Average Balances in Oracle General Ledger

Average Balances in Oracle General Ledger - Page 1 of 16

Contents:

Page 3 – What is the Average Balance (AB) feature in Oracle General Ledger?

Page 3 – Enabling Average Balance Processing for a Specified Set of Books, Setup and Maintenance:

Page 5 - Setting processing options:

Page 6 – Opening a new period:

Page 8 – Average Balance Examples:

Page 9 – Other Considerations using Average Balances –

Page 9 – Multi-Currency Issues:

Page 10 - Conversion
Page 10 - Revaluation
Page 11 - Translation

Page 12 – Reporting on Average Balances:

Page 13 – Consolidations using Sets of books with AB enabled:

Page 14 – Account Inquiry using AB:

Page 16 - Terms

Page 16 – Documentation sources

Average Balances in Oracle General Ledger - Page 2 of 16

What is the Average Balance (AB) feature in Oracle General Ledger?

The AB feature for General Ledger provides the ability to track average and end-of-day balances, report
average balances balance sheets, and create custom reports using both standard and average balances.

The difference between an average and standard balance sheet is that the balances are expressed as average
amounts rather than actual period – end amounts. An average balance is computed as the sum of the actual
daily closing balance for a balance sheet account, divided by the number of calendar days in the reporting
period.

You can maintain and report average balances on daily, quarterly, and yearly period types. You can also
track average balances using effective dates which you can enter for each of your transactions.

General Ledger calculates both average and end-of-day balance amounts. These amounts can be used with
many other General Ledger features, such as translation, consolidation, multi-currency and formula
journals.

You can use General Ledger’s on-line inquiry features to display information about average balances for
specified dates. You can also request standard average balance reports, as well as FSG’s.

Enabling Average Balance Processing for a Specified Set of Books, Setup and Maintenance:

To be able to use the AB functionality in a set of books, you must enable it. After enabling this
functionality, you will not be able to use budgetary control or dual currency options. If using MRC, your
reporting set of books must use AB as well as the primary. Also, once turned on you cannot turn AB off.

Step 1: Define your transaction Calendar:

When you first define this calendar, you specify a name and optional description. Once created, the
calendar will return an entry for every day in the range of dates which exist in your General Ledger. Each
entry includes a date, day of week and business day indicator.

From Name: GLXSTTRC

Navigation: Setup/Financials/Calendar/Transaction

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To be able to use this functionality, you must enable it by selecting the Enable Average Balances option on
the set of books form.
Form Name: GLXSTBKS
Navigation: Setup/Accounting/Flexfield

You will need to define the Average balance Options for your set of books. Choosing the calendar,
transaction rate type and the Translate Optional Amount Type.

The Transaction calendar is used to ensure that transactions are posted only to valid business days.
The Translate Optional Amount types can be End-of-Day (EOD), Quarter Average-To-Date (QATD)
and/or Year Average-To-Date (YATD). The type that is automatically set up is the Period Average-To-
Date (PATD). It is recommended that you use the PATD and one other type. The system will allow you to
use more than two types, but performance will degredate and storage requirements will increase.

Note: The net income account combination that is to be used must be set to non-postable before trying to
assign it. This account is treated as a balance sheet account, but the balance will not roll forward when you
open a new year.

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Setting processing options:

There are two methods you can use to control transaction processing when effective dates fall on non-
business days:

By User: This option can be set by the System Administrator to allow transactions to be posted on non-
business days. This option can be set at the Site, Application, Responsibility, or user level.

This profile option is Journals: Allow Non-Business Day Transactions

The profile option description is: Allows users to enter non-business day transactions
The Application Developer Name is: GL_ALLOW_NON_BUSINESS_DAY
The SQL for this profile option is:

SQL="SELECT MEANING \"Allow Non-Business Day\",

LOOKUP_CODE
INTO :visible_option_value,
:profile_option_value
FROM fnd_lookups
WHERE lookup_type = 'YES_NO'"
COLUMN="\"Allow Non-Business Day\"(30)"

By Source: This option can be set to specify an effective date rule for each source when average balance
processing is enabled. One of three options can be selected.

Leave Alone – accept transaction dates and complete posting.

Fail – reject transactions; no posting.
Roll Date – roll transactions to the nearest valid business day, within the same period, and
complete posting.

Responsibility = General Ledger Super User

GUI Form Name = GLXSTSRC
GUI Navigation = Setup/Journal/Sources

You must use this method to control non-business day processing of automated (imported) journals from
your subsidiary ledger systems.

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Opening a new period:

When you open a new accounting period, General Ledger will prepare the new period for journal entries.
When opening this period with AB enabled, the system will do the following for you:

Populate the aggregates table with PTD, QTD and YTD aggregate balances for each balance sheet
account. As journals are posted these aggregate balances are updated using the effective date to
determine which daily balances to update.

The GL_DAILY_BALANCES table has the following columns:

OPENING_PERIOD_AGGREGATE, OPENING_QUARTER_AGGREGATE,
OPENING_YEAR_AGGREGATE, PERIOD_AGGREGATE1 (to35),
END_OF_DAY1 (to 35), QUARTER_AGGREGATE1 (to 35), YEAR_AGGREGATE1 (to 35)
These last 3 columns are used only for translated balances.

When the period is initially opened, the PTD aggregates are set to zero. The QTD and YTD
aggregates are only initialized if the new period is the beginning of a quarter or a year. Otherwise,
the ending QTD and YTD aggregates from the previous period are carried forward from the
previous period.

When you open a new period, General Ledger rolls net income forward. The beginning balance of
retained earnings is set to the sum of the prior year’s ending balance, plus the ending balance of
the non-postable net income account.

Examples:

Opening the first period of the new set of books that was created, ADB (short name), go to the open close
period form:

Responsibility = General Ledger Super User

GUI Navigation = Setup/Open-Close
GUI form name = GLXOCPER

Open the first period for this set of books, and the period will now look like the following in this form:

Average Balances in Oracle General Ledger - Page 6 of 16

 Looking at the table level for one Income statement account and one balance sheet account we will
find the following balances prior to any journals being posted for this set of books:

An Asset account for this set of books code combination - 01.170.1110.0000

SQL> Select code_combination_id
2 from gl_code_combinations
3 where segment1 ='01'
4 and segment2 = '170'
5 and segment3 = '1110'
6 and segment4 = '0000'
7 and chart_of_accounts_id = 50214;
CODE_COMBINATION_ID
-------------------
17024 another asset account would be 15912

The Retained Earnings account for this set of books - 01.000.3300.0000.000

CODE_COMBINATION_ID
-------------------
23821

The Non-Postable Net Income account for this set of books - 01.000.3400.2270.000
CODE_COMBINATION_ID
-------------------
23822

An Expense account for this set of books - 01.510.6420.0000.000

CODE_COMBINATION_ID
-------------------
16322
The set of books id for the ADB set of books on rtdasol3.1103ev is: 342

Searching the gl_balances for the above ccid’s show the following values:

SQL> Select set_of_books_id "SOB", code_combination_id "CCID",

2 Period_name "Period", period_net_dr, Period_net_cr
3 From gl_balances
4 Where code_combination_id = 17024
5 And set_of_books_id = 342
6 And period_name = 'Jan-98';
no rows selected
Searching the gl_daily_balances for the above ccid’s show the following values:

SQL> Select set_of_books_id "SOB", code_combination_id "CCID",

2 Period_name "Period", opening_period_aggregate "Open Perd",
3 opening_quarter_aggregate "Open Qtr",
4 opening_year_aggregate "Open Year",
5 Period_aggregate1 "Perd1 Agg", End_of_day1 "EOD1"
6 from gl_daily_balances
7 Where code_combination_id = 17024
8 And set_of_books_id = 342
9 And period_name = 'Jan-98';
no rows selected

Average Balance Examples:

Making a 0 value journal for these postable accounts to make sure that a value is created for the above
ccid’s. After making this journal, the script above returns the following values:

The values now return :

Average Balances in Oracle General Ledger - Page 7 of 16

SOB CCID Period period_net_dr Period_net_cr
342 17024 Jan-98 0 0
342 16322 Jan-98 0 0

SOB CCID Period Open Perd Open Qtr Open Year Perd1 Agg EOD1
342 17024 Jan-98 0 0 0 0

We now have an asset account that has a balance of zero. We will make a 1,000 journal for Day1, this is
the only activity that takes place on the first day of the accounting period Jan-98

Dr 01.170.1110.0000.000 (17024) Asset 1,000

Cr 01.000.1110.0000.000 (15912) Asset 1,000

The table values are now:

SOB CCID Period period_net_dr Period_net_cr
342 17024 Jan-98 1,000 0
342 15912 Jan-98 0 1,000

SOB CCID Period Open Perd Open Qtr Open Year Perd1 Agg EOD1
342 17024 Jan-98 0 0 0 1,000
342 15912 Jan-98 0 0 0 -1,000

Day1 Account Balances: Activity End-of-Day-Bal. Aggregate Bal. Average Bal.

CCID 17024 1,000 1,000 1,000 1,000
CCID 15912 -1,000 -1,000 -1,000 -1,000
Calculated Calculated
Note, that on day one the aggregate balance is the same as the end-of-day balance. The average balance
equals the aggregate balance divided by 1, the number of days in the period. The End-of-Day1 field is only
populated with translated balances.

On Day2, the following journal is made:

Dr 01.170.1110.0000.000 (17024) Asset 100

Cr 01.510.6420.0000.000 (16322) Expense 100
The table values are now:
SOB CCID Period period_net_dr Period_net_cr
342 17024 Jan-98 1,100 0
342 15912 Jan-98 0 1,000
342 16322 Jan-98 0 100

SOB CCID Period Open Perd Open Qtr Open Year Perd2 Agg EOD2
342 17024 Jan-98 0 0 0 2,100
342 15912 Jan-98 0 0 0 -2,000

Day2 Account Balances: Activity End-of-Day-Bal Aggregate Bal Average Bal

CCID 17024 100 1,100 2,100 1,050
CCID 15912 0 -1,000 -2,000 -1,000
Calculated Calculated

On Day3, the following journal is made:

Dr 01.510.6420.0000.000 (15912) Asset 200

Cr 01.510.6420.0000.000 (16322) Expense 200

The table values are now:

Average Balances in Oracle General Ledger - Page 8 of 16

SOB CCID Period period_net_dr Period_net_cr
342 17024 Jan-98 1,100 0
342 15912 Jan-98 200 1,000
342 16322 Jan-98 0 300

SOB CCID Period Open Perd Open Qtr Open Year Perd3 Agg EOD3
342 17024 Jan-98 0 0 0 3,200
342 15912 Jan-98 0 0 0 -2,800

Day3 Account Balances: Activity End-of-Day-Bal Aggregate Bal Average Bal

CCID 17024 0 1,100 3,200 1,066.66
CCID 15912 200 -800 -2,800 -933.33
Calculated Calculated
Some explanation of what is occurring –

When you post an entry to a balance sheet account that is in a set of books with ADB enabled, the system
stores aggregate balances for the period types PTD, QTD and YTD. Note that the system does not actually
store average or end-of-day balances. Instead, it performs a calculation when these balances are needed.

Average balance = aggregate balance divided by number of days in the range.

End-of-Day balance = current day’s aggregate balance minus pervious day’s aggregate balance.

Note: The system will track only average balances for actual transactions only. You cannot track budget or
encumbrance transactions.

How are Averages calculated?

Period Average–to-date is calculated by taking the PTD Aggregate Balance divided by PTD Range.
In the example above for CCID 17024 on the 3rd business day: 3,200/3 = 1,066.66

Quarter Average-to-date is calculated by taking the QTD Aggregate balance divided by QTD Range.
The QTD balance is reset to zero at the beginning of each quarter. The first period of the quarter will have
the PTD and QTD being the same.

Year Average-to-date is calculated by taking the YTD Aggregate balance divided by YTD Range.
The YTD balance is reset to zero at the beginning of each year. The first period of the year will have the
PTD, QTD and YTD being the same. All three aggregate balance types should be zero for balance sheet
accounts at the beginning of a new year.

Other Considerations using Average Balances -

Multi-Currency issues:

Oracle General Ledger maintains average balances in the functional currency of the set of books that you
are running AB in. The system will also maintain separate balances for each foreign currency you’ve used
to enter transactions.

Conversion: When entering a journal in a foreign currency it is automatically converted to the

functional currency of that set of books. When posting the journal, the balances will be updated for
the standard balances for the functional and foreign currency. At the same time, aggregate
balances for both the entered(foreign) and converted(functional) amounts are updated. These
balances are used to compute your average balances.

Average Balances in Oracle General Ledger - Page 9 of 16

 Example: Entering a foreign journal entry to an asset account not previously used as follows –
Period Jan-98 Day1 – GBP currency entered and USD functional.

For this example, I set up a daily spot rate for Jan-98 of 1.5 USD to 1 GBP.

Dr 01.000.1330.0000.000 (15904) Asset 100 - GBP

Cr 01.510.6420.0000.000 (16322) Expense 100 - GBP

What the tables show:

The table values are now:

SOB CCID Currency Period period_net_dr Period_net_cr
342 15904 USD Jan-98 66.667 0
342 15904 GBP Jan-98 100.00 0

SOB CCID Currency Period Open Perd Open Qtr Open Year Perd1 Agg EOD1
342 15904 USD Jan-98 0 0 0 66.667
342 15904 GBP Jan-98 0 0 0 100

Day1 Account Balances: Activity End-of-Day-Bal Aggregate Bal Average Bal

CCID 15904 – USD 66.667 66.667 66.667 66.667
CCID 15904 – GBP 100 100 100 100
Calculated Calculated

Revaluation: When you revalue a balance sheet account that is denominated in foreign currency,
a journal entry will be automatically created to record the unrealized gain or loss on the foreign
exchange. When this journal is posted, the standard and corresponding aggregate balances will be
updated.

Example: Fill out the revaluation form to revalue the above account. Note on the following screen
shot, that you have to choose the effective day that you will run the revaluation for. The example
will revalue the above example to .5 USD to GBP.

Responsibility = General Ledger Super User

GUI Navigation = Currency/Revaluation
GUI Form Name = GLXFCRVL

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 This process creates a unposted journal in USD (functional currency) for the following values:

Dr 01.510.6420.0000.000 (16322) Expense 16.667 – USD

Cr. 01.000.1330.0000.000 (15904) Asset 16.667 - USD
Posting this journal, has the following effect on the tables:

The table values are now:

SOB CCID Currency Period period_net_dr Period_net_cr
342 15904 USD Jan-98 66.667 16.667
342 15904 GBP Jan-98 100.00 0

SOB CCID Currency Period Open Perd Open Qtr Open Year Perd1 Agg EOD1
342 15904 USD Jan-98 0 0 0 50
342 15904 GBP Jan-98 0 0 0 100

Day1 Account Balances: Activity End-of-Day-Bal Aggregate Bal Average Bal

CCID 15904 – USD 50 50 50 50
CCID 15904 – GBP 100 100 100 100
Calculated Calculated

Translation: If you choose to translate your accounts, both your standard and average balances
can be translated. Your can translate both balance types in a single translation run. The system
maintains translated balances for each day of an accounting period. When translating each day, the
system multiplies the functional currency average by the average of the daily conversion rates for
the period, up to and including the current day.

Where necessary, you can use historical rates or amounts, rather than the averages daily
conversion rates. When you enter historical rates or amounts for an account:
• You can specify separate values for standard and average balances, or use the same value for
both.
• The system uses the specified value to translate the related balances.

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 • The same historic rate or amount will be used to translate average balances for each day of the
period.

Example: Running translation for the same account for the same day. You can choose Usage when
using AB, and can choose standard, average or both. In this example we will use both.

Responsibility = General Ledger Super User

GUI Navigation = Currency/Translation
GUI Form Name = GLXFCXLT

This will submit a concurrent process request to translate each balance types standard and average.

Quarter and Year Average-to Date Translations:

The translations for the quarter and year averages-to-date are done differently depending on whether the
daily average balances are translated using averages of daily conversion rates or historical rates or amounts.

If Averages of daily conversion rates is used, the averages of the daily rates for all days in the quarter or
year are used. If the Historical rate of amount is used, the average of the historical rate or amount for the
appropriate period is used. It is weighted by the number of days in each period.

Reporting on Average Balances:

You can request standard reports, or define custom reports using the FSG functionality. The standard
reports that you can use are:

Average Trial Balance – provides a listing of standard and average balances for selected accounts. A
sample of the output is below:

Average Balance Audit Report – The report shows the detail activity which created the aggregate balances
and related average balances maintained by the system. This report is only available in 10.7.

Average Balances in Oracle General Ledger - Page 12 of 16

ADB Test Average Balance Trial Balance Report Date: 20-SEP-2000 11:06
As of 01-JAN-1998 Page: 1 of 1

Currency: USD

Company: 01 First National Bank

Period Average Quarter Average Year Average

Account Description Ending Balance To Date To Date To Date
----------------------------- ------------------ ------------------- ------------------- ------------------- -------------------

01.000.1330.0000.000 First National Ban 50.000000 50.000000 50.000000 50.000000

------------------- ------------------- ------------------- -------------------

50.000000 50.000000 50.000000 50.000000

FSG reports can be defined with amount types :

Typically found in the column set, I will define a column set using all three types for the above listed
sample transaction.

ADB Test Date: 20-SEP-00 11:43:37

ADB Test Page: 1
Current Date: 01-JAN-98

currency USD
No specific Company requested
PATD QATD YATD

Test for ADB types 50.000000 50.000000 50.000000

Consolidations using sets of books with AB enabled:

Oracle General Ledger supports consolidations of sets of books, no matter the currencies, accounting
calendars or charts of accounts. You can consolidate in transaction detail or summary. Standard or average
balances can be consolidated at the same or different levels of detail.

When consolidating, the system creates a consolidation journal batch. When posted, this batch will update
your corresponding standard balances and the corresponding consolidated average balances.

When creating a set of books for consolidation, it must have average balancing enabled and be specified as
a consolidating set of books. When specified as a consolidating set of books, the link between standard and
average balances is not enforced. As a result, you can update standard and average balances independently.

Average Balances in Oracle General Ledger - Page 13 of 16

Account Inquiry using AB:

You can inquiry on the account balances for each of your balance sheet accounts by currency and balance
type. The following are screen shots of our sample account that will show the drill down for the different
balance types and currencies.

Responsibility = General Ledger Super User

GUI Navigation = Inquiry Account
GUI Form Name = GLXIQACC

Average Balances in Oracle General Ledger - Page 14 of 16

Using the Inquiry/Average navigation, you can run a inquiry for average balances such as the following
shows:

Notice that the average needs to be run for the day, and not a month period as standard balances are run.

Average Balances in Oracle General Ledger - Page 15 of 16

Terms:

Aggregate Balance: The sum of the end-of-day balances for a range of days. There are three types of
aggregate balances: period-to-date (PTD), quarter-to-date (QTD) and year-to-date (YTD). All three are
stored in the database for every calendar day.

Average Balance: The amount computed by dividing an aggregate balance by the number of calendar days
in the related range.

Back-Value Transactions: Transactions whose effective date is prior to the current accounting date. Also
known as value-dated transactions.

Business Day: Days on which financial institutions conduct business. In the setup, you define which days
are business days and which are not in your transaction calendar.

Consolidation Set of Books: A set of books which has average balance processing enabled and which is
defined as a consolidated set of books. A consolidation set of books must be used to consolidate average
balances using balances to consolidation method.

Effective Date: The date a transaction affects the balances in the general ledger. Does not have to be the
posting date.

End-of-Day Balance: The actual balance of a general ledger account at the end of a day. This balance
includes all transactions whose effective date precedes or is the same as the calendar day.

Period Average-to Date: The average of the end-of-day balances for a related range of days within a
period.

Posting Date: The date a journal transaction is actually posted to the general ledger.

Quarter Average-to-Date: The average of the end-of-day balances for a related range of days within a
quarter.

Standard Balance: The usual and customary period-to-date, quarter-to-date, or year-to-date balance for an
account. The standard balance is the sum of an account’s opening balance, plus all activity for a specified
period, quarter, or year. Unlike average balance, no additional computations are needed to arrive at the
standard balance.

Year Average-to-Date: The average for the end-of-day balance for a related range of days within a year.

Documentation sources:

Overview of Average Balance Processing in Oracle General Ledger for Release 10SC part #A43621-1

Oracle General Ledger User’s Guide Release 11 – part #A58472-01

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