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Oracle General Ledger

OVERVIEW TO ORACLE GENERAL LEDGER


Compiled by Prithvi Rao Oracle India Support Center
(Company Confidential - For Oracle Internal Use Only)

Oracle General Ledger

TABLE OF CONTENTS Overview of Accounting ............................................................................... 4


What is Accounting? ....................................................................................................... 4 Accounting System ......................................................................................................... 4 Accounting Principles ..................................................................................................... 4 Oracle Trivia ................................................................................................................... 4

Oracle General Ledger Overview................................................................ 5


General Ledger Overview ............................................................................................... 5 General Ledger Accounting Cycle.................................................................................. 5 General Ledger Data that is Shared Across Oracle Applications ................................... 6 General Ledger Interface Information and Accounting Entries...................................... 6 Integrating with Sub ledgers ........................................................................................... 6 Importing to General Ledger from Non-Oracle Applications......................................... 7

Set of Books.................................................................................................... 8
Creating a Set of Books................................................................................................... 8 Set of Books Options ...................................................................................................... 8

Chart of Accounts ......................................................................................... 9


Steps to create an Accounting Flexfield.......................................................................... 9 What Is a Value Set? ..................................................................................................... 10 Security for Value Sets.................................................................................................. 10 Defining the Accounting Flexfield Structure ................................................................ 11 Accounting Flexfield Segments .................................................................................... 12 Balancing Segment.................................................................................................... 12 How to Disable a Segments & Code Combination ....................................................... 12 How to Change Segment Values?................................................................................. 12 Problems in modifying Segment Values? ..................................................................... 13 Entering Segment Values .............................................................................................. 13 Using Independent and Dependent Segments............................................................... 14 Defining Hierarchies ..................................................................................................... 14 Account Hierarchies...................................................................................................... 15 Enabling Account Combinations .................................................................................. 15 Using Dynamic Insertion .............................................................................................. 15 Defining Cross-Validation Rules .................................................................................. 16 Defining Aliases to Represent Accounts....................................................................... 17 Defining Flexfield Security Rules................................................................................. 17

Accounting Calendar Considerations ....................................................... 18


Defining Period Types .................................................................................................. 18 Defining Your First Accounting Period ........................................................................ 19 Accounting Period Status .............................................................................................. 19 Calendar Auditing ......................................................................................................... 19

Currency ...................................................................................................... 20
Currency Type............................................................................................................... 20 Conversion Types.......................................................................................................... 20

Linking a Set of Books to a Responsibility ............................................... 20

Oracle General Ledger Predefined and Customized Responsibilities ............................................................ 20

Accounting Method..................................................................................... 20 Setup steps required are for Inter company: ........................................... 21
Intercompany Segment.................................................................................................. 21 Intercompany Balancing Options within a Single Set of Books................................... 22 Multiple Companies Within a Single Set of Books ...................................................... 22 Multiple Companies Using Multiple Sets of Books...................................................... 22

Journal Processing ...................................................................................... 23 Global Intercompany System..................................................................... 23 Foreign Currency Concepts ....................................................................... 24 Budgeting in Oracle General Ledger (GL)............................................... 24 Financial Statement Generator Reports (FSG) ....................................... 25 Oracle Financial Analyzer ......................................................................... 25 Applications Desktop Integrator ............................................................... 25 Global Accounting Engine ......................................................................... 26 Quick Recap................................................................................................. 27

Oracle General Ledger

Overview of Accounting
What is Accounting? A system that collects and processes (analyzes, measures, and records) financial Information about an organization and reports that information to decision makers. Accounting System There s 2 parts to the accounting system to address the needs of the two types of decision makers. The Financial Accounting System addresses the needs of external decision makers. It involves the preparation of the main Financial Statements: Balance Sheet, Income Statement, Statement of Retained Earnings, and Cash Flow Statement that are produced at the end of a month to report on the month s business activity. The Managerial Accounting System addresses the needs of internal decision makers, such as internal managers within an organization. It involves the preparation of more detailed reports, such as daily sales and daily invoices as well as plans and forecasts because these managers typically require continuous detailed information in order to plan and manage the day-to-day business operations of the organization. Accounting Principles While many companies compete in a single global economy, different sets of generally accepted accounting principles have developed within particular countries. Because each country s legislation requires companies to create different accounting entries and reports, a company with subsidiaries in five different countries can receive five different year-end statements for identical business transactions. Country legislation differs in the way that accounting entries are recorded for situations such as: goodwill, research and development, inventory valuation, leasing, deferred tax income, finance charges on inventory or purchase, pension funds, and unrealized gains or losses on currency revaluations. In the US, we have something called GAAP, Generally Accepted Accounting Principles. They re basically the body of principles that govern how you should record and report the financial results of your business operations. All public companies must follow the rules set by forth in GAAP. These rules benefit the external decision makers to ensure that the financial statements are fairly represented. Oracle Trivia In 1988 Oracle Corporation introduced Oracle Financials. At that time, the suite consisted of just two modules: General Ledger and Accounts Payable. This first release was built on traditional character mode architecture. Oracle Corporation has introduced numerous new and functionally different modules since 1988. Oracle continually enhances all of its applications solutions. In 1995, the underlying architecture of Oracle Applications was upgraded to substitute PCs for dumb terminals. This architecture was

Oracle General Ledger called Smart Client and was based upon the newest release of the Oracle Toolset (Forms and Reports). At the same time, the user interface was also changed from traditional green screen to a Graphical User Interface (GUI). In January 1998, Oracle introduced Release 10.7 NCA - Network Computer Architecture. NCA was based upon open Internet standards including: web servers and web browsers. The current release, R11i, further incorporates Internet technology and is 100% Internet enabled. R11i was released for general availability in May 2000.

Oracle General Ledger Overview


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. General Ledger Overview Oracle General Ledger is a comprehensive financial management solution that performs the following: 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. General Ledger Accounting Cycle 1. 2. 3. 4. 5. 6. 7. 8. 9. Open period Create/reverse journal entries Post Review Revalue Translate Consolidate Review/correct balances Run accounting reports

Oracle General Ledger 10. 11. Close accounting period Analyze results.

General Ledger Data that is Shared Across Oracle Applications Oracle sub ledgers share the following from Oracle General Ledger: Chart of accounts, value sets, segment values, security rules, cross-validation rules, and shorthand aliases used to record the accounting for transactions. Enabled currencies, conversion rate types, and daily rates used to convert foreign currency transactions. Calendar, periods and period types used as the basis for the subledger accounting periods. Journal entry sources and categories used to record information about the origination and purpose of transactions General Ledger Interface Information and Accounting Entries The following lists the sub ledgers and the information that is sent to General Ledger: Purchasing: Accrual of receipts not invoiced, purchase orders, final close, cancellations Inventory: Cycle count and physical inventory adjustments, receiving transactions, delivery transactions, intercompany transfers, sales order issues, internal requisitions, subinventory transfers, and Cost of Goods Sold (COGS). Work In Process: Material issues or backflush to WIP, completions, returns, resource and overhead transactions, and cost updates. Payroll: Salary, deductions, and taxes. Projects: Cost distribution of labor and non-labor, and project revenue. Payables: Invoices, payments, realized gain and loss on foreign currency, and invoice price variance. Assets: Capital and construction in process asset additions, cost adjustments, transfers, retirements, depreciation, and reclassifications. Receivables: Invoices, payments, adjustments, debit memos, credit memos, cash, chargebacks, and realized gain and loss on foreign currency. Integrating with Sub ledgers Transferring information from Oracle sub ledgers is a two-step process: Data is pushed into the GL_INTERFACE table from the subledger using a transfer program. Then Journal Import pulls the information from the interface table to create valid, postable journal entries in General Ledger. Oracle General Ledger can only pull information from the sub ledgers after the data is placed in the interface table. Oracle General Ledger cannot push information to the sub ledgers. When you initiate the transfer program from Oracle sub ledgers, such as Oracle Payables or Oracle Receivables, you can choose to also submit the Journal Import

Oracle General Ledger process. If you do not choose to run Journal Import from the sub ledger, you must run Journal Import separately in General Ledger to pull the information into General Ledger using the Import Journals window. This will create postable journal entries. Note: Oracle Assets transfers journal information directly to General Ledger without going through the interface table. Oracle Assets directly updates the three main tables in Oracle General Ledger, the Batches, Headers, and Lines tables, to create unposted journal entries. You do not run Journal Import to transfer asset information to General Ledger. Importing to General Ledger from Non-Oracle Applications Journal Import Use Journal Import to automatically import budget, actual, and encumbrance data from your non-Oracle applications. You can create SQL Loader script to load the data into the interface. You can also check funds and reserve them for your imported transactions. Applications Desktop Integrator (ADI) You can enter data in a spreadsheet and upload to General Ledger: Prepare functional and foreign journal entries. Prepare and analyze budgets. Interface Tables The GL_INTERFACE table is the main interface table in Oracle General Ledger. However, there are three other interface tables that General Ledger uses. The Daily Rates table called GL_DAILY_RATES_INTERFACE allows you to create, update, and delete daily conversion rates. Customers use this table to load conversion rates into the GL_DAILY_RATES table. The GL_BUDGET_INTERFACE table allows you to upload budget data into your Oracle General Ledger application from a spreadsheet program or other external source. The GL_IEA_INTERFACE is the interface table used to import data into the Global Intercompany System from external systems. The data entered into this table is processed by the GIS Import program.

Oracle General Ledger

Set of Books
A set of books determines the functional currency, account structure, accounting calendar, and accounting method for each company or group of companies. If one of these four components has to be different, then a new set of books has to be created. Creating a Set of Books Set of Books Considerations: Minimize the number of future enterable periods to prevent users from accidentally entering journal entries in an incorrect period. Ensure that all currencies you use, including the statistical journal (STAT) currency, are defined and enabled prior to entering transactions in your set of books. Define several responsibilities for a set of books to allow for appropriate levels of forms security. Considerations for Multiple Companies Sharing Books When you create the account flexfield structure, define the company segment as the balancing segment with multiple values. When you define the set of books, assign the options you want to use for the set of books. For example, enable intercompany balancing. Set up a separate company segment value for your eliminating entries. You can then post elimination entries to this elimination company segment without needing to reverse them later. Set up a parent company segment value that includes as children, all the company segment values you want to consolidate. Be sure to include the eliminating entries company you set up in the previous step. For example, if you want to consolidate companies 01 through 07 and your eliminating entries are made to company 08, define a parent company 09 whose children are companies 01 through 08. Include the parent company in a rollup group and then define summary templates with this rollup group. Set of Books Options Allow Suspense Posting: Posts out-of-balance journal entries to a suspense account you specify. If you do not enable this feature, you can only post journal entries that balance. Balance Intercompany Journals: Allows users to post out-of-balance intercompany journal entries and automatically balance those journal entries against a specified intercompany account. Select the Balance Intercompany Journals check box and enter the intercompany account(s) in the Intercompany Accounts window. If you do not enable this feature, you can only post intercompany journal entries that balance by balancing segment, (usually the company segment). Enable Track Rounding Differences: Tracks rounding differences in currency conversions.

Oracle General Ledger Enable Average Balances: Allows you to use this set of books for average balance processing. Enable Journal Approval: Allows you to use the Journal Approval feature in your set of books. When Journal Approval is enabled and a journal entry s source requires approval, the journal must be approved by the appropriate level of management before any further action can be taken. Enable Journal Entry Tax: Allows you to manually enter taxable journal entries in General Ledger.The system automatically calculates associated tax amounts and generates tax journal lines. Retained Earnings Account: General Ledger posts the net balance of all income and expense accounts from the prior year to this account when you open the first period of a fiscal year. Suspense Account: If you choose to allow posting of out-of-balance journal entries, General Ledger automatically posts the difference to this account. If you have multiple companies or balancing entities, General Ledger automatically creates a suspense account for each balancing entity. Rounding Differences Account: Specify an account to track rounding differences that occur during currency conversions. Cumulative Translation Adjustment Account: If you translate your functional currency balances into another currency for reporting, or if you revalue foreign currency-dominated balances, you must specify a translation adjustment account. Reserve for Encumbrance Account: Allows you to post the difference of out-ofbalance encumbrance entries. Net Income Account: (For ADB only) General Ledger uses this account to capture the net activity of all revenue and expense accounts when calculating the average balance for retained earnings.

Chart of Accounts
Define a chart of accounts structure based on your business, reporting, and statutory requirements. Your chart of accounts is a list of Accounting Flexfields you create to identify general ledger accounts. This flexible structure is made up of subfields or segments. Each segment has a name and a set of values. You can choose the number of account segments as well as the length, name, and order of each segment. Steps to create an Accounting Flexfield 1. 2. 3. 4. 5. 6. 7. 8. Define a value set. Define an accounting flexfield structure. Create Segments up to 30 segments of max 25 characters per segment Define valid segment values. Optionally, define cross-validation rules if using Dynamic Insertion. Optionally, create account combinations if not using Dynamic Insertion. Optionally, create aliases. Optionally, define security rules.

Oracle General Ledger What Is a Value Set? Value sets control what types of values can be used in the Accounting Flexfield. They determine the attributes, such as length, zero-fill, right-justify, alphanumeric, and value security. Value sets also control how validation is performed. For example, with independent validation, a list of values must be created and used. Numeric and Alphanumeric Values Numeric is preferable from a data entry perspective because users can use the ten keypad. Sort order is clearer and ranges are easy to use. Alphanumeric allow you to use characters for Parent values and numbers for child values. This allows for visually distinguishing levels of your hierarchy. Regardless of whether you use numbers or alphanumeric characters, you must ALWAYS use the char (character) format type. Segment Sizes Consider your organization s growth requirements. If your organization currently has 30 departments, a two-character segment size will only accommodate up to 99 different department values. A three-character segment size can accommodate 999 different department values. Assigning Value Sets to Segments Assign one value set to each Accounting Flexfield segment. Share the same value sets across multiple sets of books to facilitate consolidation. You can use the same value set more than once within the same Accounting Flexfield structure, as noted in the diagram above, where the same values set is used for the Balancing and Intercompany segments. Security for Value Sets If you plan on using Segment Value Security, then you must assign security at the value set level for each segment you want to secure. For example, you may want to hide specific department values from specific responsibilities. This is particularly useful for companies that share the same chart of accounts structure or even value sets across multiple sets of books. Hierarchical Security: If you choose Hierarchical Security, it will make defining the security rule easier. You can simply secure parent values and all of its children will automatically follow the rule. Non-Hierarchical Security: If you choose Non-Hierarchical Security, you will need to define every segment value regardless if it s a parent or child value to secure. Security Rule Features

Oracle General Ledger

Security rules restrict access to specific segment values or ranges of segment values for the following: When you enter data in General Ledger windows. For example, you cannot enter an account code combination in the Enter Journals window that contains a restricted segment value When you perform online inquiries When you run FSG reports When you run Standard Reports for Account Analysis, Journals, General Ledger, and Trial Balance Defining the Accounting Flexfield Structure The Accounting Flexfield Structure combines the elements that make-up a chart of accounts. Define your account structure in the Key Flexfield Segments window. Each set of books can have its own Accounting Flexfield structure. Select the appropriate symbol as the Segment Separator. Choose whether to enable dynamic insertion to allow new account combinations to be entered. If dynamic insertion is not allowed, account combinations must be defined individually using the GL Accounts window. Choose to allow cross-validation rules to control the creation of account combinations. Enter a name, description, column and segment number for each segment. Segment numbers must be sequential for the accounting key flexfield, beginning with 1 (such as 1, 2, 3, ). To prevent changes to the Accounting Flexfield structure definition, freeze the Flexfield Definition. This will submit a process that compiles your structure. Assign Value Sets to Segments Assign a value set to each segment. Select the Required check box and the Displayed check box. Assign Flexfield Qualifiers Natural Account: Each Accounting Flexfield structure must contain only one natural account segment. When setting up the values, you will indicate the type of account as Asset, Liability, Owner s Equity, Revenue, or Expense. Balancing Account: Each structure must contain only one balancing segment. Oracle General Ledger ensures that all journals balance for each balancing segment. Cost Center: This segment is required for Oracle Assets. In addition, Oracle Projects and Oracle Purchasing also utilize the cost center segment. Intercompany: General Ledger automatically uses the intercompany segment in the account code combination to track intercompany transactions within a single set of

Oracle General Ledger books. This segment has the same value set and the same values as the balancing segment. Accounting Flexfield Segments Balancing Segment Each Accounting Flexfield structure must contain Only One Balancing segment. Oracle General Ledger ensures that all journals balance for each balancing segment value. Natural Account Each Accounting Flexfield structure must contain Only One Natural Account segment. When defining natural account segment values, indicate the type of account (Asset, Liability, Owners Equity, Revenue, or Expense) Cost Center Segment Account Flexfield structures need not contain a cost center segment. Oracle General Ledger does not use the Cost Center segment for any specific purpose, except for Oracle Fixed Assets. Inter-Company Segment GL automatically uses the Inter-company segment in account code combination to track inter-company transactions within a single set of books. It should have Same Value Set as the Balancing Segment About Segments Maximum 30 Segments allowed Minimum 2 Segments required (Balancing & Natural Account) Oracle Fixed Assets installed Cost Center required Number: Flexfield requires Consecutive Segment numbers beginning with 1 & 2, 3 Gaps not allowed Segment Name should be Unique & not a SQL reserved word All segments should be Enabled & Displayed How to Disable a Segments & Code Combination If you disable a segment, the existing code combinations are not automatically disabled To disable existing code combinations query the code combinations on the GL Accounts form and uncheck the Enabled box or end date the code combination In release 11 & prior need to manually disable each combination In release 11i we can do so by using Segment Value Inheritance Program How to Change Segment Values? Unfreeze flexfield definition Update segment values on the segment value form freeze flexfield definition compile flexfield structure

Oracle General Ledger

Problems in modifying Segment Values? If you cannot make changes after you unchecked Freeze Flexfield Definition , then there is OTHER FLEXFIELD STRUCTURES USING THE VALUE SET, which are still FROZEN. Note 1015950.6 contain scripts to find the Flexfield that use the value set.

Entering Segment Values After you have your structure, you need to create the values for each value set. For example, value 01 may represent US, and value 1001 may represent the cash account. As you enter values for a value set in the Segment Values window, you also set the attributes for those values. If the value set has the type Translatable Independent or Translatable Dependent, the Translated Value field is enabled and users can select the Translation icon to update the translated value in all installed languages.Select Parent to specify a parent value. When entering parent values, optionally enter a rollup group name and/or level. Enable or disable values by selecting the enabled check box or by using the Date From and To fields Segment Qualifiers When you define a segment value, you must also assign qualifiers to whether budgeting is allowed, and whether posting is allowed. For the natural account segment, you have the following additional qualifiers you must specify: Account Type: Enter the type of proprietary account (Asset, Liability, Owners Equity, Revenue, or Expense) or enter the type of budget account (Budgetary Dr or Budgetary Cr). For statistical accounts, enter either Asset, Liability, or Owners Equity. Note: When you specify an account type of Expense or Revenue, at year end all of those account types will be zeroed out when you open the first period of the new year. Control Account: Set to calculate account balances for third parties per period in subledger applications such as Payables or Receivables. Reconciliation Flag: Used for localization and globalization requirements, set this flag to enable designated accounts to be identified as reconciled when their balance is zero. Note: When you define a value as a Parent, you can not budget or post to this value even if you select the Budget Entry Allowed and Posting Allowed check boxes.

Oracle General Ledger Using Independent and Dependent Segments Independent Segments For Accounting Flexfields, use independent segments. Do not use the Dependent validation type. It complicates parent/child hierarchies and limits the ability to use parent values with reporting and mass allocation journal entries. Dependent Segments Dependent segments separate items that are closely related into individually identifiable segments. Account/sub account is the most common use for independent/dependent segments (account is the major classification and sub account provides more detail within the account).With dependent segments, you must set up each combination of independent/dependent values. You do not need to set up cross-validation rules for independent/ dependent combinations since you set up each combination individually. Sometimes setting up dependent segments is preferable to maintaining extensive validation rules for combinations of two segments which have many values with no ranges or logic for the valid combinations. Dependent segments limit the values that appear on lists to the dependent values of the independent segment chosen. Defining Hierarchies Child Segment Values Post journals and enter budgets directly to child segment values. Assign ranges of children to parents . Parent Segment Values Use parents to sum the balances of associated child accounts in reports and summary accounts. Any segment that has children beneath it - even if that segment has its own parent above it - is considered a parent by Oracle General Ledger. Assign ranges of child values to parent values to create summations for running reports, Mass Allocations, or Mass Budgeting. You can create parent segment values for independent segments, but there are limitations when used with dependent segments. The Dependent validation type limits using parent values with Mass Allocations, MassBudgeting, and Financial Statement Generator (FSG). The only parent value available for dependent segments is an all-inclusive parent T that includes all the values of the value set. Technical Note: Summary accounts may use the segment value T in one or more of the segments, therefore, define the segment value T for every Accounting Flexfield segment if you are planning to create summary accounts. The value T is also a parent value even

Oracle General Ledger though its children are not specifically assigned. Note: Char must be used as the format type for all segments of the accounting key flexfields because of the value T . Account Hierarchies Use various flexible parent/child account hierarchies to view your business according to product lines, geographical regions, organizational lines, or any other combination of factors you deem important. Create your hierarchy with as many vertical and horizontal levels as you need to effectively analyze your business or business segment. It is better to create new parent structures than to modify existing structures because changes can effect historical reporting. Note: Oracle General Ledger treats all segment values that have the Parent check box selected as parents even if they don t have children assigned and does not allow direct posting or budgeting to these values. Enabling Account Combinations The default setting for an account code combination is enabled. Once created, an account code combination cannot be deleted. To discontinue using an account code combination, simply deselect the Enabled check box for the account. You can also use the effective date to enable or disable the combination. For example, if you have a new department as of January 1, 2002, you can create an account code combination with an effective date of 01-JAN-2002 and the account combination becomes enabled on that date. This means you have the flexibility to create the account combinations in advance. Additionally, you can control the following attributes from the GL Accounts window: Preserved Type Effective Dates Allow Posting Allow Budgeting Using Dynamic Insertion Setting the Allow Dynamic Inserts Option You have the option of allowing account combinations to be added automatically as you enter them in transactions, including when you define a set of books. This option is controlled by the Allow Dynamic Inserts check box located on the Key Flexfield Segments window. Alternately, you can require all accounts to be defining manually in the Accounts Combinations window. Frequently, companies enable dynamic insertion while they are entering historical data from a legacy system. They then disable the feature to ensure tighter control over the creation of new account combinations.

Oracle General Ledger Note: If you are defining an Accounting Flexfield for Oracle Projects, you must define your segment with the Allow Dynamic Inserts option set to Yes. For more information, refer to the Oracle Projects User Guide. Defining Cross-Validation Rules Cross-validation controls the combinations of values you can create when you are entering Accounting Flexfield combinations. It defines whether a value of a particular segment can be combined with specific values of other segments. It prevents the creation of combinations that should never exist (combinations with values that should not coexist in the same combination). For example, you can assign rules to prevent the combination of a product with administrative departments. Defining and Revising Cross-Validation Rules Because cross-validation rules validate only new accounts, you should define and enable them prior to entering transactions. Revise cross-validation rules at any time, but remember that they only prevent the creation of new invalid account combinations. Using Cross-Validation with Dynamic Insertion Enable dynamic insertion in the Key Flexfield Segments window to allow users to define new account combinations as they enter transactions. If dynamic insertion is not enabled, you can only account combinations that exist in the GL Accounts window. Specifying Cross-Validation Rules Cross Validation Rules are defined in the Cross Validation Rules window. You enter the error message that should be displayed if the rule is violated as well as the name of the segment most likely to cause this cross-validation rule to fail; Oracle General Ledger moves the cursor to this segment whenever a new account combination violates this cross-validation rule. How to define Cross Validation Rules Enter the error message that should be displayed if the rule is violated Enter the name of the segment most likely to cause this cross-validation rule to fail; Oracle General Ledger moves the cursor to this segment whenever a new account combination violates this cross-validation rule Defining Cross-Validation Rule Elements Select Include or Exclude and specify a range of accounts for each rule. Oracle General Ledger excludes all accounts that are not explicitly included. Exclude rule elements always override Include rule elements. Hence ensure that all acceptable segment values are in at least one Include element and not in any Exclude elements. Rules are not retroactive.

Oracle General Ledger Use many simple rules rather than few complex rules, may cause F45RUN error while importing Journals. To make changes, DELETE any old elements & ADD new elements. You can t edit existing elements. Note: To help you maintain your cross-validation rules, have your system administrator add the following reports to your General Ledger responsibility: Cross-Validation Rule Violation Report: This report provides a listing of all the previously created flexfield combinations that violate your cross-validation rules. You can also choose to have the report program actually disable the existing combinations that violate your new rules. Cross-Validation Rules Listing Report: This report lists all the cross-validation rules that exist for a particular flexfield structure. This is the information you define using the Define Cross-Validation Rules form, presented in a multiple-rule format you can review and keep for your records for a given flexfield structure. Defining Aliases to Represent Accounts An alias is shortcut that can represent the value for a single segment, several segments or an entire account combination. You can define an unlimited number of aliases to represent complete or partial accounts. Important Notes You cannot define a shorthand alias using invalid values. There is no validation process or checking of cross-validation rules when you define shorthand aliases. After you define the first shorthand alias, you must unfreeze your flexfield and recompile it in order to be able to use your newly defined shorthand alias. The Profile Option, Flexfields: Shorthand Entry, must be set to Yes before you can use your shorthand aliases. This profile option can be set by the user or system administrator. Caution: Do not define shorthand aliases for a small number of accounts. It is inefficient. Entering Aliases When Entering Accounts. When you invoke the list of values for the Accounting Flexfield during data entry, the Shorthand Aliases window will pop up. You can enter a partial shorthand alias or skip the Shorthand Alias window to open the Accounting Flexfield window. After you enter a partial alias, the Accounting Flexfield window displays the segment values represented by the alias. Change any segment values if desired. If you entered an alias that represented an entire accounting combination, it fills in the values and moves you to the next field in the window. Defining Flexfield Security Rules To prohibit certain users from accessing specific segment values, you can define flexfield security rules and assign those rules to the responsibility of the restricted users. For example, you can create a security rule that grants a user access only to his or her own department. Accounting Flexfield segment values must pass every assigned flexfield security rule for a user s responsibility before the value can be selected by the user.

Oracle General Ledger

How to define Security Rules Select Security Available in both the Key Flexfield Segments and Value Sets windows, then recompile the Flexfield definition. Associate each security rule with a value set. Enter the message that will be displayed if the rule is violated. Specify whether to include or exclude a range of segment values for each rule. Oracle General Ledger excludes all segment values that are not explicitly included. Exclude rule elements override Include elements. Therefore, ensure that all acceptable segment values are in at least one Include element and not in any Exclude element. Note: Defining many rules with few elements is generally much clearer than defining few rules with many elements. For clarity, always contain one universal Include element and one or more restricting excludes elements.

Accounting Calendar Considerations


The accounting calendar defines an accounting year and the periods it contains. You can define multiple calendars and assign a different calendar to each set of books. Define at least one year at a time. By setting up your periods in advance, you can reduce the amount of period maintenance at the start of each accounting period. Foreign currency translations cannot be performed in the initial period opened for your set of books. Choose the earliest period carefully. After you open the first accounting period, prior periods cannot be opened. Set up the number of periods you want to budget for, up to a maximum of 60 periods. When the next accounting period is opened, Oracle General Ledger rolls account balances forward to that period. Defining Period Types Oracle General Ledger uses the year type to determine the year to assign to a period name in the accounting period system. When defining new period types: Choose Calendar to use the year in which an accounting period begins for the period name. Choose Fiscal to use the year in which your fiscal year ends for the period name.

Oracle General Ledger Defining Your First Accounting Period When you define a new set of books, choose carefully the first accounting period you want to open. Once you open your first accounting period, Oracle General Ledger does not allow you to open prior accounting periods. Choosing whether to include an adjusting period or not in your calendar is a very important decision. You can have an unlimited number of adjusting periods. Typically, the last day of the fiscal year is used as an adjusting period to perform adjusting and closing journal entries. Once you begin using your accounting calendar, you cannot change its structure to remove or add an adjusting period. Accounting Period Status Never Opened: You cannot enter or post journals. Future Enterable: You can enter journals, but you cannot post. The number of future enterable periods is a fixed number defined in the Set of Books window. You can change the number of Future Enterable periods at any time. Open: You can enter and post journals to any open period. An unlimited number of periods can be open, but doing so may slow the posting process and can confuse users entering journals. Closed: You must reopen Closed periods before you can post journals. You should manually close periods after finishing your month-end processing. Permanently Closed: Permanently Closed periods cannot be reopened. This status is required to archive and purge data. Calendar Auditing When you define or make changes to your calendar, Oracle General Ledger automatically audits your accounting calendars to check for common setup errors. This feature strengthens controls during implementation and prevents potential processing problems related to invalid calendar definitions.When you exit the Calendar window, the Calendar Auditing program automatically produces a report that clearly outlines calendar definition violations such as date omissions, overlapping nonadjusting periods, and nonsequential periods. The Calendar Validation report prints the error description, years, periods, or dates that violate the GL calendar definition when you create a calendar or add accounting periods to your calendar. Use the Calendar Validation Report to identify errors in your calendar that may interfere with the proper operation of Oracle General Ledger

Oracle General Ledger

Currency
You can select the functional currency for your set of books as well as other currencies that you use to transact business. Currency Type Euro Currency for Euroland EMU NCU currencies Non-EMU Currency of Non European Countries Conversion Types Reporting Corporate Spot User defined Unique type

Linking a Set of Books to a Responsibility


Use Oracle System Administration to link a set of books to a General Ledger responsibility. When starting an Oracle General Ledger session, select a responsibility in order to enter and retrieve accounting information for the set of books associated with that responsibility. Predefined and Customized Responsibilities Oracle General Ledger predefines several responsibilities that determine users access to a specific set of books and allows users to run specific programs or perform specific functions. You can define unique responsibilities that include different reports and functions. You can assign appropriate responsibilities to users according to their job requirements and your data security demands. Linking the Responsibility to a User. You must also assign the responsibility to users to allow user to select the appropriate responsibility when they log on to Oracle Applications. Accounting Method The accounting method is not explicitly defined in Oracle General Ledger. The accounting method is implied when you are setting up your subledgers. For example, when setting up Payables, you can choose to set it up using the Cash or Accrual method of accounting. Oracle General Ledger recommends that if you are using different accounting methods, then you should create separate sets of books even if the other 3 Cs are identical. This will pave the way for a future release of Oracle General Ledger.

Oracle General Ledger

Setup steps required are for Inter company:


Set of Books Form: You must enable the Balance Intercompany Journals checkbox in the Set of Books window before you can use intercompany balancing. Intercompany Segment Qualifier (Optionally): When setting up your segments for your chart of accounts, you can us an intercompany segment that has the intercompany segment qualifier attached to it. The only difference between a chart of account without an intercompany segment and one with an intercompany segment is that the Posting program automatically populates the intercompany segment when appropriate with the corresponding balancing segment. Intercompany Accounts Form: Completing this form is required if you enable intercompany balancing regardless of the method you choose to use. You can balance intercompany journals based on multiple parameters, such as Journal Source, Journal Category, and Balancing Segment Value For each combination of these three parameters you can specify a unique intercompany account or template for Oracle General Ledger to use to balance intercompany journal entries automatically. Based on the rule the you define, Oracle General Ledger inserts additional journal lines to offset journal lines that cross-balancing segments. Your intercompany account rules may also include different accounts based on whether the balancing amount should be posted to a credit account (due to) or a debit account (due from). At the journal source and category level you can also specify whether intercompany journal balancing is perform at a summarized level for each trading partner or a the journal level. For clearing companies you have the choice of Always Use Clearing Company versus Many to Many Intercompany Transactions Only. The difference is that with Always Use Clearing Company, the clearing company logic applies to all transactions (single to single, multiple to multiple, and multiple to single). For Many to Many Intercompany Transactions Only, the clearing company logic only applies to multiple to multiple transactions. The minimal level of setup required in the Intercompany Accounts form is to use a source and category of Other. Then for the balancing segment use the default of All Other and enter the same account number in both the due from account and the due to account. Intercompany Segment Shares the same value set and values as the balancing segment and is used in the account combination that Oracle General Ledger creates to balance intercompany journals. Facilitates tracking the trading companies involved in an intercompany transaction. Automatically populates the intercompany segment with the balancing segment of the trading partner. Creates balancing journal lines, during the posting process, that use the appropriate intercompany accounts for the source, category, balancing segment, and type, with consideration for the intercompany segment and clearing company, if applicable. Makes creation and reconciliation of intercompany transactions more effective. Provides more

Oracle General Ledger detailed reporting by trading partner. Enables minimal definition of intercompany accounts since GL automatically create these account for you. In the Intercompany Accounts window define Other for the Source and the Category, and All Other for the Balancing Segment. Intercompany Balancing Options within a Single Set of Books When you select the Balance Intercompany Journals check box on the Set of Books window, Oracle General Ledger offers a number of solutions to automatically account for intercompany transactions in a single set of books. Standard Intercompany Balancing: You 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 trading subsidiaries. Enhanced Intercompany Balancing: You can define separate intercompany accounts to record more detail for your intercompany journals and track intercompany balances. Clearing Companies: You can designate one company to act as the trading partner for all subsidiary companies in the organization for certain types of intercompany transactions. Intercompany Segment Balances: Instead of using different natural accounts to track intercompany balances, you can use an intercompany segment in your chart of account to record the same detail as enhanced intercompany balancing. Multiple Companies Within a Single Set of Books You can set up multiple companies that share the same functional currency, chart of accounts, calendar, and accounting method in a single set of books. When setting up the account structure for your set of books, use the segment representing your companies as the balancing segment. This ensures that each company is always in balance, which lets you easily maintain and report on multiple companies as stand-alone entities. Each company can contain any number of divisions, departments, and cost centers that can be subdivided into as many levels as needed. Multiple Companies Using Multiple Sets of Books You need multiple sets of books if one of the following is true: You have companies that require different account structures to record information about transactions and balances. For example, one company may require 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 using different accounting representations.

Oracle General Ledger You have companies that require different functional currencies. Consider 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 set of books. You use multiple Oracle Applications instances for your companies.

Journal Processing
Within Oracle General Ledger, you can work with the following types of journal entries: Manual Journal Entries The basic journal entry type is used for most accounting transactions. Examples include adjustments and reclassifications. Reversing Journal Entries Reversing journal entries are created by reversing an existing journal entry. You can reverse any journal entry in the current or any future open accounting period. You can only post entries in an open period. Recurring Journal Entries Recurring journal entries are defined once, then are repeated for each subsequent accounting period. You can use recurring journal entries to define automatic consolidating and eliminating entries. Examples include intercompany debt, bad debt expense, and periodic accruals. Mass Allocations Mass Allocations are journal entries that utilize a single journal entry formula to allocate balances across a group of cost centers, departments, divisions or other segments. Examples include rent expense allocated by headcount or administrative costs allocated by machine labor hours.

Global Intercompany System


The Global Intercompany System (GIS) provides a controlled, central location for subsidiaries to conduct intercompany transactions throughout a global organization. GIS is used for companies using multiple sets of books or multiple application instances. If all of your companies reside in the same set of books, they do not need to use GIS. Benefits of GIS Subsidiaries with different charts of accounts, calendars, currencies, and applications instances can exchange transactions with one another through GIS. Streamlines the intercompany transaction and reconciliation process by preventing out of balance intercompany transactions. For example, if two subsidiaries record the exchange of services as different amounts, on different dates, or use different exchange rates or currencies, the result is an out of balance intercompany transaction.

Oracle General Ledger Requires both sender and receiver to approve the amount, transaction date, and currency of an intercompany transaction. When the transaction is approved, each subsidiary posts the balanced transaction to its operating set of books. Accommodates diverse enterprise structures. Any subset of an organization can be defined as a GIS subsidiary and assigned to a responsibility.

Foreign Currency Concepts


Conversion Conversion refers to foreign currency transactions that are immediately converted at the time of entry to the functional currency of the set of books in which the transaction takes place. You can enter transactions in any currency in Oracle General Ledger and General Ledger will automatically convert them to your functional currency defined for your set of books. Revaluation Revaluation adjusts liability or asset accounts that may be materially understated or overstated at the end of a period due to a fluctuation in the exchange rate between the time the transaction was entered and the end of the period. Translation Translation refers to the act of restating an entire set of books balances for a company from the functional currency to a foreign currency.

Budgeting in Oracle General Ledger (GL)


Create an unlimited number of budgets or forecasts. Control user access to budgets. Create budget organizations to mirror the various levels of your company s organization and to control user access to the budget information. Create master-detail budgets. Budgeting with Applications Desktop Integrator (ADI) Enter budget amounts in the familiarity of a spreadsheet, then upload your budget data to General Ledger. Downloads both budget or actual amounts and use to calculating new budget amounts, then be upload the new budget amounts into Oracle General Ledger. Budgeting with Oracle Financial Analyzer You can also use Oracle Financial Analyzer to update budget balances in General Ledger.

Oracle General Ledger

Financial Statement Generator Reports (FSG)


You can define custom financial reports, such as income statements and balance sheets, online with complete control over the rows, columns, and content of your report. You can control account assignments, headings, descriptions, format, and calculations in addition to the actual content. The reusable report components make building reports quick and easy. You can copy a report component from one report, make minor edits, then apply the report component to a new report without having to create a new report from scratch.

Oracle Financial Analyzer


Oracle Financial Analyzer lets you: Analyze financial data collected by Oracle General Ledger. Eliminate double maintenance. Data entered in General Ledger can be automatically transferred for analysis in Oracle Financial Analyzer. Selectively map General Ledger segments to Financial Analyzer dimensions. Easily identify, analyze, model, budget, forecast, and report on information stored in General Ledger. Perform budgeting in OFA and then write back budget amounts to Oracle General Ledger.

Applications Desktop Integrator


Applications Desktop Integrator (ADI) allows users to create journal entries, perform budget enter, and report creation, submission, publishing, and analysis within the familiarity of an Excel spreadsheet environment. Journal Wizard Provides a spreadsheet-based journal entry worksheet to enter journal entries using full Excel functionality and Oracle validation. Budget Wizard Creates a spreadsheet-based worksheet based on the budget and budget organization enter in Oracle General Ledger to simplify budget data entry and modeling. Report Wizard Provides a spreadsheet-based interface to General Ledger s financial reporting engine, the Financial Statement Generator (FSG). Request Center Submits and monitors your concurrent requests, automatically notifying you when your financial reports, journal uploads, or budget uploads finish processing. Analysis Wizard Combines multidimensional analysis with report drill-down completely within Microsoft Excel.

Oracle General Ledger

Account Hierarchy Editor Presents the Oracle General Ledger parent/child account hierarchies in a graphical format. Provides a graphical interface to create or modify existing hierarchies and save them back to Oracle General Ledger.

Global Accounting Engine


Because many countries have their own accounting rules, or Generally Accepted Accounting Principles, the Global Accounting Engine as well as localized versions of Oracle Applications address some of these differences for countries. The Global Accounting Engine provides an accounting system for Oracle subledger applications that satisfies legal and fiscal requirements in some countries. The Global Accounting Engine replaces the Transfer to General Ledger program that is used in subledger applications to transfer one subledger to one set of books. The Transfer to General Ledger program transfers invoice and payment accounting information, for example, from the subledger to Oracle General Ledger, where journal entries are accounted and stored. With the Global Accounting Engine, journal entries are created and stored as well as accounted for in the AX subledger before the journal entries are transferred to Oracle General Ledger.

Oracle General Ledger

Quick Recap
1. Defining Value Sets Use the Value Sets window to define value sets to control the formatting and characteristics of the segment values associated with each Accounting Flexfield segment. Select Security Available to enable Flexfield value security. Enable Long list to limit selections in lists of values windows. Always use the Char format type for Oracle General Ledger value sets. 2. Defining an Accounting Flexfield Structure Use the Key Flexfield Segments window to define an unlimited number of Accounting Flexfield structures. Use the Segments window to define key Flexfield segments to create the Accounting Flexfield structure.Use the Flexfield Qualifiers window to identify individual Accounting Flexfield segments as the natural account segment, the balancing segment, and the cost center segment. 3. Entering Segment Values Use the Segment Values window to enter values for segments by assigning values to value sets. Create hierarchies by assigning ranges of child values to parent values. For each segment, select Allow Posting and Allow Budgeting. Disable the values that you do not want the users to access. 4. Entering and Disabling Accounts Use the GL Accounts window to enable and disable account combinations. Enable account combinations for posting and budgeting. 5. Creating Flexfield Security and Cross-Validation Rules Use the Define Security Rules window to define Flexfield security rules to control access to ranges of Accounting Flexfield segment values. Use the Cross-Validation Rules window to define cross-validation rules to control the creation of new account combinations. Define Set Of Books to link the 3 Cs. Attach SOB to Responsibility & link Responsibility to USER.

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