nav: Setup  Financials  Flexfields  Key  Groups.

3. Assign Roll up Group to parent Values.

Nav: Setup  Currencies  Rate  Values.

4. Define Summary Template.

Nav: Setup  Accounts  Summary.

5. Enter and post it.
6. Enquire the balances. Nav: Enquiry  Account.

Consolidation

It is used to consolidate multiple subsidiary ledger information into single parent ledger.

To consolidate 4 C’s may be same or may not be same.

Let us illustrate with change in currency and all remaining 3 C’s constant.

	Parent	Subsidiary 1	Subsidiary 2
Country	India	United States	United Kingdom
Currency	RIL	USD	GBP
Calendar	RIL Calendar	RIL Calendar	RIL Calendar
COA	RIL COA	RIL COA	RIL COA
Convention Method	Standard Accrual	Standard Accrual	Standard Accrual

Steps:

1. Define Parent and Required Subsidiary ledgers.

• Parent ledger ( Ril currency)
• Subsidiary ledger 1 (USD currency)
• Subsidiary Ledger 2 (GBP Currency).

2. Define responsibility for Parent and subsidiary Ledgers.
3. Assign ledger to GL Responsibility with profile “GL ledger Name”.
4. Assign the parent and subsidiary responsibility to the user.
5. Open periods in parent and subsidiaries as well.
6. Define Exchange rate types.
7. Define Exchange rates.
8. Complete Translation options in parent and subsidiary ledger.

Nav: Setup  Financials  Accounting setup Manager  Accounting Setup.

9. Define Consolidation mapping

Nav: Consolidation  Define  Consolidation.

• Mapping Subsidiary 1 with parent.
• Mapping Subsidiary 2 with parent.

10. Define Consolidation Set.

Nav: Consolidation  Define  Consolidation Set.

11. Enter Journals in each subsidiary ledger and post it.
12. Run Translation in each Subsidiary ledger.

Nav: Currency  Translation.

13. Run Consolidation transfers.

Nav: Consolidation  Transfer  Data Set.

14. Query journals in parent journal and post them.

Secondary Ledger

It will represent the primary ledger accounting information in another accounting format. It will be created when there is change in the following 5 things.

1. Chart of Accounts
2. Calendar.
3. Currency.
4. Convention Method.
5. Accounting Options.

Steps:

• Define Exchange Rate Type.
• Define Exchange Rate.
• Define Secondary Ledger.

Nav: Setup  Financials  Accounting Setup Manager  Accounting Setup.

• Come to Secondary ledger region & complete setup step options.
• Define Secondary ledger to the GL Responsibility with profile options “ GL ledger Name”
• Assign Secondary ledger GL Responsibility to User.
• Open periods in secondary ledger.
• Enter journal in primary ledger and post it.
• Query the journal in secondary ledger and post it.
                                        Security Rule

It works at responsibility level. The list of values are not visible in security rules at the time of entering journals.

Steps:

1. Enable security rule at value set

Nav: Setup  financial  Flexfield key  Segment.

2. Enable security at segment Level.

Nav: Setup  financial  Flexfields  key  Segment.

3. Define Security Rule

Nav: Setup  Financial Key  Security  Define.

4. Assign security rules to the responsibility.

Nav: Setup  Financial  key  Security  Assign

5. Enter journal to check the result.

Nav: Journal  Enter.

Cross Validation Rule

It works at COA Level. The list of values are visible but will populate an “Error Message” for invalid code combination.

Steps:

1. Enable Cross validation segment at COA level(Accounting Structure level).

Nav: Setup  financials  Flexfields  key  Segments.

2. Define Cross validation Rule.

Nav: Setup  Financials  Flexfields  Key  Rules.

3. Enter Journal to check the result.

Nav: Journal  Enter.

Definition Access Set

It is used to provide view or use or modify access to the various gl definitions. It will work at responsibility level to the various gl definitions/ Functions.

Data Access Set

It is used to provide read only or read & write access to the ledger or balancing segment values or management segment values.

Steps:

   1. Define Data Access Set

Nav: Setup  Financials  Data Access Set.

2. Assign these data access set to a profile option (GL data access Set).

Ledger Set: It is used to access to multiple ledger information from single responsibility. We can group ledger which have same COA and Calendar.

Financial Statement Generator(FSG)

It is a tool which is used to configure the financial report as per the organization requirement. It contains five components, they are

1. Row Set
2. Column Set.
3. Order Set.
4. Content Set.
5. Display Set.

Note: Row set & Column set are mandatory. Order Set, Content set & Display Set are optional.

Row Set: It determines format & Content of rows.

Column Set: It Determines format & content of columns.

Order Set: It Determines data should display in what order in the report like ascending/descending Order.

Content Set: It is used to Generate reports for multiple departments in a single run.

Display Set: It determines what data should be displayed in the reports.

Steps:

1. Define Row Set.

Nav: Reports  Define  Row Set.

2. Define Column Set.

Nav: Reports  Define  Column Set.

3. Define Report.

Nav: Reports  Define  Reports.

4. Define Report Set.

Nav: Reports  Define  Report Set.

5. Run Financial Report.

Nav: Reports  Request  Financial.

Retained Earnings

They are undistributed profits of the organization. These are period end process profits that calculate for each balancing segment value by running retained earnings reports with specific Segment.

Format Types: Character, Date, Date & Time, Numbering, Standard time & Standard time & Date.

Value Set

It means a set of predefined and validate values assigned to a field that restricts the user from entering “Junk and invalidated data”. It provides list of values to the end user to accept one of the values as report parameters value.

Validation Types

The following are Validation Types.

1. Independent: the nature of segment is independent.
2. Dependent: This segment depends on independent segment.
3. None: it is not applicable.
4. Pair: pair means range of segments.
5. Table: table means calculation purpose.
6. Special: Special means based on conditions.
7. Translatable Independent: We use it other than English language.
8. Translatable dependent: We use it other than English language.