Budget

Budget concept is used for planning and controlling purpose. We can define budget up to maximum 60 periods. They are two types of budget. 
Planning Budget: In this planning budget we just plan the expenditures but there will not be any control over it. It's is prepared for comparing the actual with budget figures to know the variance.
Funding Budget: In this funding budget we can plan the expenditure or Revenue and also we can keep the control on budget journal amount. Here, we required to create budget journal for defining budget amount. It will control the actual transaction by using fund check methods(None, absolute, Advisory).

	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. 
        None - It is for planning budget 
        Absolute - We can’t enter amount beyond the budget amount. 
        Advisory – It will pop up a warning message when we enter amount beyond budget amount. 
Setup Steps:
1. Create Reserve for encumbrance account and expenses accounts in account segment values
2. Enable budgetary control at Ledger
3. Define Budget
4. Define Budget organization
5. Create Budget Journals
6. Query the budget journals and post
7. Create journal entry using budget account and test it.

Let us see, how to configure setup steps for funding budget
Step 1:  Define Reserve for encumbrance (Ownership) A/c at  account segment level. 

Step 2: Enable Budget control at ledger Level.

Navigation: Setup --> Financial --> Accounting Setup Manager

--> Accounting Setup.
Query your ledger and click on Update accounting options

Go to primary ledger region and click on Update

Now go to Advance Option window and fill budgetary control regions details like
       Enable Budgetary Control
       Enable Budget Journal
       Enter Account code combination for Reserve for encumbrance.

Now, click on Finish and check for the Confirmation note.

Step 3: Define Budget.

Navigation: Budget --> Define --> Budget. 
Enter Budget name and description

Choose your Ledger

Status: Current

Enable check box “Require budget Journals”

Choose Budget periods: First and Last

Click on “Open Next Year”

click on "Yes"

Say "OK"

Go to View -->  Request and  ensure request completed normal

Note: Now, Query the Budget and you can see last open year field is updated.

Step 4: Define Budget organization. 

             Using these Budget organization form we can define name of the budget and descriptions and choose the display sequence and Set password (Optional) and also used to mention accounts which are using for budget planning and Budget control options.

Navigation: Budget --> Define --> Organisation.

Name your Budget Organization & Description

Choose ledger

Select Ordering segment

Choose Display Sequence

Enter Effective dates

Click on "Ranges" button

Enter Line: 1

Choose Accounts for Low and High

Type: Entered

Currency: INR

Now Status is adding

Click on “Range Assignments” and Choose Accounts individually

Close this window & Click on “Budgetary Control” button

Save and close this window

Go to View --> Request and Ensure program completed normal

Step 5: Create Budget Journal. 

Navigation: Budget --> Define --> Journal. 
Choose “Budget organization” 

Choose “Accounting periods”

Go to “Work sheet mode”

Choose Accounts period from and to

Select one by one account

Click on “Budget Rules” button and choose rule and amount.

Say "Apply".

Note: You have do the same for all accounts

Now click on "Create Journal" button

Enter Journal Batch name

Choose Category: Expenditures

Funds status: Required

Click on “Check Funds”

Click on “Reserve Funds”

Step 6: Query the Unposted budget journals and post

Navigation: Journals --> Enter.
Choose Status Posting as " Unposted" and click on find button

See the unposted budget journal. 

Review Journal

You can see:

Journal name: CJE

Balance type: Budget

Only debit lines created in journal entry 

Now, Post all unposted budget journals

Post the Journal entry

Go to View --> Request

Ensure Journal posting program completed normal

Now, Let's test the budget concept by entering more than Planned amount.

Step 7: Create Journal entry using budget account

Navigation: Journals --> Enter

Say “new Journal”

Category: Expenditures

Click on "Check funds"

System displayed a note message stating that this transaction failed fund check. It means we can't post this journal. We need to enter amount less than the budget/Planned amount.

Note: To Check the funds availability Navigate to  Inquiry --> Funds window.

Revenue Recognition

In Revenue Recognition we have two concept in oracle apps.
                 1. Invoicing Rule.
                 2. Accounting Rule.
Invoicing Rule:
Invoice rules will be determined the accounting period in which receivables are recognized.
There are 2 types of Invoice Rules:
                 1. Bills in advance
                 2. Bills in Arrears
Bills in advance: System will recognize the invoice amount as a advance or starting of a project. In case of Bill in advance " Unearned Revenue " will come into the picture.
If you enter an invoice with a Bill in Advance invoicing rule, Receivables creates the following journal entries.
In first Period:
                 Receivables A/c .....Dr
                                 To Unearned Revenue A/c......Cr
                                  To Tax A/c ...........................Cr
                                  To Freight A/c.......................Cr
In all periods of the rule for the portion that is recognized:
                  Unearned Revenue A/c ......Dr
                                  To Revenue...........Cr
Bills in Arrears: System will recognize amount at the end of the contract or project. In case of Bills in Arrears " Unbilled Receivable" will come into the picture. If you enter an invoice with a Bill in Arrears invoicing rule, Receivables creates the following journal entry:
In first Period, Second period till the last period the following entry will be generated.
              Unbilled Receivable A/c.......DR
                                 To Revenue ..............CR
At the completion of Project and at the last Period the following entry will be generated by system.
               Receivables A/c..............DR
                              To Unbilled Receivables A/c.............CR
                              To Tax.........................................CR
                              To Freight...................................CR
Accounting Rules:
Accounting Rules will determined the Accounting Period in which Revenues are recognized.
There are 2 types of accounting rules:
                        1. Fixed Schedule
                        2. Variable Schedule
Fixed Schedule:
We will define duration of the project and % of Revenue of each accounting period, at the time of fixed scheduled accounting rule setup.
Step: 1 Define Fixed Schedule Accounting Rule.

Navigation: Setup --> Transactions --> Accounting Rules.

     Enter Name and Description

     Enter Type of Accounting Rule - Fixed Schedule

     Enter Number of Periods

     Divide the 100% into no of periods.    

Step: 2 Create Invoice with Fixed Schedule accounting rule with Bills in advance invoice rule. 
Navigation: Transactions --> Transactions.
          Enter Standard Invoice as usual
          Payment terms: Immediate
          Choose Invoice Rule: In Advance.          

Go to line items to enter item, quantity and price details
Go to  "Rules" tab and choose accounting Rule as "Fixed Schedule"

Now system will automatically pic the " Unearned Revenue" & Revenue A/c from auto Accounting setup. Save and complete the transaction

Step -3: Run Revenue Recognition program
Navigation: View --> Request 

Now, Run create accouting program and see the ouput in subledger accounting.

Variable Schedule:
At the time of set up the Variable Schedule Rule we will not enter duration of the project & % of Revenue for each accounting period.
We enter only first period Revenue % at the time of accounting rule set up. Duration of the project will be entered at the time of invoice entry. 
Step - 1 : Define Variable Schedule Accounting Rule

     Enter Name and Description

     Enter Type of Accounting Rule - Variable Schedule

     Enter Number of Periods

     Enter First Period Percentage.

Step – 2:
Create Invoice with Fixed Schedule accounting rule with Bills in advance invoice rule.
Navigation: Transactions --> Transactions.
          Enter Standard Invoice as usual
          Payment terms: Immediate
          Choose Invoice Rule: In Advance.  

Go to line items to enter item, quantity and price details
Go to  "Rules" tab and choose accounting Rule as "Variable"

Now system will automatically pic the " Unearned Revenue" & Revenue A/c from auto Accounting setup. Save and complete the transaction

Step -3: Run Revenue Recognition program
Navigation: View --> Request 

Note: In case of "Bill in advance" invoice Rule "Unearned Revenue A/c" will hit, at the time of accounting and Incase of "bill in arreas"  invoice rule "Unbilled Receivable A/c" will come into picture for accounting.

Payment Manager

Payments also can be processed as individual payments or through batch. Batch payments are automation. Automation means if we give instruction to system, system will make payment automatically. In 11i we called it as "Batch Payment and now in R12 the process is modified and named as "Payment Process Request". There are various stages of Payment Process Request. They are: 

                        1. Selection

                        2. Build

                        3. Format

                        4. Confirmation.

The Following are Pre-requiste steps required to submit Payment Process Request.

                       1. XML Template.

                       2. Payment Format.

                       3. Payment Method. 

                       4. Payment Documents.

                       5. Payment Process Profile.

Note: Bank, Bank Branches and Bank Account is created.

Now let us the see how the Payment Process Request works. Navigate to payment manager window.

Navigation: Payments --> Entry --> Payment Manager.

Now Click on "Submit Single Payment Process Request"

The Following window appears, Now Enter your criteria to pick all your invoices for which you wish to make a payment and click on Submit button.

Now click on Payment attributes tab and give the details like

                   1. Payment Date.

                   2. Disbursement Bank Account.

                   3. Payment Document. 

                   4. Payment Process Profile.

                   5. Payment Exchange Rate Type.

Now Click on "Processing" tab and give the instructions to how to process the payment. and click on "Submit" button.

The following confirmation message will appear.

Now submit the "Payment Process Request" Name in search criteria and click on "Go" Button, The following screen will appear. You can observe the change in “Payment Process Request" Status from "New" to "Invoice Pending Review". 

In the Main window,
Navigation: View --> Request --> Find.

You can observe " Scheduled Payment Selection" is running.

As we have checked “Stop Process for Review After Scheduled Payment Selection” while submitting the process, Now you can see the status as “Invoices Pending Review”. Now, Coming back to the OAF page and Click on the "Start Action" Icon as shown below to review the Selected Invoices for Payment.

Now review the selected invoices and at this point, you can remove the invoices the you don’t wish to pay now or can add new invoices. I have removed all the invoices, Except one invoice. (Invoice No: 9013, Invoice Amount: 60000, Trading Partner: Amrit Sales Corp).

System will ask for confirmation. If you want remove the invoices click on "Yes" or else click on "No" button

Now, You can see in the below screen, for which invoices payment can be made. 

Click on "Submit" Button

Click on "Refresh" button, You can see the status as "Calculating Special Amounts"

Now come back to Request window, and see "Build Payment" program is running.

Again click on "Refresh" button in OAF Page, As we have checked “Stop Process for Review After Creation of proposed payment Selection” while submitting the process, Now you can see the status as "Pending Proposed Payment Reveiw".

Review the invoices that are build for payment and click on " Start Action" Icon

After reviewing the invoice that are build for payment. Click on " Go" Button

Now Shift to Request window, You can obeserve "Format payment Instruction" Request has been Submitted.

Again Shift to OAF Page, Click on "Refresh" Button. You can see the PPR status as " Formatting"

Now click on "Show" button we can see the PPR Status as " Formatted Ready for Printing". Click on " Start Action" Icon

In printer column select "No Print" and click on "Print" Button.

Now come to " Payment Intructions" Tab enter your PPR name in search criteria and click "Go" You can see the status as "Submitted for Printing".  

Click on " Take Action" Icon

Click on "Continue" Button

 The system will through an "Warning" Message.

Click on " Apply" Button

Confirmation message will pop up and Payment is applied to the invoices.