| Oracle Subledger Accounting Implementation Guide Release 12.1 Part Number E13628-04 |  Contents |  Previous |  Next |
Accounting Methods Builder
Accounting Methods Builder (AMB) Overview
The AMB enables you to create and modify subledger journal line setups and application accounting definitions. These definitions define the journal entries that enable an organization to meet specific fiscal, regulatory, and analytical requirements. These definitions are then grouped into subledger accounting methods and assigned collectively to a ledger.
By using the AMB, you can define the way subledger transactions are accounted. The AMB includes the following features that are discussed in this chapter:
-
Accounting options that determine different characteristics of the journal entry
-
Descriptions that appear on the subledger journal header and lines which provide additional information about the journal entry
For example, a subledger journal entry created for a Payables invoice can show the supplier name and invoice number.
-
Account derivation rules to construct the accounts for a subledger journal entry line
Users define various rules in the AMB to determine how a journal entry account is derived. Users can derive accounts segment by segment or as a complete Accounting Flexfield.
-
Conditions that determine when subledger journal entry accounts and lines are created
Some accounts can be used to create a journal entry only in certain circumstances. For example, an asset account can only be used when the Assets flag for an invoice distribution is enabled through the Oracle Payables Invoices window.
The different elements of a subledger journal and their relationships to the AMB are displayed in the diagram below and explained in the subsequent text.
Elements of a Subledger Journal Entry
The AMB includes journal entry setup components to configure each of these elements:
-
Journal Line Types: Control journal entry line options such as balance type, side, and summarization
-
Journal Entry Descriptions: Control the description for the journal entry headers and lines
-
Account Derivation Rules: Control the derivation of Accounting Flexfield combinations for the journal entry lines
The journal entry setup components are associated with journal lines definitions that are attached to application accounting definitions. You can group detailed subledger accounting definitions for different kinds of transactions into consistent sets, each of which addresses different needs. While one application accounting definition can generate subledger journal entries to meet a particular set of requirements, another definition can be defined to satisfy completely different requirements.
To use application accounting definitions, they must be included in a subledger accounting method and then assigned to a ledger. Users can group accounting definitions from multiple products, such as Oracle Payables, Oracle Receivables, and Oracle Assets into a single accounting method. You can assign a subledger accounting method to multiple ledgers.
As an example of these groupings and assignments, consider a set of definitions set up to create accrual accounting for payables in the U.S. These definitions can be grouped into the U.S. Payables Accrual application accounting definition. Accrual accounting application accounting definitions for each application in the U.S., such as U.S. Payables Accrual and U.S. Receivables Accrual, can be grouped into the U.S. Accrual Subledger Accounting Method.
The relationship between the various AMB components are displayed in the diagram below and is described in the succeeding text.
Accounting Methods Builder Components
The above diagram shows how the AMB predefined components, standard sources, event entities, event classes, and event types, can be used to create journal entry descriptions, journal line types, account derivation rules, and mapping sets. The mapping sets are used in the setup of account derivation rules. The journal line types, account derivation rules, and journal entry descriptions are assigned to journal lines definitions. The journal lines definitions and optional journal entry descriptions for the journal headers, are assigned at the application accounting definition level. Application accounting definitions are grouped in a subledger accounting method.
Oracle Applications development provides startup application accounting definitions and at least one subledger accounting method for all products using Oracle Subledger Accounting. If users do not have any special accounting requirements, these startup definitions may meet their needs and the only required setup step is to assign subledger accounting methods to the ledger.
If users have specific accounting requirements that are not met by the startup definitions, they can copy and modify the seeded definitions or create new definitions.
Accounting Methods Builder Process
The Components for Building Accounting Definitions figure below shows the components in the Accounting Methods Builder process for building accounting definitions and is described in the succeeding text.
Components for Building Accounting Definitions
The components in the figure above are used by the Subledger Accounting program to create subledger journal entries. Before creating or modifying any components or definitions, check whether the seeded application accounting definitions meet your requirements. In the event that more detail is required than that provided by the default definitions, modify them or create new ones.
Since the flexibility for creating accounting definitions is dependent on source availability, Oracle subledgers provide standard sources. Create custom sources for use in accounting definitions.
Step 1. Define Journal Line Types
Set up journal line types for a particular event class and determine the characteristics of the subledger journal entry lines. Also, set up conditions for the use of the journal line type.
This is startup data seeded by Oracle. Modify these definitions or create new ones.
See: Journal Line Types
Step 2. Define Journal Entry Descriptions.
Define the journal entry description for the subledger journal entry. Descriptions are assigned to the journal header and lines.
This is startup data seeded by Oracle. Modify these definitions or create new ones.
See: Defining Journal Entry Descriptions
Step 3. Define Mapping Sets.
Use mapping sets in the account derivation rules setup. By mapping input values to different outputs, mapping sets provide flexibility in the creation of account derivation rules. The use of mapping sets is optional.
See: Mapping Sets
Step 4. Define Account Derivation Rules.
Account derivation rules determine the Accounting Flexfields for subledger journal entries. You can also define conditions that determine when a particular rule is used.
This is startup data seeded by Oracle. Modify these definitions or create new ones.
Step 5. Define Supporting References.
Supporting references may be used as follows:
-
to provide additional business information about a subledger journal entry at the header or line level
-
to establish a subledger balance for a particular source value or combination of source values for a particular account
-
to assist with reconciliation of account balances
-
for financial and managerial analysis
The use of supporting references is optional.
See: Defining Supporting References
Step 6. Define Journal Lines Definitions.
Use journal lines definitions to group and assign journal line types, account derivation rules, and journal entry descriptions into a complete set of journal entries within an event class or event type. Share these sets across application accounting definitions for the same application.
The use of journal lines definitions is required.
See: Journal Lines Definitions
Step 7. Define Application Accounting Definitions.
Use application accounting definitions to group journal lines definitions and header assignments for event classes and event types. You can also optionally add one or more supporting references.
Also, indicate whether to create accounting for a particular event class or event type. For example, when using cash basis accounting, you would not create a journal entry to record the accrual of an invoice.
This is startup data seeded by Oracle. Modify these definitions or create new ones.
See: Application Accounting Definitions
Step 8. Define Subledger Accounting Methods.
Group application accounting definitions that comply with a common set of accounting requirements into a subledger accounting method. Each subledger accounting method can be assigned to one or more ledgers.
This is startup data seeded by Oracle. Modify these definitions or create new ones.
See: Subledger Accounting Methods
Copy and Modify Functionality
If you have specific accounting requirements that are not covered by the seeded definitions, use the copy feature included in the AMB to create copies of the seeded definitions and customize them. Also, create new definitions and copy and modify them appropriately.
The copy functionality reduces the need to repeat data entry functions when there are substantial similarities between two definitions. Definitions created by users are not overwritten by upgrades to Subledger Accounting. However, upgrades can still affect definitions if those definitions use seeded components. Use the merge analysis feature to assess whether any upgrades to the AMB impact any user-defined application accounting definitions.
The copy and modify functionality is provided for the following components of the AMB:
-
Subledger accounting methods
-
Application accounting definitions
-
Journal lines definitions
-
Journal line types
-
Account derivation rules
-
Journal entry descriptions
-
Supporting references
Assign custom components only to custom definitions. For example, assign a custom account derivation rule (one that has been copied from an existing account derivation rule and modified) only to a custom journal lines definition. Assign a journal lines definition only to custom application accounting definitions and custom subledger accounting methods.
Use seeded components in custom application accounting definitions.
Transaction and Accounting Charts of Accounts
Both the transaction chart of accounts and the accounting chart of accounts are used extensively in the AMB and are quite distinct. These fields appear in several setup windows.
Transaction Chart of Accounts
The transaction chart of accounts is the chart of accounts for the primary ledger and is referenced when users enter Accounting Flexfields for their transactions. This chart of accounts is employed when users enter and maintain the data required to support the daily operations of a company.
For example, a receivables invoice is recorded in the system. The item, tax, freight, and other Accounting Flexfields that users view and enter for the invoice contain the structure and values from the transaction chart of accounts. Similarly, recording the receipt of goods and invoices as well as the issue of payments are all done in the context of a transaction chart of accounts structure.
Values for Accounting Flexfield sources stored in the transaction objects are taken from the transaction chart of accounts. Use these source values in the AMB account derivation rules and conditions.
Accounting Chart of Accounts
Use the accounting chart of accounts to create the Accounting Flexfields for subledger journal entries. It is taken from the ledger for which the journal entries are created.
Account derivation rules derive accounts for a specific accounting chart of accounts. The creation of all journal entries by Subledger Accounting is therefore done in the context of the accounting chart of accounts.
Note: The transaction and accounting charts of accounts are always the same for the primary ledger. They can be different in cases where users create secondary multiple representations.
Multiple Representations
Assign each subledger accounting method to many ledgers. The combination of a subledger accounting method and ledger is called an accounting representation. The primary ledger reflects the primary accounting representation. In the primary ledger, the transaction and accounting charts of accounts are always the same.
Create multiple accounting representations by using secondary ledgers. Due to regulatory or other requirements, the accounting for these ledgers can be different than the accounting for the primary ledger. Each of these ledgers can have a different subledger accounting method assigned to it and is a secondary accounting representation. Create several secondary representations, each with a different currency, chart of accounts, calendar, and set of accounting definitions. An example of multiple accounting representations is described in the figure below.
Multiple Accounting Representations
Example: Multiple Representations and Transaction or Accounting Charts of Accounts
To illustrate the difference between the two charts of accounts, consider a data entry clerk in a French firm who is creating payables invoices in Payables. This individual creates transactions using the charts of accounts from the French primary ledger. The transactions are then used to create accounting events for accounting. The account code combination used during data entry is from the transaction chart of accounts. For the purposes of the illustration, this chart of accounts has a six segment structure:
-
Company
-
Department
-
Cost Center
-
Account
-
Product
-
Sub-Product
Assume that French local requirements include a statutorily mandated Reporting Chart of Accounts for financial reporting. In most environments, both transaction entry and accounting representation is done in the context of a single ledger. It is normal to create the accounting for this transaction using the same chart of accounts as that used for transaction entry. The Reporting Chart of Accounts is used for both transaction and accounting charts of accounts. These two charts of accounts are always the same in the primary ledger.
In addition to the Reporting Chart of Accounts, assume that the firm requires a detailed Management Chart of Accounts for analytical purposes. This Management Chart of Accounts has a four segment structure:
-
Company
-
Department
-
Cost Center
-
Account
Using the AMB, the firm can create accounting for a secondary representation in a secondary ledger, which is based on a different currency, chart of accounts, calendar, and set of accounting definitions.
In this example, it is assumed that the firm's management requires a different chart of accounts for analytical purposes. This is a secondary representation and uses the Management Chart of Accounts. When accounts and journal entries are created using the AMB, they are created for the accounting chart of accounts. The creation of all journal entries by Subledger Accounting in the secondary ledger is therefore done in the context of this Management Chart of Accounts.
Using the Transaction and Accounting Chart of Accounts
The transaction and accounting charts of accounts are both optional for application accounting definitions and subledger accounting methods. If these charts of accounts are not used, then the AMB uses the chart of accounts assigned to the primary ledger as a default.
You can create application accounting definitions and subledger accounting methods that are completely independent of the transaction and accounting charts of accounts. Oracle uses definitions of this kind for startup data since they are created before the user has decided upon the definition of their charts of accounts.
However, some features of the AMB are dependent on the transaction or accounting chart of accounts. If the transaction chart of accounts is defined, then its individual segments are not available for use in application accounting definitions. If the accounting chart of accounts is not defined, then you cannot set up rules to derive values for individual segments with the exception of Accounting Flexfield qualifier segments.
Assigning the Transaction and Accounting Chart of Accounts
If any component of an account definition is set up with a particular transaction or accounting chart of accounts, then it can only be assigned to an overlying definition with the same transaction or accounting chart of accounts. For example, assign a mapping set defined for an application with a particular accounting chart of accounts only to an account derivation rule with the same accounting chart of accounts.
As another example, if an application accounting definition is defined with a particular accounting chart of accounts, then it must be assigned to a subledger accounting method with the same accounting chart of accounts. Furthermore, you can assign this subledger accounting method only to a ledger with the same matching chart of accounts.
The transaction and accounting charts of accounts cannot be different if the subledger accounting method is to be assigned to the primary ledger. For the setup of a secondary accounting representation, while the accounting chart of accounts must be equal to the chart of accounts used by the ledger, the transaction chart of accounts can be different.
Chart of Accounts Mapping
A chart of accounts mapping is assigned at the ledger level and can be used to map Accounting Flexfield combinations from the transaction chart of accounts to the accounting chart of accounts. When subledger journal entries are generated for multiple representations, a chart of accounts mapping may be necessary to obtain values for the accounting chart of accounts in the secondary ledger.
A chart of accounts mapping is required if the following conditions are met:
-
The transaction chart of accounts is different than the accounting chart of accounts.
-
The account derivation rule is by Accounting Flexfield with a value type of Source.
In this scenario, the account derivation rules create accounts based on the transaction chart of accounts. In the case of the primary ledger, the derived account is the same in both the transaction and accounting charts of accounts, which are the same. However, in a secondary ledger, the account created by an account derivation rule, based in this case on the transaction chart of accounts, has a structure different than that of the secondary ledger's accounting chart of accounts. In this case, you need to map Accounting Flexfield combinations from the transaction chart of accounts to the accounting chart of accounts.
The use of a chart of accounts mapping imposes the following limitation: the level of detail in the transaction chart of accounts must be greater or equal to the level of detail in the accounting chart of accounts. There should be a many to one relationship in the mapping of the transaction chart of accounts to the accounting chart of accounts. One or more Accounting Flexfield combinations from the transaction chart of accounts can be mapped to one and only one combination in the accounting chart of accounts.
Event Model
Accounting events represent transactions that have a financial accounting impact. Examples of accounting events are issuing an invoice and disposing an asset. Financial accounting information can be recorded for these events. Accounting events cannot be compared to system events and programs that update transaction tables; instead they should be analyzed from a business perspective. Events are captured when transactions are committed in the subledgers.
As an example, a Payables invoice is created, then approved, possibly adjusted, and then paid or canceled. The accounting events representing these transactions can create one or more subledger journal entries and subsequently link the originating transaction to its corresponding journal entries.
Accounting events are categorized into event types. Event types are grouped into event classes that in turn are grouped into event entities. These groupings play a prominent role in the setup of the AMB. The definition of several components in the AMB is by event class or event type.
See:
Custom Sources
Extend the list of sources available to application accounting definitions. Using standard and system source values as parameters, write PL/SQL functions that create custom sources.
It is used to extend the list of sources available to application accounting definitions. First, decide your primary goal in defining a custom source. Also be sure to explore other alternatives, as custom source may impact the performance of the create accounting program. If you need to define one custom source, then define a PL/SQL function. In the function, you determine the input and output parameters. The output parameters becomes the return data options that you need to provide the Custom Source page. The name of the PL/SQL function must be provided in the Custom Source page. Provide the input parameters that you need in the PL/SQL function in the Parameters section of the Custom Source page. A custom source's PL/SQL function may use the seeded sources that are available to the application accounting definition or any constant value. You have to define the PL/SQL function in the database.
Defining Custom Sources
In the Custom Sources window, define custom sources using seeded sources and constant values when sources required for the definition of accounting rules are not provided as seeded sources.
The table below describes selected fields in the Custom Sources window.
| Field | Description |
|---|---|
| Enabled | Retains the default to make the source available for use |
| Segment | Marks a source as a segment for an Accounting Flexfield |
| Accounting Flexfield | Marks a source as an Accounting Flexfield. If selected, the Lookup Application, Lookup Type, and Value Set fields are disabled. |
| Lookup Application | Application to associate with a lookup type. If selected, the Value Set field is disabled. |
| Value Set | The list of values includes all enabled independent and table-validated value sets and enforces the following rules:
|
| Seq | Sequence in which parameters are described in the plsql function name |
| Type | Source type |
| Name | Parameter name |
Accounting Attributes Guideline
The accounting program uses accounting attributes values to create subledger journal entries. The types of accounting attributes values are as follows:
-
Values that are subject to special processing or values that are stored in named columns in journal entry headers and lines
Examples of accounting attributes of this type are Entered Currency Code and Entered Amount.
-
Values that control the behavior of the subledger program when processing a specific accounting event or transaction object line
Examples of accounting attributes of this type are Accounting Reversal Indicator and Multiperiod Option.
Each accounting attribute is associated with a level:
-
Header to create subledger journal entry headers
-
Line to create subledger journal entry lines
Accounting Attribute Assignments
The accounting program derives the values of accounting attributes by looking at the sources that are assigned to them. Almost all accounting attributes have sources assigned at the event class level. Depending on the accounting attribute, the accounting attribute assignment defaulted from the event class can be overridden on journal line types or application accounting definitions.
Post-Accounting Programs
A Post-Accounting program is a container for accounting classes. Subledger applications use the Post-Accounting program assignment to determine which journal entry lines to retrieve for a particular process. For example: for mass-additions, Oracle Payables needs to define a Post-Accounting program to identify the journal entry lines that need to be pushed to Assets.
Defining Post-Accounting Programs
In the Post-Accounting Programs window, define Post-Accounting Programs and create assignments that may be associated with a ledger.
In the Accounting Class Assignments window, assign accounting classes to an assignment definition.
Seeded programs and assignment definitions cannot be deleted or updated. You can copy a seeded assignment definition and modify the copy.
To Define Post-Accounting Programs
The table below describes selected fields and buttons in the Post-Accounting Programs window.
| Field or Button | Description |
|---|---|
| Owner | Automatically populated. If seeded by Oracle developers, the owner is Oracle. Otherwise, the owner is User. |
| Primary Application | Defaults from the responsibility |
| Ledger | Ledger to seed ledger-specific assignments; disabled for assignment definitions seeded by Oracle development Enable only one assignment definition for a specific ledger. Assignments created for a specific ledger override the ledger-independent assignments. |
| Enabled | If selected, makes the program assignment available for use |
| Accounting Class | Opens the Accounting Class Assignments window |
Note: The following fields cannot be updated once the record is saved:
-
Program Code
-
Assignment Code
-
Ledger
Downloading Post-Accounting Programs
You can download Post-Accounting Programs using the following syntax:
FNDLOAD <username>/<password>[@connect]0 Y DOWNLOAD @XLA:patch/115/import/xlapgseed.lct <datafile> XLA_POST_ACCT_PROGS APPLICATION_ID=<application_ID>
Business Flows
Use business flows to establish a link between the accounting of transactions that are related both within the same application and across applications. With this link, you can preserve key accounting information across related transactions instead of using the same set of rules to derive this information.
The purpose of business flows is:
-
Preserve General Ledger accounts or segment values across journal entries of related transactions within a business flow
-
Ensure proper General Ledger balances
A business flow is a series of logically related business transactions and their accounting where the creation of one transaction causes the creation of another transaction which itself can result in another transaction.
For example, when goods are received, an invoice is entered and the invoice is paid. The business flow at the transaction level is:
-
The receiving transaction is entered to acknowledge the arrival of the goods.
-
The invoice is entered to acknowledge that the supplier is owed for the goods and therefore references the receipt transaction.
-
The payment is created to satisfy the amount owed on the invoice and therefore references the invoice.
The business flow at the accounting level is:
-
The receipt generates an entry to the purchase order charge account.
-
This entry is offset by an accrual entry representing a future invoice liability.
-
The invoice reverses this accrual entry and creates the invoice liability, and the accounting for the payment reverses the invoice liability and generates the entry reducing the company's cash account.
The diagram below illustrates this example.
Basic Business Flow Example
Note: In the context of business flows, upstream refers to a transaction and its accounting that occurred before the current transaction. Downstream refers to a transaction and its accounting that come after the current transaction. For example, an invoice is upstream from the payment and a payment is downstream from the invoice.
In a business flow, it may be unreliable to copy the General Ledger account entered on an upstream transaction to the current journal entry. This is because the AMB provides the flexibility to override certain Accounting Flexfield values such that the General Ledger account on the transaction is different from the General Ledger account on its journal entry. The accounting side of a business flow is not preserved if the downstream journal entry copies the General Ledger account from the upstream transaction, which was actually accounted to a different General Ledger account.
Additionally, you can implement accounting rules that have identical conditions, but the source values used by these conditions can change between the time of the original entry and the time of the current entry. For example, a source can be a date or a project number.
However, you can copy accounting information from the actual journal entry of a related transaction instead of evaluating the same set of conditions or copying static transaction values. In the AMB, define rules that permit a transaction's accounting to inherit certain values instead of having them determined from sources, rules, or conditions. These values are inherited from either the journal entries of a related transaction in the initial stage of the business flow or from the other side of the current journal line.
Developers provide the identifiers that link transactions in the business flow. These links are provided in the transaction objects. Subledger Accounting uses these links, along with the accounting rules, to determine the means by which accounting data is copied.
Business Flows Features
Business Flow Method
The business flow method specifies how a journal line obtains certain journal entry values including accounting attributes for a journal entry. A business flow method is assigned to a journal line type in the Journal Line Types window.
| Option | Description |
|---|---|
| None | Retains the existing business rules enforced by the Journal Line Types window. This option has no impact on the accounting program and the journal line does not rely on any other journal entry. Journal entries are created using the definitions and conditions assigned to the various journal entry components. |
| Prior Entry | Instructs the Subledger Accounting program to:
|
| Same Entry | Instructs the Subledger Accounting program to build the General Ledger account using segments from the offsetting entry of the current journal line. For example, it provides the option to overlay the balancing segment value on the credit side of the entry with the balancing segment value from the debit side. This option does not copy the accounting attribute values. It provides the ability to copy the journal entry description instead of assigning a separate description. |
Business Flow Class
The business flow class is a user-defined lookup that can be assigned to a journal line type and used by more than one application. The Subledger Accounting program uses the business flow class to identify the journal entry line in the initial stage of the business flow from which current journal entries copy certain journal entry values.
Business Flow Setup Features
Set up business flow features in the following windows:
Journal Line Types Window
Set up the following in the Journal Line Types window:
-
Assign a business flows class to a journal line type
-
Select a business flows method
See: Defining Journal Line Types
Journal Lines Accounting Attribute Assignments Window
The Journal Lines Accounting Attribute Assignments window displays all accounting attributes assigned to an event class. If the Inherit check box is enabled, the values for the selected attributes are inherited and are not available for update or entry.
Journal Lines Definitions Window
Set up the following in the Journal Lines Definitions window:
-
Assign a journal line type to a journal lines definition
-
For Same Entry and Prior Entry, indicate that the journal lines definition inherits the journal entry description for the journal line type
-
For the Same Entry and None business flows method, assign account derivation rules
-
For the Same Entry and None business flows method, optionally inherit accounting segment values
See: To Define Journal Lines Definitions
Business Flows Setup Considerations and Tasks
In setting up business flows, developers and users should perform the following steps:
-
Evaluate accounting dependencies between transactions to understand the accounting relationship between and across accounting events.
In many business flows, it is worth preserving and propagating key accounting data to all transactions within the business flow. For example, developers can use the balancing segment value of a purchase order distribution on both the invoice and payment related to the purchase order.
-
For the purpose of Prior Entry inheritance, evaluate references between related accounting events including links across applications, such as a Purchasing receipt to a Payables invoice, and within the application, such as a Receivables invoice to a Receivables cash receipt.
Applications involved in the accounting of transactions involved in the business flow must agree on a consistent means of identifying distributions.
-
For the Same Entry Method, evaluate accounting needs within a single transaction where key values need to be consistent across both sides of the journal entry for a single transaction.
-
Ensure that a transaction distribution has a means of identifying a single transaction distribution with which it has a one-to-one relationship.
For example, a Payables invoice distribution references only one Purchasing distribution. This information is typically captured during the creation of the transaction at the final stages of the business flow and needs to be at the level of granularity consistent with the accounting of the transaction.
-
Seed necessary lookups for the business flow class.
-
Seed journal line types and journal lines definitions for business flows to act effectively.
-
Include and populate applied to columns in the transaction objects.
Copy from the Prior Journal Entry Business Flow Method Process
The Prior Journal Entry method process is:
-
The Subledger Accounting program uses the applied to accounting attributes to identify the accounting for a transaction or event upstream in the business flow.
-
The Subledger Accounting program searches the accounting event for entries having the same business flow class as the entry currently being created.
Note: In budgetary control mode, the Subledger Accounting program ignores draft entries for business flows since Draft equates to funds checking which does not persist.
-
Upon finding a match, the Subledger Accounting program copies certain values from this entry to the current entry.
Copy from Prior Entry Example
This example includes the following steps based on the purchase order described in the table below which describes two distributions for the purchase order.
| Distribution ID | Distribution Amount | Charge Account | Accrual Account |
|---|---|---|---|
| 1011 | 75.00 | 01-101-Exp | 01-101-Accr |
| 1012 | 25.00 | 01-102-Exp | 01-102-Accr |
-
A receipt for this purchase order is entered and accounted as described in the table below.
Journal Line Types Name Event Class Side Business Flow Method Business Flow Class PO Charges Goods Received DR None NULL PO Accruals Goods Received CR None Purchased Goods -
The Subledger Accounting program uses the journal line types in the table above to create journal entries as described in the table below.
Note: The journal line type used to create an entry is not stored on the entry and it is referenced only for clarity.
Goods Received Accounting Event Entry Line Number PO Distribution ID GL Account Debit Credit Business Flow Class Created Using Journal Line Type 1 1011 01-101 Exp 75.00 NULL PO Charges 2 1012 01-102-Exp 25.00
NULL PO Charges 3 1011 01-101-Accr 75.00 Purchased Goods PO Accruals 4 1012 01-102-Accr 25.00 Purchased Goods PO Accruals Totals 100.00 100.00 The following notes relate to the table above.
-
Lines 1 and 2 were created using the journal line type PO Charges, which does not use business flow functionality and has no business class.
-
Lines 3 and 4 were created using the journal line type PO Accruals, which has no business flow method but does have a business flow class of Purchased Goods that is stored on the resulting lines. It is possible to have a journal line that has no business flow method but does have a business flow class.
-
The GL account for all four lines was created using basic account derivation rules that copy the account from the PO distributions.
-
-
An invoice is entered and matched to the purchase order.
The liability assigned to the invoice is 01-000-Liab. The table below describes the invoice distributions.
Invoice Distributions Distribution Number Distribution ID Distribution Amount GL Account Applied to Distribution ID 1 201 75.00 01-117-Chrg 1011 2 202 25.00 01-118-Chrg 1012 -
The invoice is accounted.
The Subledger Accounting program uses the journal line types described in the table below to create a journal entry for the Invoice Validated accounting event.
Journal Entry for Invoice Validated Account Journal Line Type Name Event Class Side Business Flow Method Business Flow Class AP Accruals Invoice Validated DR Prior Entry Purchased Goods AP Inv Liability Invoice Validated CR None NULL -
The accounting for the invoice creates the journal entry lines described in the table below.
Invoice Validated Accounting Event Entry Line Number Invoice Distribution ID GL Account Debit Credit Business Flow Class Created Using Journal Line Type 1 201 01-101-Accr 75.00 Purchased Goods AP Accruals 2 202 01-102-Accr 25.00 Purchased Goods AP Accruals 3 201 01-000-Liability 75.00 Purchased Goods AP Inv Liability 4 202 01-000-Liability 25.00 NULL AP Inv Liability Totals 100.00 100.00
Lines 1 and 2 of the journal entry of the Invoice Validated accounting event are created as follows:
-
The Subledger Accounting program uses the identifiers in the Applied to Distribution column in the Invoice Distributions table, to find the most recent journal entry for those distributions.
These values are entered in the PO Distribution ID column of the Goods Received Accounting Event Entry table.
-
The Subledger Accounting program searches this entry for lines that have the same business flow class as the current entry.
In this example, PO distributions 1011 and 1012 each occur twice in the journal entry as described in the Goods Received Accounting Event Entry table.
Only lines 3 and 4 of the Goods Received accounting event have the same business flow class as the current lines, which are described in the Invoice Validated Accounting Event Entry table.
-
The Subledger Accounting program copies the GL account in lines 3 and 4 of the Goods Received Accounting Event Entry table, from these lines onto the current lines, which are described in the Invoice Validated Accounting Event Entry table.
Had the General Ledger account described in the Invoice Distributions table from the invoice distributions been used, the accounts credited on lines 3 and 4 of the Goods Received Accounting Event table would never have been reversed leading to unbalanced General Ledger accounts.
Note: There is no special rule used to derive the invoice liability account. The liability account on lines 3 and 4 of the Invoice Validated Accounting Event Entry table are taken directly from the General Ledger account specified on the invoice itself.
Copy from the Same Entry Business Flow Method Process
When the business flow method is Same Entry, specify which accounting segment values should be copied from one side of the current entry to the other side of the current entry. For example, the balancing segment value used on the debit side of an entry can be copied to the credit side.
The purpose of the Same Entry business flow method is to support cases where certain General Ledger account segment values must be preserved throughout the life of the business flow. An example is when the business process requires that a cost center incurring an expense must also bear the invoice liability and cash outlay.
Copy from Same Entry Example
Consider the example described in the table below. For this entry, the General Ledger account for lines 3 and 4 was taken directly from the invoice header. However, this does not spread the liability across the cost center (101, 102) that incurred the cost, which is borne entirely by cost center 000.
| Line Number | Invoice Distribution ID | GL Account | Debit | Credit | Business Flow Class | Created Using Journal Line Type |
|---|---|---|---|---|---|---|
| 1 | 201 | 01-101-Accr | 75.00 | Purchased Goods | AP Accruals | |
| 2 | 202 | 01-102-Accr | 25.00 | Purchased Goods | AP Accruals | |
| 3 | 201 | 01-000-Liability | 75.00 | Purchased Goods | AP Inv Liability | |
| 4 | 202 | 01-000-Liability | 25.00 | NULL | AP Inv Liability | |
| Totals | 100.00 | 100.00 |
It is not sufficient to create an account derivation rule that takes the cost center value from the invoice distributions and overlays it onto the liability account from the invoice header. To do so would result in the Invoice Validated event journal entry described in the table below.
| Line Number | Invoice Distribution ID | GL Account | Debit | Credit | Business Flow Class | Created Using Journal Line Type |
|---|---|---|---|---|---|---|
| 1 | 201 | 01-101-Accr | 75.00 | Purchased Goods | AP Accruals | |
| 2 | 202 | 01-102-Accr | 25.00 | Purchased Goods | AP Accruals | |
| 3 | 201 | 01-117-Liability | 75.00 | Purchased Goods | AP Inv Liability | |
| 4 | 202 | 01-118-Liability | 25.00 | NULL | AP Inv Liability | |
| Totals | 100.00 | 100.00 |
This is incorrect because the cost center values (117 and 118) used on lines 3 and 4 are not the same as those on lines 1 and 2 (101 and 102), which results in an imbalance in all four General Ledger accounts. The values must be copied from actual journal entry lines to ensure that the correct accounts are built.
The correct accounts are shown in the GL Account column in the table below.
| Line Number | Invoice Distribution ID | GL Account | Debit | Credit | Business Flow Class | Created Using Journal Line Type |
|---|---|---|---|---|---|---|
| 1 | 201 | 01-101-Accr | 75.00 | Purchased Goods | AP Accruals | |
| 2 | 202 | 01-102-Accr | 25.00 | Purchased Goods | AP Accruals | |
| 3 | 201 | 01-101-Liability | 75.00 | Purchased Goods | AP Inv Liability | |
| 4 | 202 | 01-102-Liability | 25.00 | NULL | AP Inv Liability | |
| Totals | 100.00 | 100.00 |
To accomplish this, the business flow method on the journal line type AP Inv Liability is changed from None to Same Entry. To create the General Ledger account, the journal lines definition has two rows in the Account Derivation Rules tab: one to derive an entire account (All Segments) and the other enabled to inherit the balancing segment value.
The journal entry is created as follows:
-
The Subledger Accounting program determines that the business flow method on journal line type AP INV Liability is Same Entry. For this journal line type, the Side is Credit as described in lines 3 and 4 of the Invoice Validated Accounting Event Entry table.
-
After the debit side lines are created, the Subledger Accounting program returns to processing the credit lines and uses a basic account derivation rule to get the liability account from the invoice header, which is 01-000-Liab in this example.
-
The Subledger Accounting program copies the cost center segment value on the debit lines and overlays it onto the balancing segment of the credit lines as described in the GL Account column in the Invoice Validated Accounting Event Entry table.
-
The cost center segment values on the invoice distribution, described in the Invoice Distributions table, are not used, thereby maintaining the integrity of the General Ledger account balances for the appropriate cost center segment values from the receiving through the invoicing parts of the business flow.
Invoice Distributions Distribution Number Distribution ID Distribution Amount GL Account Applied to Distribution ID 1 201 75.00 01-117-Chrg 1011 2 202 25.00 01-118-Chrg 1012
Journal Line Types
This section includes the following topics:
Journal Line Types Features
Journal line types are defined for a particular event class. They must then be assigned to a journal lines definition along with supporting references, account derivation rules, and journal entry descriptions.
The definition of a journal line type includes the following features:
-
Subledger Accounting uses rounding class along with the transaction rounding reference to group journal lines tighter and calculate transaction rounding. Subledger transaction rounding differences can occur when a transaction has multiple distributions.
-
The journal entry line can have an actual, budget, or encumbrance balance type.
For products like Oracle public sector applications that use encumbrance accounting, separate journal line types can be created for encumbrance lines.
-
Journal line types specify if the journal line is to be a debit, credit, or gain/loss line.
For example, when a Payables invoice is generated, the liability account should normally be credited. The journal line type must therefore specify the Side option as Credit. On the other hand, the payment of the Payables invoice must be accounted with a debit to the liability account. A separate journal line type must be defined to create this debit line.
The gain/loss amount is the difference in the ledger currency due to foreign currency fluctuations. Gain or loss amounts occur when two related transactions, such as an invoice and its payment, are entered in a currency other than the ledger currency, and the conversion rate fluctuates between the time that the two are accounted.
-
Users can specify whether to merge matching journal entry lines.
-
Users can specify whether the gain or loss has been calculated in the primary ledger so that the gain or loss amount is not converted to the reporting currency or non-valuation method secondary ledgers.
-
Users can specify whether to derive journal entry components from a related journal entry.
The business flow method determines if and how a journal line should inherit journal entry values.
-
Users can specify whether to apply multiperiod accounting to a journal line type.
-
Journal entry lines are transferred to General Ledger in summary or detail mode.
-
Users can define conditions to restrict the use of a journal line type by controlling when a particular journal line type is used by the Subledger Accounting program.
-
Users can assign accounting attributes.
If an accounting attribute is relevant to the accounting event's underlying transaction, then its value is required to generate subledger journal entries for the transaction. By assigning standard sources to accounting attributes in the Accounting Attributes window, you can use standard source values as the values for accounting attributes.
See: Accounting Attributes Guidelineand To Define Journal Line Types
Defining Journal Line Types
This section includes the following sections:
To Define Journal Line Types
The table below describes selected fields and buttons in the Journal Line Types window.
| Field, Region, and Button | Description |
|---|---|
| Application | Automatically populated with the application name associated with the user's responsibility. |
| Line Type Code | Note: Users cannot modify a seeded journal line type or any other seeded component as it could get overwritten in an upgrade. Instead users can copy the seeded type and then modify it appropriately. The copied journal line type has an Owner type of User. The list of values displays the component name and the owner to distinguish between seeded and user-defined components. |
| Name | Appears in the list of values when assigning the journal line type to a journal lines definition. |
| Accounting Class | Shared across applications and enables users to classify journal entry lines. For example, when a receipt is matched to a purchase order and the accrual method is On Receipt, an accrual journal line is created upon receipt creation. When the Payables invoice is matched to a purchasing document, Payables creates a journal line reversing the original accrual. In this case, Purchasing and Payables define journal line types to generate these accruals and both of them can assign the accounting class Accrual. Accounting classes are defined using an extensible AOL lookup type. The list of values for this field contains all accounting classes that are seeded but users can add new accounting classes. |
| Rounding Class | Defaults to the accounting class. The rounding class, along with the transaction rounding reference accounting attribute, groups lines together in order to determine whether rounding is necessary. |
| Enabled | If selected, makes this journal line type available for use. |
| Encumbrance | If this balance type is selected and the business flow method is not Prior Entry, an encumbrance type must be selected from the drop-down list. See: Defining Encumbrance Types, Oracle General Ledger User Guide This field is disabled if Prior Entry is selected as the business flow method or if Accrual or Recognition is selected as the Multiperiod option. |
| Side | A Gain/Loss journal line type creates a debit line for a loss and a credit line for a gain. The gain/loss side journal line type is used exclusively for the gain or loss amount automatically calculated by Subledger Accounting and can only be defined for the actual balance type. Note: For journal line types with a side of Gain/Loss, the following accounting attributes are not displayed in the Accounting Attributes Assignments window when accessed from this window:
Note: If the business flow method Prior Entry or Same Entry is selected, the Gain/Loss option cannot be selected. The Gain/Loss option can only be selected if the business flow method is set to None and the Multiperiod option is also set to None. |
| Switch Debit/Credit | Determines whether negative amounts will result in negative amounts on the same side or positive amounts on the opposite side. Note: If the Side is Gain/Loss, the Switch Debit/Credit field is disabled. |
| Merge Matching Lines | Summarizes subledger journal lines within each subledger entry. Journal entry lines with matching criteria are merged. The possible values are:
Note: Normally, users merge matching lines. However there are some exceptions. For example, in Italy, gain or loss amounts must be recorded for each invoice payment rather than at the total payment level. By setting the merge selection to No, users guarantee that journal entry lines are not merged, even though they are for the same transaction and entry. |
| Subledger Gain or Loss | Yes indicates that gain/loss is calculated in the primary ledger. The gain/loss amount is therefore not converted to the reporting currency and non-valuation method secondary ledgers. Select No for Subledger Accounting to calculate the gain or loss. Note: When Gain or Loss is set to Yes, multiperiod accounting is disabled. |
| Transaction | Transaction chart of accounts. See: Transaction and Accounting Charts of Accounts and Application Accounting Definitions |
| Method | Business flow method If Prior Entry or Same Entry is selected, the Gain/Loss option in the Side region cannot be selected. If Prior Entry is selected, then the following accounting attributes are inherited from an upstream journal entry and cannot be selected or updated in the Accounting Attributes Assignments window:
|
| Class | Business flow class; required if the business flow method is Prior Entry |
| Multiperiod |
Note: When Gain or Loss is set to Yes, multiperiod accounting is disabled and defaults to None. See: Multiperiod Accounting |
| Transfer to GL | Select Detail to maintain the same level of detail as the subledger journal entry line. Select Summary to summarize subledger journal entry lines by Accounting Flexfield. One journal line is created in General Ledger to record the subledger activity. See: Subledger Accounting Setup Options Description |
| Conditions | Opens the Journal Line Type Conditions window. See Defining Conditions for and To Define Journal Line Type Conditions |
| Accounting Attribute Assignments | Note: This button is enabled when the conditions are entered. Opens the Journal Line Accounting Attribute Assignments window.When creating a journal line type, accounting attribute assignments are automatically established based on the default accounting attribute assignments for that journal line type's event class or entity. In the Journal Line Accounting Attribute Assignments window, override this default mapping of standard sources to accounting attributes. The list of values for the Source field contains all header level sources that are assigned by developers to the accounting attribute and event class associated with the journal line type. Users can assign a source to the Reconciliation Reference accounting attribute which is used to meet accounting requirements in continental Europe. |
| Field | Description |
|---|---|
| Inherited | If selected, indicates the values of a selected accounting attribute can be inherited. |
| Source | List of values includes all header level sources assigned to the accounting attribute and event class associated with the journal line type. Note: You can assign a source to the Reconciliation Reference accounting attribute, which is used to meet accounting requirements in continental Europe. |
Defining Conditions for Journal Line Types
To set conditions appropriately, specify the journal line types that the Subledger Accounting program uses to create a subledger journal entry.
For example, set up a condition to create journal entries using a particular journal line type only if the distribution line has the Oracle Assets' tracking option set to No. As another example, an inventory transaction to record transfers could be accounted using journal line types for material overhead.
Use sources to create these conditions. For example, the condition for use of a Payables Invoice Tax journal line type could be Where line type = Tax. Similarly, the condition for a Receivables Invoice Tax journal line type could be Where account class = Tax. The line type and account class mentioned here are examples of sources.
Journal line type conditions establish whether a journal line type and its associated account derivation rules and journal entry descriptions are to be used in the subledger journal entry. Use account derivation rules to specify how an account is constructed. Associated account derivation rule conditions define the conditions under which these accounts are built.
See: Account Derivation Rules Conditions
Examples of Journal Line Type Conditions
This section describes the following examples:
-
Example 1: Using the Value of a Source to Set up a Journal Line Type Condition
-
Example 2: Using Multiple Conditions with the And/Or Operator
Example 1: Using the Values of a Source to Set Up a Journal Line Type Condition
This example describes how to create a journal line type to account for an invoice price variance (IPV). Due to changes in price, Payables uses the IPV to account for the difference between purchase order price and invoice price.
Consider an IPV journal line type. A condition is defined and attached to this journal line type, to ensure that the IPV is applied only to IPV lines. This condition can be expressed as follows:
Where
Distribution Type of the detailed distribution line = IPV.
| Seq. | ( | Source | Segment | Operator | Value Type | Value | Seg- ment | ) | And/Or |
|---|---|---|---|---|---|---|---|---|---|
| 1 | ( | Distribution Type | = | Constant | IPV | ) |
Now consider a case where an invoice is entered and approved. The invoice involves variance distribution lines that need to be accounted. Assume the presence of a distribution line with a Distribution Type of IPV and another with a line type of tax.
| Source | Distribution Line 1 | Distribution Line 2 |
|---|---|---|
| Distribution Type | IPV | Tax |
| Distribution Line | Journal Entry Line |
|---|---|
| Distribution Line 1 | IPV journal line type is used to create a subledger journal entry line. |
| Distribution Line 2 | IPV journal line type is not applied. |
For distribution line 1, a journal entry line for the IPV is created based upon the journal line type. Note that a separate journal line type and condition must be written to handle the non-IPV line type.
Example 2: Using Multiple Conditions with The And/Or Operator
This example involves multiple conditions that can be set up with the use of the And/Or operator. Consider requirements as follows:
For cost center #420, the gain/loss on retirements from the sale of assets must use a specific journal line type.
This condition can be expressed as follows:
Where
Cost Center of the asset retired = 420 And Retirement Type = Sale
Based on the above, the account derivation rule is entered as follows:
| Seq. | ( | Source | Segment | Operator | Value Type | Value | Segment | ) | And/Or |
|---|---|---|---|---|---|---|---|---|---|
| 1 | ( | Distribution Account | Cost Center | = | Constant | 420 | ) | And | |
| 2 | ( | Retirement Type | = | Constant | Sale | ) |
To Define Journal Line Type Conditions
-
In the Journal Line Types window, click Conditions.
-
In the Seq field, enter a Sequence number.
The details of the condition are created from left to right according to this number. This number does not necessarily correspond to the evaluation of the condition, as parenthesis and logical operators precedence can affect the order.
-
In the ( field, use the "(" and ")" symbols for grouping a section of a condition.
This is useful when a condition spans multiple lines with the And/Or operators.
-
In the Source field, select a source value.
Source values are seeded by the subledger application or custom application but access to the custom sources defined is also provided. This value is the first operand in the condition line.
-
In the Segment field, if the source is a key flexfield or an Accounting Flexfield, optionally select the segment.
The table below describes the relationship between the Source and the Value Type fields based on the transaction chart of accounts.
Transaction Chart of Accounts Nature of Source Segments in List of Values Null Accounting Flexfield All Accounting Flexfield qualifiers Not Null Accounting Flexfield All segments for the transaction chart of accounts N/A Key Flexfield All segments for the key flexfield and flexfield structure given by the source -
In the Operator field, select an operator to evaluate the condition.
-
In the Value Type field, select the value type of the second operand that is evaluated in the condition line.
The value types are:
-
Source: This includes any source defined for the application. The source can be seeded by Oracle or it can be a custom source.
-
Constant: Choose this value type for a comparison with constant values.
The table below describes the relationship between the source and the value type fields based on the transaction chart of accounts.
Transaction Chart of Accounts Nature of Source Value Type Null Accounting Flexfield Can only be Source Not Null Accounting Flexfield Can be Source or Constant N/A Key Flexfield or any other source Can be Source or Constant
When defining a condition, you can compare one data source with another data source by using the comparison operator, for example, '=' or '<>'. In some cases, the value of one side of the data source could be null or blank when the extract data contains no value for the specific source that is being compared. In such cases, Subledger Accounting will return 'TRUE' or 'FALSE' depending on which comparison operators are used and which data source is being compared as shown in the table below.
Condition Expected Value null source = constant or a non-null source false null source <> constant or a non-null source true null source = null source true null source <> null source false -
-
If the Segment field to the left of the Independent Value field has a dependent segment and the value type is Constant, in the Independent Value field, enter the value of the segment that the dependent segment is based upon.
This is the value for the independent segment in the key flexfield that the dependent segment value is based upon. For example, the following condition, described in the table below, requires users to choose an independent value before choosing a value for the dependent segment.
Source Segment Operator Value Type Independent Value Value Asset Category Flexfield Minor Category = Constant BUILDING ADMINISTRATION -
In the Value field, enter a value as follows:
-
If a value type of Constant is selected, then enter a value for the constant and this value is used as the second operand to evaluate the condition.
-
If a value type of source is selected, then select an Accounting Flexfield code combination identifier or any other source value from the list of values for this field.
The table below describes the relationship between the source, segment, value type, and Value field.
Source Segment Value Type Value Field List of Values Key Flexfield Not populated Constant Complete key flexfield combination Key Flexfield Populated Constant Values for the segment selected Any other source N/A Constant Values based on value set or lookup type if specified for the source Key Flexfield Not Populated Source All key flexfield sources Key Flexfield Populated Source Includes all segment and key flexfield sources Segment N/A Source All segment sources Any other source N/A Source All sources of matching data type
-
-
If a value type of Source and a value that represents an Accounting Flexfield code combination identifier are entered, optionally select a segment name in the Segment field.
This segment value is used as the second operand in the condition line.
-
In the ) field, use AND/OR values to concatenate two lines together when making complex conditions.
Typically, the AND takes precedence over the OR. Parenthesis are only required to overwrite this precedence. As an example, consider a condition that should use a particular account derivation rule if the following are true:
-
The Assets' tracking option is Yes AND.
-
The cost is less than $200 or the supplier is ABC.
Not only must the Assets' tracking option be Yes, but either or both of the remaining two conditions must also be true.
This condition utilizes the bracket operators as follows:
(Asset Tracking option = Yes) AND ((Amount < 200) OR (Supplier = ABC))
-
Copying Journal Line Types and Their Associated Conditions
See Copy and Modify Functionality.
Note: If entering a transaction chart of accounts, the journal line type that is created supports this chart of accounts.
This field can only be entered if the line type being copied does not have a chart of accounts already assigned to it. If it does, the new line type that is created inherits the assigned chart of accounts and users cannot change the value.
If copying a nontransaction chart of accounts specific journal line types to a transaction chart of accounts specific journal line type, Subledger Accounting replaces any reference to Accounting Flexfield qualifiers in the conditions with the actual segment names for the qualifiers in the transaction chart of accounts. If no corresponding segment exists, an error message appears.
Defining Journal Entry Descriptions
Use the Journal Entry Descriptions window to define the elements of a description that appear on the subledger journal header and line. The definition determines both the content and sequence in which the elements of the description appear.
Build descriptions using any of the available sources for the application. For example, an individual segment of an Accounting Flexfield can be included in the description. Use literal strings or a combination of both sources and literals. Some of the sources can only be used for descriptions applied at the line level. For example, a source associated with invoice line number can only be applied to a line description.
Assign journal entry descriptions headers and lines in the Applications Accounting Definition window.
To Define a Journal Entry Description
The table below describes selected fields in the Journal Entry Descriptions window.
| Field | Description |
|---|---|
| Application | Defaults from the application associated with the responsibility |
| Owner | Automatically populated. Value is Oracle for seeded components. Value is User for components created on site by users. |
| Transaction Chart of Accounts | Chart of accounts used to input and create transactions See: Transaction and Accounting Charts of Accounts |
| Enabled | Retain the default to make the description available for assignment to application accounting definitions |
| Priority | Users can create more than one priority number for a journal entry description, each one with its own conditions and details. Description details are evaluated in ascending priority order, where the highest priority has the lowest number until a condition is met. For performance reasons, use the most commonly met descriptions first. Change the order in which description details are evaluated by updating the priority number instead of deleting and rewriting the descriptions. Once the conditions associated with a detail line are satisfied, the value from that line is used and other lines are ignored. See: Journal Entry Description Conditions If none of the conditions are met, enter a last line with no conditions associated to it. Because Subledger Accounting uses this line as a default, assign the lowest priority to this line. The Journal Entry Description field displays a concatenation of the elements of the description created in the Journal Entry Description Details window as described in To Define Journal Entry Description Details. |
To Define Journal Entry Description Details
Use the Journal Entry Description Details window to create the journal entry description that users see. Define the description content and the sequence in which it appears.
A journal entry description that uses sources that have values which vary by line cannot be assigned as a header level description.
| Field | Description |
|---|---|
| Seq. | Number for ordering the elements of a description Use this field to quickly change the order of appearance of the journal entry description contents. |
| Constant | If Constant is selected in the Value Type field, enter text to be used in the journal entry description. For example, enter Check Number or Invoice Number. By defining several lines, users can use multiple sets of constant strings in the description definition. These can be concatenated with a source, as described in the Source field, and appear according to the sequence number of the line. |
| Source | Note that the source selected serves as a placeholder. When the journal entry is created, this source value is replaced with appropriate source content. For example, the source Supplier Name populates the journal entry description with the actual name of the supplier. The same logic applies if the source is an Accounting Flexfield segment. |
| Segment | Define which segment value appears in the accounting description. If a transaction chart of accounts is specified, the list of values for this field displays the name of all the segments. If there is no transaction chart of accounts specified, the list of values displays the flexfield qualifiers available in General Ledger. |
| Display Description | Displays the segment description for an accounting flexfield segment source. |
Journal Entry Description Conditions
Create journal entry description conditions in the same manner as described in Defining Conditions for Journal Line Types.
Copying Journal Entry Descriptions
See: Copy and Modify Functionality and Copying Journal Line Types.
Mapping Sets
Use mapping sets to associate a specific output value for an Accounting Flexfield or Accounting Flexfield segment. Based on the input value, a specific value can be assigned to a single segment or to the entire Accounting Flexfield. Use mapping sets in account derivation rules to build the Accounting Flexfield.
To define a Mapping Set, pairs of values are specified. For each input value, specify a corresponding account segment or Accounting Flexfield output value. One or more related pairs of these input values and segment or Accounting Flexfield output values form a mapping set. Use value sets or lookup types for validating the input values of the mapping set.
For example, it is possible to create a mapping set based on two input values, Yes and No. Apply these input values to determine the balancing segment value of an account: 01 if the input value is Yes and 02 if it is No. Use this mapping set in one of the rules that builds the segment values of an account. The rule compares the value of a source to see if it is Yes or No and determines the segment value accordingly.
As another example, suppose a business has three major regions: East, South, and West. Assume also that the business has a Region Code segment in the Accounting Flexfield. Region names can be input values in applications such as transaction type names and service codes. These input values can be included with other information about the transaction and become part of the source information available to the AMB. Users can create a mapping set that maps region names to the corresponding region code as described in the table below.
| Input Value | Segment Value |
|---|---|
| East | 01 |
| South | 02 |
| West | 03 |
It is possible to restrict a mapping set to a range of dates by entering the start and end dates. The GL date of the potential subledger entry is compared to the effective date range of the mapping set. This determines whether mapping set values should be applied.
Defining Mapping Sets
Prerequisite
Using value sets and lookup types prevents data entry errors when entering input values. If planning to use either value sets or lookup types to validate the input values, they must be defined before setting up mapping sets. If neither a value set nor a lookup type is selected, users can enter any value in the Input Value field.
See: Overview of Values and Value Sets, Oracle Applications Flexfields User Guide
To Define Mapping Sets
| Field | Description |
|---|---|
| Enabled | If selected, makes the mapping set available for use |
| Type region | Based on this selection, the mapping set is defined for the setup of the entire Accounting Flexfield, an individual segment in the flexfield, or a value set. The Flexfield and Segment options are disabled if the accounting chart of accounts is not specified. The Value Set option is disabled if the accounting chart of accounts is specified. |
| Segment | If selected, enter the segment to be used to assign a value the mapping set. |
| Value Set | If selected, select the value set. |
| Value Type | If the Value Type is Input, then enter an input value. If Input is selected and a value set or lookup type is defined, then the list of values includes all the allowable values defined for the lookup type or value set. Use the value type Default in cases where the source value from the transaction is not equal to any of the input values in the mapping set. If a mapping set is used and the Subledger Accounting program encounters accounting definitions with undefined input values, journal entries cannot be successfully generated unless there is a default. Using the example introduced earlier in this section, if there is a source value equal to Northwest, it would not map to any of the input values. Specify a default value of 04 for any regions not included as input values. This prevents entries from failing validation when the Subledger Accounting program is submitted. |
| Input Value | If the value type Input is selected, enter an input value to be mapped to a corresponding output value. |
| Output Value | For a given input value, enter the corresponding output value. The account derivation rule uses this value to populate either the accounting flexfield or accounting flexfield segment. If the Value Set option in the Type region is selected, the output value is an individual value from the value set entered in the Value Set field of the Type region, and the list of values includes all values from this value set. In the case where a mapping set is defined to populate an individual segment value, the output value is an individual segment value and the list of values includes all values for the segment entered in the Segment field. If the Accounting Flexfield option in the Type region of the Mapping Sets window is selected, then the output value is the entire Accounting Flexfield and the list of values includes all enabled combinations for the accounting chart of accounts. |
| Start Date and End Date | Effective range dates for the mapping set |
| Enabled | If selected, makes the mapping set values available for use. |
Mapping Sets Examples
Example 1.
When using the mapping set, the source values from the invoice includes the Small Business Option value. This is compared with the Mapping Set Input Values to determine the output segment value. Assume two transactions with the following values described in the corresponding tables.
-
In this example, assume that if procurement is from a small business supplier, then cost center 100 should be used. A mapping set is defined with two input values Yes and No as described in the following table.
Example 1 Mapping Set Input Value Output Value Yes 100 No 200 The first invoice is for the purchase of goods and services from a small business vendor. Therefore, the input value is Yes.
-
The supplier of the second invoice does not meet the criteria to be categorized as a small business. Therefore the Input Value is No.
The output segment value is therefore derived as described in the following table.
| Invoice | Cost Center |
|---|---|
| 1 | 100 |
| 2 | 200 |
Example 2
In this example, the chart of accounts is setup with four segments. A mapping set is defined with a value set for Supplier Type as described in the following table.
| Input Value | Output Value |
|---|---|
| Services | 01-100-6120-000 |
| Consulting | 01-400-6110-000 |
Assume that two invoices are entered into Payables, one for a supplier with a type of Services and one for a supplier with a type of Manufacturing.
When using the mapping set, the source value Supplier Type from the accounting event data is compared with the Mapping Set Input Values to determine the Accounting Flexfield. In this example, there is a match for the first case; the invoice with a supplier type of Services maps to an Input Value. However, the invoice with a supplier type of Manufacturing does not map to an input value. The accounts are derived and described in the following table.
| Invoice | Supplier Type | Output Value |
|---|---|---|
| 1 | Services | 01-100-6120-000 |
| 2 | Manufacturing | No account generated |
Note: To ensure that Transaction 2 is accounted for, the account derivation rule to which this mapping set is assigned may have to be modified. If not, a separate rule can be defined to provide for it. Otherwise, it cannot be successfully accounted.
Account Derivation Rules
Use account derivation rules to determine the Accounting Flexfields for subledger journal entries. In addition, specify the conditions under which these rules apply. Using these capabilities, develop complex rules for defining accounts under different circumstances to meet their specific requirements.
Define a rule by Accounting Flexfield, segment, or value set. If the rule is by Accounting Flexfield, the rule determines the entire Accounting Flexfield combination. For example, an account derivation rule defined by Accounting Flexfield can be used to determine the complete supplier liability Accounting Flexfield in Payables.
Define segment rules to derive the Accounting Flexfield segment by segment. For example, a particular segment like the company segment can be determined from the Distribution Accounting Flexfield. Another segment can be determined with the use of a constant value. Creating the Accounting Flexfield one segment at a time offers greater flexibility but also requires more setup.
You can use both segment-based and flexfield-based rules to derive a single account. Subledger Accounting uses segment-specific rules where they are defined and takes the remaining values from a flexfield-based rule. For example, a user can select an account derivation rule which is for All Segments and also separately select a rule which is for one particular segment. Subledger Accounting derives accounts based upon segment-specific rules and then fills in the remaining segments with the rule that specifies All Segments. Segment-specific rules take precedence over the All Segments flexfield-based rule.
If the Create Accounting program returns an account that is end-dated or disabled and a substitute account is defined in General Ledger, Subledger Accounting uses the substitute account. The original account is stored on the journal line for audit purposes. If the substitute account is invalid and a suspense account is defined, Subledger Accounting uses the suspense account. An error message is displayed if a valid suspense account is not available.
See: Adding or Changing Individual Accounts, Oracle General Ledger User Guide
Define account derivation rules based on value sets in the absence of an accounting chart of accounts.
See: Overview of Values and Values Sets, Oracle Applications Flexfield Guide
Share account derivation rules across applications in the following ways:
-
Assign an account derivation rule from the same or a different application to a journal line type in the Journal Lines Definitions window
For example, to derive an expense account for journal line type Expense, assign the Projects Cost Account derivation rule owned by Projects to the Payables journal line type Expense.
-
Create an account derivation rule based on another account derivation rule from another application and assign it to a journal line type
For example, create a new account derivation rule Invoice Expense Account referencing Project Cost Account assigned in the Priorities region. Attach Invoice Expense Account rule to the journal line type Expense in the Journal Lines Definitions window.
Note: To share an account derivation rule across applications, all sources used by the account derivation rule must be available for the event class.
When an account derivation rule is assigned to a journal line type in the Journal Lines Definition window, Subledger Accounting verifies whether all sources used by the account derivation rule are available for the journal line type event class.
Accounting Flexfield Rules
Set up Accounting Flexfield rules based upon four possible Value Types as follows:
-
Source value type
For Accounting Flexfield rules, all the code combination identifiers from the transaction chart of accounts that have been setup as sources are available to create the account. Derive the account combination by specifying a source such as the Distribution Account in the rule. The Subledger Accounting program then obtains the account by referencing the distribution Accounting Flexfield.
The transaction or accounting chart of accounts does not need to be known when this type of rule is defined. If no chart of accounts is specified, the value derived from the source uses the default chart of accounts for the subledger application.
-
Constant value type
Establish the account as a constant value. For example, the constant could be the account combination 01.000.2210.0000.000 from the accounting chart of accounts specified. This is the simplest way to derive an account.
-
Mapping Set value type
Derive the account combination by referencing a mapping set. Set up a mapping set rule to determine the complete account combination from the accounting chart of accounts specified.
Note: An accounting chart of accounts must be specified for rules using either constants or mapping sets.
-
Account Derivation Rule value type
Derive the account by referencing another account derivation rule. You cannot select account derivation rules that already have an assigned account derivation rule.
The transaction or accounting chart of accounts does not need to be specified when defining this type of rule. If the account derivation rule has an accounting chart of accounts, then all account derivation rules that are assigned must have the same or no chart of accounts.
When the value type is Account Derivation Rule, select only account derivation rules with matching output types.
Segment Rules
Set up segment rules as follows:
-
When an accounting chart of accounts is specified, create a rule to derive a specific segment from the accounting chart of accounts.
-
If the accounting chart of accounts is not specified, create a rule to derive the value for an Accounting Flexfield qualifier.
Set up segment rules using the same four methods discussed for Accounting Flexfield rules. By specifying different value types, users can choose the way in which the segment value is derived.
-
Source value type
For Segment rules, all sources defined for the application are available. If the source is an Accounting Flexfield, take the value from a particular segment of the transaction chart of accounts. For example, derive a segment value from the cost center segment of the liability Accounting Flexfield.
In addition, use sources that are not Accounting Flexfields. For example, take the value for a Project segment from a Project Number source.
Use sources that are marked as Accounting Flexfield qualifiers and use them to derive the value for the segment.
Note: When creating rules for an Accounting Flexfield qualifier, only sources that are marked as Accounting Flexfield sources or the same Accounting Flexfield qualifier segment as the qualifier specified for the rule can be selected.
-
Constant value type
Establish the segment value as a constant. For example, the company segment can be set to 01.
-
Mapping Set value type
Use a mapping set to determine the value of the segment. For example, using a mapping set that maps supplier types to departments, the supplier type can determine the department segment value.
Note: An accounting chart of accounts must be specified for rules using either constants or mapping sets.
-
Account Derivation Rule value type
Derive the account by referencing another account derivation rule. You cannot select account derivation rules that already have an assigned account derivation rule.
The transaction or accounting chart of accounts does not need to be specified when defining this type of rule. If the account derivation rule has an accounting chart of accounts, then all account derivation rules that are assigned must have the same or no chart of accounts.
When the value type is Account Derivation Rule, select only account derivation rules with matching output types.
Value Set Rules
Value set based rules can be created when an accounting chart of accounts is not specified. This enables you to share the same rule between more than one accounting chart of accounts if the segments in these chart of accounts share the same value set. Set up Value Set based rules using the same four methods discussed in Accounting Flexfield Rules. By specifying different Value Types, you can choose the way in which the segment value is derived.
-
Source value type
For Value set based rules, all sources that are data type Alphanumeric and are not marked as Accounting Flexfields or Accounting Flexfield qualifiers are available.
-
Constant value type
Establish the segment value as a constant. This list of values is based on the value set defined for the rule.
-
Mapping Set value type
Use a mapping set to determine the value of the value set based rule. In this case, the mapping set must be created for the same output value set as the value set for the account derivation rule.
-
Account Derivation Rule value type
Derive the account by referencing another account derivation rule. You cannot select account derivation rules that already have an assigned account derivation rule.
The transaction or accounting chart of accounts does not need to be specified when defining this type of rule. If the account derivation rule has an accounting chart of accounts, then all account derivation rules that are assigned must have the same or no chart of accounts.
When the value type is Account Derivation Rule, select only account derivation rules with matching output types.
Account Derivation Rules Examples
Since no conditions are used in these examples, assume there is just a single detail account derivation rule line with priority one.
Accounting Flexfield Rules Examples
-
Using a mapping set to derive an Accounting Flexfield
Consider a mapping set Vendor Category, which assigns the following accounts based on input vendor category described in the following table.
Accounting Flexfield Rules Example 1: Mapping Set Vendor Category Input Value Output Value Manufacturing 01-100-2210-0000 Services 01-200-2210-0000 Consulting 01-300-2210-0000 For the given transaction, assume that the accounting event information includes a Source called Supplier Type. This serves as the Mapping Set Input Source. The account derivation rule is defined to use the mapping set as described in the following table.
Accounting Flexfield Rules Example 1: Account Derivation Rule Mapping Set Priority Value Type Value Input Source 1 Mapping Set Vendor Category Supplier Type To derive an account, the values of the Mapping Set Input Source specified in a rule are compared with the input values of the mapping set. In this example, Mapping Set Input Source values from the accounting event information include the Supplier Type source values. These are now compared with the Vendor Category input values to determine what the account should be.
Assume that the accounting event data of the transaction to which the account derivation rule is applied has a value for the Source Supplier Type of Manufacturing. The account built by the Subledger Accounting program is derived by applying the account derivation rule to the transaction object data. Using the mapping set defined, if the supplier type is Manufacturing, the account created is 01-100-2210-0000.
-
The assignment of segment qualifiers to an account derivation rule enables users to create accounts with a single consistent mechanism.
Segment Rules Examples
-
Using a specific source segment to derive the value of a different segment in a different chart of accounts.
In this example, a segment rule is created to derive the cost center segment of the Accounting Flexfield. The structure of the charts of accounts is described in the table below.
Segment Rules Example 1: Chart of Accounts Structure Chart of Accounts Name Structure Transaction Italy Balancing-Cost Center-Natural Account-Region Accounting Belgium Balancing-Cost Center-Natural Account The account derivation rule is defined to derive the cost center segment value from the Region segment of the Distribution Accounting Flexfield. Note that the account is always derived for the accounting chart of accounts.
The table below describes the account derivation rule for Example 1.
Segment Rules Example 1: Account Derivation Rule Priority Value Type Value Segment 1 Source Distribution Account Region Assume that the data from the Italy transaction chart of accounts has the following values for the distribution Accounting Flexfield:
02-640-2210-1234
The segment built by the Subledger Accounting program is determined by applying the account derivation rule to the source values. According to the account derivation rule, the segment to be used to derive the cost center segment of the accounting chart of accounts is the Region segment, which has a value 1234.
Note that other segment rules must be defined to build the remaining segments of the account.
-
Using a source to derive the value of a segment in a different chart of accounts.
In this example, the transaction chart of accounts is not entered. Once again, a segment rule is set up to derive the cost center segment. Assume that the charts of accounts are given as described in the following table.
Segment Rules Example 2: Charts of Accounts Chart of Accounts Name Structure Transaction (Blank) (Blank) Accounting Belgium Balancing-Cost Center-Natural Account The account derivation rule is set up as described in the following table.
Segment Rules Example 2: Account Derivation Rule Priority Value Type Value Segment 1 Source Distribution Account The segment built by the Subledger Accounting program is determined by applying the account derivation rule to the source values. A segment value from the Distribution account cannot be chosen because the transaction chart of accounts is not known but a segment qualifier can be selected. Note that the account is always derived for the accounting chart of accounts.
When the Subledger Accounting program is run, if the transaction chart of accounts is the same as the accounting chart of accounts, then the resulting segment value in the Belgium chart of accounts mirrors the cost center segment value from the Distribution Account in the transaction chart of accounts.
For secondary environments, where the transaction and accounting charts of accounts are different, the segment value is determined by the chart of accounts mapping.
See: Chart of Accounts Mapping
Note that other segment rules must be defined to build the remaining segments of the account.
Defining Account Derivation Rules
Note: Oracle strongly recommends that users do not modify a seeded rule or any other seeded component as it could get overwritten in an upgrade. Instead, copy a seeded rule and then modify it appropriately. The modified rule has an Owner type of User.
When users select rules and other components from a list of values in AMB windows, the name as well as the Owner of the component is displayed. This enables users to distinguish between seeded and user-defined components.
To Define Account Derivation Rules for Accounting Flexfields
The following procedure describes selected fields.
-
Navigate to the Account Derivation Rules window, and in the Find Account Derivation Rules window, click New.
The application name defaults from the application associated with the responsibility.
The Owner field is automatically populated by Subledger Accounting. For components seeded by Oracle, the value is Oracle. For components created on site by users, the value is User.
-
Retain the default for the Enabled check box which is selected to make the account derivation rule available for use for any application with reference objects used in this account derivation rule and accounting chart of accounts.
-
In the Chart of Accounts region, select values for the charts of accounts.
If a value for the accounting chart of accounts is not selected, users can create an account derivation rule for an Accounting Flexfield qualifier, an Accounting Flexfield, or a value set.
Note: Account derivation rules seeded by Oracle user are independent of the accounting and transaction chart of accounts.
The table below describes the accounting chart of accounts configuration.
Accounting Chart of Accounts Configuration Accounting Chart of Accounts Accounting Flexfield Rule Segment Rule Value Set Rule Null Value type must be Source and it must be an Accounting Flexfield or account derivation rule. Value type must be source and the nature of the source can be Accounting Flexfield or segment of an Accounting Flexfield. Value type can be Source, Mapping, or Constant. Entered Value type can be Source, Mapping Set, Constant, or Account Derivation Rule. Value type can be Source, Mapping Set, or Constant. Not allowed -
In the Output Type region, select the option that the account derivation rule will be based on.
-
If the output type Segment is selected, in the Segment field, select a segment from the list of values.
If the accounting chart of accounts is specified, the list of values includes all enabled segments for the chart of accounts. If the accounting chart of accounts is not specified, the list of values includes all segment qualifiers for the flexfield application and title.
-
If the output type Value Set is selected, in the Value Set field, select a value set from the list of values.
-
In the Priority field, enter a priority number.
Rules are evaluated in ascending order, where the highest priority has the lowest number, until a condition is met. It is advantageous to list the most commonly met rules and conditions first. The order in which rules and conditions are evaluated by updating the priority number instead of by deleting and rewriting detail lines can be changed. Once the conditions associated with a detail line are satisfied, the value from that line is used and other lines are ignored.
See: Account Derivation Rule Conditions
To handle the case in which none of the conditions are met, enter a last detail line with no conditions associated with it. As AMB uses this line as a default, assign the lowest priority to this line. Once a segment has a valid value, it cannot be overwritten and AMB proceeds with the building of the next segment value.
-
To specify the method of deriving the Accounting Flexfield or segment value, in the Value Type field, select a value type.
-
In the Value field, enter the value consistent with the value type selected.
The table below summarizes the relationship between accounting chart of accounts, output type, value type, and values in the Value field.
Accounting Chart of Accounts Output Type Value Type Value Field Values Null Flexfield Source All enabled sources for the application marked as Accounting Flexfield Null Accounting Flexfield Qualifier Source If creating an account derivation rule for Accounting Flexfield: all enabled sources for the application marked as Accounting Flexfield plus sources marked as the Accounting Flexfield qualifier corresponding to the segment to be derived in the account derivation rule Null Value Set Source If creating an account derivation rule for Accounting Flexfield: all enabled sources for the application marked as an Accounting Flexfield qualifier or Other that have the same value set Null Value Set Mapping Set All enabled mapping sets with the same value set Null Value Set Constant List of values from the value set Null Value Set Account Derivation Rule All account derivation rules with no account derivation rule assigned to it Not Null Flexfield Source All enabled sources for the application marked as Accounting Flexfield Not Null Flexfield Mapping Set All enabled mapping sets with the same accounting chart of accounts and whose output type is Flexfield Not Null Flexfield Constant All enabled combination for the accounting chart of accounts Not Null Flexfield Account Derivation Rule All account derivation rules with no account derivation rule assigned to it are available. Not Null Segment Source If creating an account derivation rule for Accounting Flexfield: all enabled sources for the application marked as Accounting Flexfield plus sources marked as the Accounting Flexfield qualifier corresponding to the segment to be derived in the account derivation rule plus sources marked as the Other segment Not Null Segment Mapping Set All enabled mapping sets with the same accounting chart of accounts and whose output type has the same segment as the segment to be derived in the account derivation rule Not Null Segment Constant All segment values for the accounting chart of accounts and segment Not Null Segment Account Derivation Rule All account derivation rules with no account derivation rule assigned to it -
If value type Mapping Set is selected, in the Input Source field, select the source name to be compared with the mapping set input value.
-
If output type Segment and value type Source are selected, in the Segment field, select the segment from which the value is to be taken.
The Segment field can be entered if the nature of source in the Value field is Accounting Flexfield or key flexfield or the nature of the input source is Accounting Flexfield or key flexfield.
Account Derivation Rules Conditions
In the Account Derivation Rules Conditions window, specify conditions for each rule detail line. Priorities determine the order in which account derivation rule conditions are examined. Depending on which of the defined conditions is met, a different account derivation rule detail is employed to create the account.
The Subledger Accounting program evaluates conditions based on the priority of the rule detail. If the conditions for a priority are met and the associated rule detail results in a valid account or segment value, no further priorities are evaluated. Otherwise, the Subledger Accounting program evaluates the conditions for the next priority until a valid account or segment value is derived or there are no more conditions to evaluate.
You can combine Accounting Flexfield rules with segment rules. In this case, Subledger Accounting uses the segment value derived from the segment rule to override the corresponding segment of the Accounting Flexfield. However, if the segment rule has conditions associated with the priorities and none of the conditions are met, no override occurs and therefore the segment value is derived from the Accounting Flexfield rule.
Account derivation rules conditions are created in the same manner as described in Defining Conditions for Journal Line Types.
Lookup Types
If a source is a lookup code, Subledger Accounting displays its corresponding meaning in the appropriate language when it is used in header and line descriptions or supporting references. Also, when defining conditions in the AMB, Subledger Accounting displays the translated meaning to the user and stores the untranslated lookup code. Since the untranslated lookup code is used in conditions, conditions can function independently of the language used by the ledger.
Lookup types:
-
Reduce the number of source values that need to be stored in the transaction object
-
Help prevent errors by displaying valid, user friendly LOV names for sources that are lookup codes
-
Overcome many of the restrictions associated with translated sources
Account Derivation Rules Conditions Examples
The following example illustrates the value of specific sources to set up an account derivation rule Condition.
Consider a rule HQ Capital Purchase as follows:
The rule is to be applied only if the distribution account cost center is the same as the liability account cost center and the Assets' tracking option is Yes. This condition can be expressed as:
Where
Distribution.Cost Center = Liability.Cost Center and
Asset Tracking option = Yes
The following tables describe the setup of the condition.
| Seq. | ( | Source | Segment | Operator | Value Type | Value | Seg- ment | ) | And/Or |
|---|---|---|---|---|---|---|---|---|---|
| 1 | ( | Distribution Account | Cost Center | = | Source | Liability Account | Cost Center | ) | And |
| 2 | ( | Asset Flag | = | Constant | Yes | ) |
Now assume that the accounting event data, to which the account derivation rule and therefore the condition is applied, has two rows of data to be processed with the values described in the following table.
| Account | Invoice 1 | Invoice 2 | Asset Flag |
|---|---|---|---|
| Distribution Account | 02-640-2210-1234 | 01-780-6120-0000 | Yes |
| Liability Account | 01-640-2210-0000 | 02-782-2210-0000 | Yes |
In the table above, assume the cost center segment as the second segment. Based on this set up, the account derivation rule is applied to derive the account of Invoice 1 only. For the second invoice, even though the Assets' tracking option is set to Yes, the cost center for the Distribution account and Liability account are not the same. Both conditions must be met in order for the rule to apply.
Supporting References
Define supporting references to store transaction information on your journal entry. You can choose to maintain balances for each account and supporting reference detail value combination.
After the supporting reference is defined, assign it to the application accounting definition on the journal line types or on the header for event class and type. The accounting program will then associate values from the transaction to the journal entry created, based on your application accounting definition. You can also enter supporting references for manual journal entries. Use the online inquiry to view the account balances for a specific ledger and supporting reference.
Supporting References Example
Example: A user decides to capture the Project Number on the Invoice Expenses lines, and defines and assigns a supporting reference on the journal line type Invoice Expense in the line assignments for the event class Invoices. The Subledger Journal Entry Exampledescribes the subledger journal entry that is booked.
| Event Class/Event Type | Journal Line Type | Account | Amount | Supporting Reference: Project Number |
|---|---|---|---|---|
| Invoice/All | Invoice Expense | 01-100-4001-0000 | $400 | 100 |
As a result, $400 is added to the subledger balance for the account 01-100-4001-0000 and the project number 100. It is possible to execute an online inquiry on the subledger balances by project number for the account 01-100-4001-0000.
Users can also define supporting references without associated balances. These are mainly used as journal entry references and can be assigned at the journal entry header or line levels. In contrast, supporting references defined with balances can only be assigned at the line level.
Supporting References Setup
The following steps describe how to set up supporting references.
-
Step 1: Create the Supporting References
-
Step 2: Assign Sources to the Supporting References Details
-
Step 3: Include the Supporting References in the Header and/or Line Assignments of the Journal Lines Definition
-
Step 4: Validate the Application Accounting Definition
Step 1: Create the Supporting References Supporting references facilitate account analysis, reporting, and reconciliation by enabling users to break down their subledger balances in totals and subtotals. A supporting reference comprises one or more pieces of transaction information, each of which can be used to calculate a subtotal or total of the account balance.
Users must complete the following task to create a supporting reference:
Users must decide what type of information they would like to capture on journal entries and how they would like their account balances to be subtotaled and totaled.
Example 1: users determine that they want to have subtotals by transaction types and by salesperson for a revenue account. Therefore, they set up Transaction Type and Salesperson as supporting reference details.
The account balance breakdown using this grouping order is described in the table below.
| Account #01-100-3000-0000 - Sales Revenue | Total |
|---|---|
| Transaction Type: Consulting Sales | |
| Total for Salesperson: Bill Smith | $4,000 |
| Total for Salesperson: Sue Davis | $6,000 |
| Transaction Type: Software Sales | |
| Total for Salesperson: Barry Hopkins | $6,500 |
| Total for Salesperson: Sue Davis | $1,000 |
Example 2: Users determine that they want subtotals by project number, by project expenditure types and by project task number for an expense account. Therefore, they set up Project Number and Project Expenditure Types as supporting reference details.
In this example, there is no subtotal for Project 2010 and expenditure type Television Ads. This would occur because no subledger journal entry lines have been posted to account 01-100-4000-0000 for this combination of Project Number and Expenditure Type.
| Account #01-100-4000-0000 - Advertising Expense | Total |
|---|---|
| Project Number: 1000 | |
| Total for Expenditure Type: Television Ads | $2,000 |
| Total for Expenditure Type: Radio Ads | $6,000 |
| Project Number: 2010 | |
| Total for Expenditure Type: Radio Ads | $6,000 |
Step 2: Assign Sources to the Supporting References DetailsAfter users have decided the supporting references structure, they must select the sources that provide the values for the supporting references details. Each supporting reference detail can have one or more sources associated. A single source can be assigned for each application and event class that affects the account balance. This is particularly relevant when the supporting reference is used across different applications.
Example 1: Users want to break down the balance of an asset account by asset category. The source for this value in Oracle Assets can be called Asset Category, while in Oracle Projects it can be called Project Asset Category. Therefore, both sources need to be assigned to the support reference details for the applications Assets and Projects respectively.
Example 2: Users want to create a supporting reference for an inventory account to analyze the balance by inventory item. The source storing the inventory item for a purchase order can be called Purchase Order Item, while the one storing the item for a material receipt can be called Receipt Item. Therefore, both sources need to be assigned to the supporting reference detail, for the event classes corresponding to Purchase Orders and Material Receipts respectively.
Step 3: Include the Supporting Reference in the Header and/or Line Assignments in the Journal Lines Definition An organization can use the same general ledger account to record activity from different applications, event types and journal line types. This is especially true when the same general ledger account is used in different parts of a business cycle. To support this requirement, Subledger Accounting provides users with the ability to assign a supporting reference to multiple event classes, event types, and journal line types. This also allows the supporting reference to be independent from the general ledger accounts so that users need not know in advance all the accounts that are used in combination with certain supporting references.
Example 1: Users want to create a supporting reference to analyze revenue from Projects Billing and Account Receivables, which share the same account. Therefore, the same supporting reference must be assigned to all combinations of event class, event type, and journal line type that affects the revenue account from either Project Billing or Account Receivables.
Example 2: Users want to create a supporting reference to analyze capital projects expenditures by asset category. Therefore, the supporting reference must be assigned to all combinations of event class, event types, and journal line type used for capital expenditures in Projects as well as to all the ones used for asset additions, transfers, and retirements in Assets.
Example 3: Users want to create a supporting reference to analyze an inventory account by inventory item. Therefore, the supporting reference must be assigned to all combinations of event class, event type, and journal line type used for inventory purchase in Payables as well as to all the ones used for inventory issuances and cost adjustments in Oracle Inventory and Cost Management.
Step 4: Validate the Application Accounting Definition Once users have completed the supporting reference assignments, the application accounting definition must be validated so that the changes are taken into account.
To validate an application accounting definition, the user navigates to the Application Accounting Definitions window and clicks Validate. This submits a concurrent process that validates the application accounting definition and recreates the underlying database stored procedures. Once this concurrent process completes, the status of the application accounting definition changes to Valid. This indicates that the modified definition can now be used to generate subledger journal entries.
Year-End Carry Forward
For supporting references for which balances are maintained, users can specify whether the balances at the end of a fiscal year are carried forward to the next fiscal year. The alternatives are as follows:
-
Always: The supporting reference balances at the end of the fiscal year are always carried forward to the next fiscal year.
-
Never: The supporting reference balances are reset to zero at the beginning of a new fiscal year.
-
Based on Account: The ending supporting reference balances for balance sheet accounts (accounts whose account type is Asset, Liability, or Owner's Equity) are carried forward to the next fiscal year, while they are reset to zero for income statement accounts (accounts whose account type is Expense or Revenue).
Defining Supporting References
Use the Supporting References page to search for existing supporting references or navigate to the Create Supporting References page to define a new supporting reference and assign one or more sources to the details. You can define a maximum of five supporting reference details.
To define supporting references:
-
Navigate to the Supporting References window.
-
Click Create.
-
In the Code field, enter a unique code for the supporting reference using a combination of upper case letters, digits, underscores and no spaces.
-
In the Name field, enter a name for the supporting reference.
-
In the remaining fields, optionally enter information as required.
-
Click Add detail.
-
In the Detail Code field, enter a unique detail code for the supporting reference detail.
-
In the Detail Name field, enter a name for the supporting reference detail.
-
In the Description field, optionally enter a description for the supporting reference detail.
-
To assign a source to the selected supporting reference detail, click Assign Sources.
You can search for sources defined for a particular application or event class and search by source name in the Assign Sources page.
-
Enter search criteria and click Go.
-
Select one or more sources from the search results and click Apply to assign the sources to the supporting reference detail.
The Supporting References page appears confirming that the supporting reference has been updated.
Updating Supporting References
Use the Update Supporting Reference page to modify existing supporting references.
To update supporting references:
-
Navigate to the Supporting References window.
-
Enter search criteria as required.
-
Click Go.
-
Click the Update icon next to the supporting reference you wish to update.
Note: The Update icon is disabled if the supporting reference is defined by Oracle, since Oracle-defined supporting references cannot be updated.
-
Make changes as required in the Update Supporting References page.
Note: You cannot update the Maintain Balances, Year End Carry Forward, and Stored Value options if the supporting reference is assigned to any application accounting definition.
Duplicating Supporting References
To duplicate supporting references:
Note: You can duplicate the supporting reference details or both the details and the source assignments.
-
Navigate to the Supporting References window.
-
Enter search criteria as required.
-
Click Go.
-
Click the Duplicate icon next to the supporting reference you wish to duplicate.
-
In the Duplicate Supporting Reference Options page, enter the code and name of the new supporting reference.
-
Choose whether to copy the details or the details and the source assignments.
If you choose the details option, the detail code, name, and description are copied from the original supporting reference. Source assignments are not copied.
If you choose the details and source assignments option, both supporting reference details and the source assignments are copied.
-
Click Continue.
-
Assign sources as required.
-
Click Apply.
A confirmation page indicates that you have successfully copied the supporting reference.
Deleting Supporting References
To delete supporting references:
Note: Supporting references cannot be deleted if they are assigned to an application accounting definition or if they have already been used on journal entries.
-
Navigate to the Supporting References window.
-
Enter search criteria as required.
-
Click Go.
-
Click the Delete icon next to the supporting reference you wish to delete.
Note: The Update icon is disabled if the supporting reference is defined by Oracle, since Oracle-defined supporting references may not be updated.
-
A warning message will ask if you are sure that you want to delete the supporting reference, click Yes to continue or No to cancel.
Journal Lines Definitions
Use journal lines definitions to create sets of line assignments for an event class or event type. These sets can be shared across application accounting definitions.
In the Journal Lines Definitions window, you can:
-
Assign account derivation rules, supporting references, and descriptions to journal line types
-
Define multiperiod accounting rules for a journal line type
Journal Lines Definitions Examples
Example 1
A public sector agency buys computer equipment for $10,000. Besides accounting for the purchase, the agency wants to set aside money to cover for its replacements. The required journal entries are described in the table below.
| Equipment | Debit | Credit |
|---|---|---|
| DR Computer Equipment | $10,000 | |
| CR Account Payable | $10,000 | |
| DR Fund Balance | $10,000 | |
| CR Reserve for Capital Equipment | $10,000 |
To achieve the above journal entries, two journal lines definitions are required as described in the following tables.
| Journal Line Type |
|---|
| Expense |
| Liability |
| Journal Line Type |
|---|
| Fund Balance |
| Reserve for Equipment |
Example 2
This example describes how to allocate an invoice's liability amount across multiple balancing segments on the invoice distributions.
The Accounting Flexfield structure is Balancing Segment-Cost Center-Account. The default liability account for supplier site ABC is 000-000-2300. If automatic offsets using the balancing method are enabled, an invoice entered for supplier site ABC is distributed as described in the table below.
| Account | Debit | Credit |
|---|---|---|
| DR Expense 101-200-1245 | $30 | |
| DR Expense 201-300-3045 | $50 | |
| CR Liability 101-000-2300 | $30 | |
| CR Liability 201-000-2300 | $50 |
To achieve the above journal entry, the journal line definition is defined as described in the table below.
| Journal Line Type |
|---|
| Expense |
| Liability |
The Liability journal line type requires the following account derivation rules:
| Segment | Account Derivation Rule Name |
|---|---|
| All Segments | Liability Account |
| Balancing Segment | Invoice Distribution Balancing Segment |
Defining Journal Lines Definitions
Prerequisites
Define the following:
To Define Journal Lines Definitions
This procedure describes selected fields in the Journal Lines Definitions window
-
Navigate to the Journal Lines Definitions window, and in the Find Journal Lines Definitions window, click New.
The application name defaults from the application associated with the responsibility.
The Owner field is automatically populated. For components seeded by Oracle, the value is Oracle. For components created on site by users, the value is User.
-
Retain the default for the Enabled check box, which is selected, to make the journal lines definition available for use for this application and the selected chart of accounts.
-
To indicate that the journal lines definition is to be used only if the Create Accounting program is run in budgetary control mode, select the Budgetary Control check box.
-
To assign a journal line type to an event type, in the Journal Line Type field, select a journal line type.
The Owner field is automatically populated based on the journal line type selected.
-
To inherit the journal line description from another journal line, select the Inherit Description check box.
This check box is enabled only if the business flow method of the journal line entry is Prior Entry or Same Entry. If this check box is selected, the Line Description and Owner fields are disabled and cleared of any data.
-
In the Line Description field, enter the journal entry description to be used to populate the subledger journal entry lines.
The list of values includes all journal entry descriptions for the application to which the event class belongs that meets the following condition:
-
All sources used by the journal entry description have been assigned to the event class associated with the journal lines definition.
The Owner field is automatically populated based on the line description entered.
-
-
To use this line assignment to generate subledger journal entries, select the Active check box.
-
In the Line Assignments region, select an accrual journal line type and click Multiperiod Accounting Assignment to define the multiperiod journal entry and the multiperiod options.
-
Select the Account Derivation Rules tab.
-
In the Segment field, select an Accounting Flexfield segment or All Segments.
If entering an accounting chart of accounts for the journal lines definition, the list of values includes all segments in the Accounting Flexfield structure. Otherwise, the list of values includes the following Accounting Flexfield qualifiers:
-
All Segments
-
Balancing Segment
-
Natural Account Segment
-
Cost Center Segment
-
Management Segment
-
Intercompany Segment
If assigning both segment and Accounting Flexfield rules to a journal line type, segment rules take precedence over Accounting Flexfield rules enabling users to overwrite specific segments from the chart of accounts. If defining only qualifier segments in the Account Derivation Rules tab, the rule assignment is not complete. Define an assignment for All Segments.
Alternately, select a segment and build the Accounting Flexfield one segment at a time. A separate account derivation rule must be applied to each segment.
-
-
If the business flow method is Same Entry for the journal line type, to inherit the value in the Segment field from one side (debit or credit) of the current entry to the other, select the Inherit check box.
If this field is selected, the Rule Name, Owner, Description, and Side fields are blank.
-
In the Rule Name field, select the account derivation rule to populate the complete Accounting Flexfield or a particular segment based on the value for the Segment field.
The list of values includes all account derivation rules associated with the application for which the journal lines definition is created which meet the following conditions:
-
All sources used by the account derivation rule are assigned to the event class associated with the journal lines definition.
-
If the value All Segments is selected in the Segment field, the list of values includes only Accounting Flexfield rules.
For segment rules, account derivation rules that map to the particular segment or account derivation rules with a value set that maps to the particular segment, the accounting chart of accounts matches the one entered for the journal lines definition and the segment name matches the one entered in the Segment field. If no accounting chart of accounts is specified, the Accounting Flexfield qualifier associated with the segment rule matches the one entered in the previous field.
The Owner and Description fields are automatically populated based on the account derivation rule selected.
The list of values includes the following:
-
All account derivation rules associated with the application for which the journal lines definition is created
-
Sources that belong to the event class for which the line assignment is created and which meet the conditions described in the table below.
Transaction Chart of Accounts Accounting Chart of Accounts Segment Rule Name Null Null All Segments List of values includes all account derivation rules with no transaction and accounting chart of accounts and if the output type of the account derivation rule is Flexfield. Null Null Accounting Flexfield Qualifiers List of values includes all account derivation rules with no transaction chart of accounts and if the output type of the account derivation rule is the Accounting Flexfield qualifier. Null Not Null All Segments List of values includes all account derivation rules with no transaction and null or the same accounting chart of accounts as used by the accounting application definition and if the output type of the account derivation rule is All Segments. Null Not Null Segments List of values includes all account derivation rules with no transaction chart of accounts and the following:
- no accounting chart of accounts if the output type has the same segment
- no accounting chart of accounts, and whose output type is value set and that have the same value set as the one used by the Accounting Flexfield segment
- same accounting chart of accounts, and whose output type is segment and that have the same segment as the one selected in the Segment fieldNot Null Null All Segments List of values includes all account derivation rules with the same transaction chart of accounts used by the journal lines definition or no transaction chart of accounts and no accounting chart of accounts and whose output type is Flexfield. Not Null Null Accounting Flexfield Qualifiers List of values includes all account derivations rules with the same transaction chart of accounts used by the journal lines definition or no transaction chart of accounts and no accounting chart of accounts and whose output type has the same segment qualifier as the one selected in the Segment field. Not Null Not Null All Segments List of values includes all account derivation rules with the same transaction chart of accounts used by the journal lines definition or no transaction chart of accounts and no accounting chart of accounts or the same accounting chart of accounts used by the journal lines definition and whose output type is Flexfield. Not Null Not Null Segments List of values includes all account derivation rules with the same transaction chart of accounts used by the journal lines definition or no transaction chart of accounts and the following:
- no accounting chart of accounts and whose output type has an Accounting Flexfield qualifier that matches the one assigned to the segment
- no accounting chart of accounts and whose output type has a value set that matches the value set used by the segment
- same accounting chart of accounts and whose output type is the same segment -
-
Select the Supporting References tab to assign a supporting reference to the journal line type.
-
In the Name field, select the appropriate supporting reference.
The Owner and Description fields are automatically populated based on the supporting reference selected.
Upgrade Account Derivation Rules Tab
Users can enter account derivation rules for Prior-Entry business flow journal line types referring to non-upgraded journal entries. This tab is displayed only for federal installation when the FV: Federal Enabled profile option is enabled.
See: Profile Options, Oracle U.S. Federal Financials Implementation Guide
To Copy a Journal Lines Definition
See: Copy and Modify Functionality
| Field | Description |
|---|---|
| Transaction | Optionally, if the journal lines definition that is being copied has no transaction chart of accounts assigned to it, select a transaction chart of accounts; otherwise, the transaction chart of accounts defined in the Journal Lines Definitions window defaults to this field. |
| Accounting | Optionally, if the journal lines definition that is being copied has no accounting chart of accounts assigned to it, select an accounting chart of accounts; otherwise, the accounting chart of accounts defined in the Journal Lines Definitions window defaults to this field. Note: If there is no accounting chart of accounts, users cannot copy the journal lines definition to a specific chart of accounts if qualifiers used in the account derivations rules do not have a segment in the new accounting chart of accounts. |
| Copy Line Assignments | Copies all line assignments to the journal lines definition |
| Display After Copy | Automatically displays the new journal lines definition |
Copying Journal Lines Definitions Across Chart of Accounts
You cannot copy the Journal Line Definitions (JLD) across Chart of Accounts as the line assignments are dependent on the Transaction and Accounting Chart of Accounts. For example, two Journal Line Types (Test Item Expense and Test Item Liability) are created with both the Transaction and Accounting Chart of Accounts (COA) as Operations Accounting Flex. And, two Account Derivation Rules (Test Item Expense Rule and Test Item Liability Rule) are defined with the same Transaction and Accounting chart of account attached to it.
Now define the journal lines definitions with different Transaction and Accounting chart of account, with Services Accounting Flex, then the above two journal lines definitions and account derivation rules are not available in the Line Assignments or the Account Derivation Rules tab. Therefore, when you define the journal lines definitions (Test Accrual) with the Transaction and Accounting chart of account as same as the above journal lines definition and account derivation rules that is Operations Accounting Flex and assign the two journal lines definitions and account derivation rules respectively.
The same rule applies to the Copy functionality. When you copy the journal lines definitions along with the Line Assignments, you cannot change the Transaction and Accounting chart of accounts because the copied journal line definitions and account derivation rules are created with the Transaction and Accounting chart of account of the old Journal Lines Definition. To copy the Journal Lines Definition with different Transaction and Accounting Chart of Account, then copy the Journal Lines Definition without enabling the Copy Line Assignments option. In this case, the application copies only the header information without line assignments and you can enter different Transaction and Accounting Chart of Accounts such as Services Accounting Flex.
Multiperiod Accounting
Multiperiod accounting enables users to create accounting for a single accounting event for more than one GL period. The functionality is primarily used to recognize revenue or a prepaid expense or revenue across multiple GL periods.
Multiperiod Accounting Process
The figure below is described in Multiperiod Accounting Process Steps.
Multiperiod Accounting Process Flow
Multiperiod Accounting Process Steps
The multiperiod accounting process includes the following steps:
-
In the Journal Line Accounting Attributes Assignments window, assign sources for the following accounting attributes:
-
Multiperiod: Specifies whether a journal line type is eligible for multiperiod accounting
-
Multiperiod Start Date: Date to begin multiperiod accounting
-
Multiperiod End Date: Date to end multiperiod accounting
-
-
In the Journal Line Types window, define the journal line types to be used for multiperiod accounting by setting the multiperiod option.
See: To Define Journal Line Types
-
In the Journal Lines Definitions window, complete the following:
-
Assign the accrual journal line type
-
Navigate to the Multiperiod Accounting window to define the multiperiod options
In the Multiperiod Accounting window, users define the multiperiod options.
-
-
In the Line Assignments window, define the multiperiod line assignments as follows:
-
Update the line description for the accrual journal entry line type, which defaults from the Journal Lines Definitions window
-
Assign the recognition journal line types
-
Assign account derivation rules
-
-
Create transactions in subledger applications.
For example, a company may receive a Payables invoice in January for the cost of services for a whole year. However, the company must recognize the expense during the period the expense is incurred. The company enters the originating invoice in Payables to record its receipt.
-
Submit the Create Accounting program to create the originating journal entry as well as the multiperiod entries.
-
Periodically, submit the Complete Multiperiod Accounting program to complete incomplete recognition journal entries as their periods become open.
-
Once the multiperiod journal entries are processed, view the multiperiod journal entries in the inquiry pages for subledger journal entry headers, subledger journal entry lines, and accounting events.
Multiperiod Accounting Example
A company must prepay rent for the year. $1,200,000.00 must be paid on December 31, 2005. However, the company needs to recognize the expense over a twelve month period as shown in the table below.
| Total Expense | / | Number of Months | = | Amount Recognized Each Month |
|---|---|---|---|---|
| $1,200,000.00 | / | 12 | = | $100,000.00 |
Assume that the multiperiod accounting duration is from 1-Jan-06 to 31-Dec-06 and that the multiperiod accounting options are as follows:
-
Number of journal entries: one per period
-
GL Date: first day of the GL period
-
Proration method: 360 days
The table below describes the schedule to expense $100,000.00 each month over the next twelve months.
| Period | Amount |
|---|---|
| January 2006 | $100,000.00 |
| February 2006 | $100,000.00 |
| March 2006 | $100,000.00 |
| April 2006 | $100,000.00 |
| May 2006 | $100,000.00 |
| June 2006 | $100,000.00 |
| July 2006 | $100,000.00 |
| August 2006 | $100,000.00 |
| September 2006 | $100,000.00 |
| October 2006 | $100,000.00 |
| November 2006 | $100,000.00 |
| December 2006 | $100,000.00 |
The following journal entry is created with GL Date 31-DEC-2005 to record the prepaid rent expense.
| Account | Entered DR | Entered CR | Account DR (USD) | Account CR (USD) |
|---|---|---|---|---|
| Prepaid Rent Expense | $1,200,000.00 | $1,200,000.00 | ||
| Liability | $1,200,000.00 | $1,200,000.00 | ||
| Total: | $1,200,000.00 | $1,200,000.00 | $1,200,000.00 | $1,200,000.00 |
The following journal entry with GL date 01-JAN-2006 recognizes the rent expense for January.
| Account | Entered DR | Entered CR | Account DR (USD) | Account CR (USD) |
|---|---|---|---|---|
| Rent Expense | $100,000.00 | $100,000.00 | ||
| Prepaid Rent Expense | $100,000.00 | $100,000.00 | ||
| Total: | $100,000.00 | $100,000. | $100,000.00 | $100,000.00 |
During the ensuing eleven months, the journal entry shown in the table above will be created to recognize the monthly rent expense as it is incurred.
Defining Multiperiod Accounting
Prerequisites
Define the following:
To Define Multiperiod Accounting
-
In the Line Assignments region of the Journal Lines Definitions window, select the accrual journal line type which will create the originating entry and click Multiperiod Accounting.
The Definition Name and Journal Line Type fields default from the Journal Lines Definitions window.
-
Enter data as described in the table below.
Field Description Header Description Description for the header of recognition entries Number of Journal Entries Number of multiperiod journal entries to be created. Options are: -
One: One multiperiod journal entry is created to recognize the entire accrual amount.
Note: If this option is selected, it is not possible to select a proration type since only one journal entry is created for the entire accrual amount.
-
One per GL Period: One multiperiod journal entry is created per GL period between the dates defined by the multiperiod start and end date accounting attributes.
GL Dates Specifies when the multiperiod journal entries are created in the GL period Note: If a transaction calendar is assigned to the ledger, Subledger Accounting uses this calendar to ensure that the multiperiod accounting journal entries fall on business days.
Options are:-
First Day GL Period: Multiperiod journal entries have a GL date of the first day of the period. For example, if a company uses monthly periods, the date is October 1.
-
Last Day GL Period: Multiperiod journal entries have a GL date of the last day of the period. For example, if a company uses monthly periods, the date is October 31.
-
Originating Day: Multiperiod entries have the same GL date as the originating journal entry. For example, if the originating entry has a GL date of October 22, the multiperiod entries have GL dates of the 22nd of the ensuing GL periods, such as November 22 and December 22.
Note: If the Originating day option is selected and the originating entry falls on a date that does not occur in every GL period, the closest day within that period is used. For example, if the originating entry has a GL date of October 31, the next multiperiod journal entry would have a GL date of November 30.
Proration Type Specifies how the recognition amount per period should be calculated. Options are: -
360 days: Partial periods calculated by assuming 360 days in a year
-
Days in Period: Partial periods calculated by dividing the number of partial period days by the actual number of days in the period
-
First Period: Accrual amount divided by the number of periods and recognized evenly starting with the first period
-
Total Days in Period: Both the partial periods and the whole periods are based on the actual number of days in the period. The number of days within each period is then divided by the total number of days in the whole multiaccounting period. The result is then multiplied by the total amount due to arrive at an amount for each respective period.
-
-
Click Line Assignments.
The Definition Name, Owner, accrual Journal Line Type, and Line Description fields default from the Journal Lines Definitions window.
The first accrual journal line creates a mirror image of the original accrual line, reversing the impact of the original journal entry to the same General Ledger account. Users cannot change this journal line type or the account derivation rules for it.
The Inherit check box for the description defaults from the Inherit check box in the Journal Lines Definitions window for the accrual journal line type. If selected, users can deselect the check box and assign a new description.
-
To assign journal line types to create the recognition journal line, enter data as described in the table below.
Selected Fields in the Line Assignments Window Field Description Journal Line Type Select the corresponding recognition journal line type. The list of values includes only recognition journal line types with the same natural side and event class as the accrual journal line type. Name (Account Derivation Rule region) The Owner and Description fields default based on the rule selected.
Accrual Reversals
Use accrual reversal to define how and when accrual reversals are automatically performed. You can:
-
Indicate that an accounting event is eligible for accrual reversal
-
Schedule the reversal of accrual journal entries generated by the Subledger Accounting program
Accrual Reversal Process
The diagram below shows the accrual reversal process and is described in the Accrual Reversal Process Steps.
Accrual Reversal Process Steps
-
Assign the Accrual Reversal GL Date accounting attribute at the event class level in the Accounting Attribute Assignments window.
Use this attribute to schedule the automatic reversal of a journal entry at the time it is created. Assign any standard date source or one of the following system sources to the accrual reversal GL date accounting attribute:
-
Next Day: The GL date of the accrual reversal will be the next day following the GL date of the accrual entry. If there is a transaction calendar assigned to the ledger, this will be the next business day.
-
First Day Next GL Period: The GL date of the accrual reversal entry will be the first day of the following period. If there is a transaction calendar assigned to the ledger, this will be the first business day.
-
Last Day Next GL Period: The GL date of the accrual reversal entry will be the last day of the following period. If there is a transaction calendar assigned to the ledger, this will be the last business day.
Note: Users can override the accrual reversal GL date accounting attribute values on the journal entry header in the Application Accounting Definitions window.
-
-
Create an accounting event in the subledger application.
-
Submit the Create Accounting program.
The Create Accounting program creates the accrual journal entry as well as accrual reversals and multiperiod journal entries. The program creates the accrual reversal entry to negate the impact of the accrual entry. Depending on the selection for Reversal Method for the ledger accounting options in the Update Accounting Options window, the accrual reversal entry will have the debit and credit signs reversed or it will have negative amounts.
The status of the accrual reversal journal entry and multiperiod journal entry is based upon the status of the GL period of the GL date of the accrual reversal journal entry and the End GL Date specified in the Create Accounting request parameters as described in the table below.
GL Date Open or Future Entry GL Period Closed or Permanently Closed GL Period Never Opened GL Period The GL Date of the accrual reversal is on or before the End GL Date in the mode specified in the Create Accounting request Creates the journal entry with the status specified in the Create Accounting request -
Adjusts the GL date to the next open period
-
Creates the journal entry with an adjusted GL date in the mode specified in the Create Accounting request if the GL date is prior to the end date of the request or with an incomplete if the date is after the end GL date of the request
-
Adjusts the GL date to the next open GL period
-
Creates the journal entry with an adjusted GL date in the mode specified in the Create Accounting request if the GL date is prior to the end date of the request or as incomplete if the date is after the end GL date in the Create Accounting request
GL Date of the accrual reversal is after the END GL Date specified in the Create Accounting request Creates the journal entry with an incomplete status -
Adjusts the GL date to the next open GL period
-
Creates the journal entry with an adjusted GL date in the mode specified in the Create Accounting request if the GL date is prior to the end date of the request or with an incomplete status if the date is after the end GL date of the request
-
If no open GL period is found, creates the journal entry with an error status
Creates the journal entry with an incomplete status -
-
Submit the Complete Multiperiod Accounting program to complete accrual reversals in future GL periods as the periods are opened.
The Complete Multiperiod Accounting program looks at the GL dates of all incomplete accrual reversal and multiperiod journal entries as specified in the Complete Multiperiod Accounting request parameters. It completes those entries with GL dates in open or future entry periods that fall on or before the End GL Date parameter specified in the Complete Multiperiod Accounting request.
Once an accrual reversal or multiperiod journal entry is completed, it is sequenced and appears on reports and inquiries.
See: To Complete Multiperiod Journal Entries and Accounting Reversals
-
View accrual reversals.
See: Subledger Journal Entry Lines Inquiry and Subledger Accounting Events Inquiry Overview
Accrual Reversal Examples
The following examples describe how accrual reversals are scheduled and entered in journals.
Example 1
A company receives materials worth $100 on the 30th of the month but has not been invoiced. The following journal entry is created when the material is received to record the accrual.
| Account | Entered DR | Entered CR | Accounted DR (USD) | Accounted CR (USD) |
|---|---|---|---|---|
| Accrual Expense | 100.00 | 100.00 | ||
| Accrual Liability | 100.00 | 100.00 |
The accrual reversal GL date is First Day Next GL period and the following journal entry is created to reverse the accrual.
| Account | Entered DR | Entered CR | Accounted DR (USD) | Accounted CR (USD) |
|---|---|---|---|---|
| Accrual Liability | 100.00 | 100.00 | ||
| Accrual Expense | 100.00 | 100.00 |
Example 2
Futures trading requires a margin account that is market-to-market on a daily basis. This means that the investor or ledger's gains or losses on the position are reflected on a daily basis. If the margin account drops below a specified amount (the maintenance of the margin), a margin call is issued. This requires the holder of the account to replenish the account to the initial margin level or close out the position. In this scenario, the investor or ledger must mark the account to market each day and the entry booked from the day before may need to be reversed to reflect the new position.
The following journal entry is created on June 1, 2006.
| Account | Entered DR | Entered CR | Accounted DR (USD) | Accounted CR (USD) |
|---|---|---|---|---|
| Loss | 100.00 | 100.00 | ||
| Margin Liability | 100.00 | 100.00 |
The Accrual Reversal GL Date is set to Next Day and the following journal entry is created to reverse the journal entry from June 1.
| Account | Entered DR | Entered CR | Accounted DR (USD) | Accounted CR (USD) |
|---|---|---|---|---|
| Margin Liability | 100.00 | 100.00 | ||
| Loss | 100.00 | 100.00 |
On June 2, a new journal entry is created to reflect the new position, which will be reversed on June 3.
| Account | Entered DR | Entered CR | Accounted DR (USD) | Accounted CR (USD) |
|---|---|---|---|---|
| Loss | 105.00 | 105.00 | ||
| Margin Liability | 105.00 | 105.00 |
On June 3, the following journal entry is created to reverse the accrual from June 2.
| Account | Entered DR | Entered CR | Accounted DR (USD) | Accounted CR (USD) |
|---|---|---|---|---|
| Margin Liability | 105.00 | 105.00 | ||
| Loss | 105.00 | 105.00 |
To Complete the Multiperiod Journal Entries and Accrual Reversals
The Complete Multiperiod Accounting program checks the GL dates of all incomplete journal entries that have a GL date that is on or before the end GL date specified in the request parameters and completes these entries as their GL dates fall into open periods.
Enter parameters as described in the table below.
| Parameter | Description |
|---|---|
| Ledger | Limits incomplete journal entries selected for processing to those of the selected ledger; required |
| Process Category | Restricts events for accounting to the selected category |
| End GL Date | End date for processing all incomplete journal entries; required |
| Errors Only | Limits the completion of journal entries to those processed in error; required |
| Report | Determines whether to print the report in summary or detail mode |
| Transfer to General Ledger | Determines whether to transfer completed journal entries to General Ledger |
| Post in General Ledger | Determines whether to post completed journal entries transferred to General Ledger |
| General Ledger Batch Name | Batch name for General Ledger entries posted by the Multiperiod Accounting program |
Application Accounting Definitions
Use application accounting definitions to assign journal lines definitions, supporting references, and header descriptions to event classes and event types.
Storing the accounting definitions validation status at the event class and event level enables you to generate subledger journal entries for certain event classes or event types even if the accounting definitions for other event classes or event types are invalid.
Each event class and event type assignment consists of a header assignment and one or more journal lines definition assignments. A header assignment includes the following:
-
source assignments for the GL date and Accrual Reversal GL date, if enabled for the event class
-
a journal entry description (optional)
-
one or more supporting references (optional)
You can assign multiple journal lines definitions to an event class or event type. Subledger Accounting generates a single journal entry per accounting event and ledger using the line assignments from all the journal lines definitions assigned to the event class or event type. The following can be assigned to a journal lines definition:
-
Journal entry description
-
Journal line type
-
Account derivation rules
-
Supporting references
Sources are used by all of the above components.
The figure below shows the relationship of the components to an application accounting definition as described in the above text.
Application Accounting Definitions
Application accounting definitions enable you to meet the subledger accounting requirement of multiple accounting representations. While one application accounting definition can generate subledger journal entries that are compliant with one particular set of accounting requirements, another definition can be defined to meet a completely different set of accounting requirements.
For example, use a complete set of US GAAP accounting definitions for Payables as an application accounting definition for the ledger US applications. Use a complete set of French GAAP accounting definitions for Payables can be used for the ledger French Operations. These two sets of definitions have differences based on the setup of the various components that make up their application accounting definitions.
Seeded application accounting definitions are provided for all Oracle subledgers. If specific requirements are not met by startup accounting definitions, users can copy and modify the seeded definitions and their assignments.
The Applications Accounting Definitions (AAD) Loader enables users to import and export application accounting definitions and journal entry setups between the file system and database instances. The AAD Loader also supports concurrent development and version control of the application accounting definitions.
Defining an Application Accounting Definition
Use the Application Accounting Definitions window to assign header descriptions and journal lines definitions to the event classes and event types for a particular application.
Assign a header description to the event class or event type in the Header Assignments window.
Journal Lines Definitions can be assigned to the application accounting definition in the Application Accounting Definition window.
Prerequisite
Define the following:
To Define an Application Accounting Definition
| Field and Button | Description |
|---|---|
| Application | Defaults from the application associated with the responsibility |
| Owner | Automatically populated. For components seeded by Oracle, the value is Oracle. For components created on site by users, the value is User. |
| Enabled | If selected, makes this application accounting definition available |
| Accounting | If selected, the following rules apply:
|
| Validation Status | Displays the validation status of the event class and event type. Values include:
An application accounting definition can only be used to create subledger journal entries for a valid event class and event type. The Subledger Accounting program creates errors in the following cases:
|
| Create Accounting | Select to create subledger journal entries for the accounting events associated with the event class and event type. If this check box is deselected, no journal lines definitions can be assigned to the event class and event type. If any journal lines definitions are assigned to the event class and event type, this check box cannot be deselected. |
| Locked | Controls whether the application accounting definition can be modified |
| Header Assignments | Opens the Header Assignments window to assign a journal entry description and supporting references to the event class and event type of the application accounting definition and to view the accounting attributes associated with the journal entry header. Note: Supporting references maintaining balances or with line level sources assigned to the details may not be used on journal entry headers. |
| Journal Lines Definition Name | Assign ALL - event type journal lines definition to an event class and event type with ALL association in the application accounting definition and journal lines definitions window. List of values includes all journal lines definitions that meet the following criteria:
Users can assign one or more journal lines definitions to the event class or event type. Subledger Accounting generates a journal entry per event and ledger using the line assignments from all journal lines definitions assigned to the event class and event type. |
| Validates | Validates the application accounting definition |
Copying and Modifying Application Accounting Definitions
See: Copy and Modify Functionality
When copying an application accounting definition, copy the header and line assignments associated with the original definition, or copy a definition and create the assignments manually.
To Copy, Modify, and Validate Application Accounting Definitions
| Field | Description |
|---|---|
| Chart of Accounts region | The transaction and accounting charts of accounts default from the original application accounting definition. Note that if values have defaulted for these fields, they cannot be updated. However, if the original application accounting definition does not have a transaction or accounting chart of accounts, then users can enter them in this window. If the charts of accounts are entered, then the following rules apply:
|
| Include region | Select the appropriate check boxes to copy the assignments associated with the original application accounting definition to the new one. |
After modifying a component of an application accounting definition, its validated status changes to Not Validated. Validate the modified definition in the Application Accounting Definitions window. Once validated, use it to generate subledger journal entries.
Import Application Accounting Definitions
Application accounting definitions are imported using the Import Application Accounting Definitions concurrent program. This program imports the application accounting definitions from a data file to the Accounting Methods Builder (AMB) context specified in the SLA: Accounting Methods Builder Context profile option and produces a report of the results.
See: SLA: Accounting Methods Builder Context
When running the Import Application Accounting Definitions concurrent program, users specify whether to run the merge analysis, merge, or overwrite processes.
The main purpose of the Import Application Accounting Definitions program is to validate AAD. Run this program after applying any patch changing the rules, as it leaves the AADs invalid.
Import Application Accounting Definitions Program Parameters Description
The table below describes the parameters for the Import Application Accounting Definitions program.
| Parameter | |
|---|---|
| Accounting Methods Builder Context | AMB context for the application accounting definitions to be imported; defaulted from the SLA: Accounting Methods Builder Context profile option; required |
| Source Data File | Full path name, including the .ldt file name, of the data file containing the application accounting definitions to be imported; required Path name example: /home/jdoe/out/APAAD.ldt Note: At least one of the three source path names must be entered. |
| Source File Pathname for Base Application | Valid source file path name |
| Source File Pathname for Budgetary Control | Valid source file path name |
| Merge Analysis Only | Determines whether merge analysis is performed to the imported application accounting definitions. Default is Yes. |
| Batch Name | User-entered merge analysis report name |
| Import Option | Enabled and required only if the Merge Analysis Only parameter is set to No; indicates whether the application accounting definitions from the data file should be merged or overwritten to the database. Default is Merge. |
| Validate | Enabled and required only if the Merge Analysis Only parameter is set to No; determines whether the Validate Application Accounting Definitions concurrent program should be submitted to validate all the imported application accounting definitions. Default is Yes. |
| Force Overwrite | Enabled and required only if the Merge Analysis Only parameter is set to No and the Import Option is Overwrite; indicates whether Subledger Accounting should allow an application accounting definition to be overwritten from the data file to the database if the version in the data file is lower than the version in the database. Default is No. |
Import Application Accounting Definitions Report
When the Import Application Accounting Definitions program is completed successfully, a report highlighting all the imported application accounting definitions and their versions as well as all the errors that occurred during the import process is produced.
Export Application Accounting Definitions
The Export Application Accounting Definitions program exports all application accounting definitions of an application from a database to the file system and produces a report of the results. All application accounting definitions and journal entry setups for an application are exported to the same data file. When the application accounting definitions are exported, a new version is stamped on the application accounting definitions, mapping sets, and account derivation rules referenced by exported application accounting definitions.
Export Application Accounting Definitions Program Parameters
The table below describes the parameters for the Export Application Accounting Definitions program.
| Parameter | Description |
|---|---|
| Account Method Builder Context | AMB context for the application accounting definitions to be imported; defaulted from the SLA Accounting Methods Builder Context profile option; required |
| Destination File Path | Full path name, including the .ldt file name, of the file system where the application accounting definitions are to be exported; required Path name example: /home/jdoe/out/APAAD.ldt Note: At least one of the three destination file path names must be entered. |
| Destination File Pathname for Base Application | Valid file path name for the base application |
| Destination File Pathname for Budgetary Control | Valid path name for the federal budgetary control |
| Versioning Mode | Indicates whether the exported application accounting definitions are a result of leapfrogging. Select Standard if the AAD to be exported is based on the latest version; select Leapfrog if the AAD to be exported is not based on the latest version; or select Supersede if the AAD to be exported is not based on the latest version and is not a leapfrog. Default is Standard. |
| User Version | User-assigned version; optional |
| Export Comment | User-entered export comments; optional |
Export Application Accounting Definitions Report
When completed successfully, the Export Application Accounting Definitions program produces a report highlighting all the exported application accounting definitions as well as all the errors that occurred during the export process.
Subledger Accounting Methods
Application accounting definitions that comply with a common set of accounting requirements can be grouped into a subledger accounting method. The grouping allows a set of application accounting definitions to be assigned collectively to a ledger. This reduces setup time and helps ensure a consistent method of accounting for all subledgers feeding into a particular ledger.
For example, a subledger accounting method entitled French GAAP can be defined to group application accounting definitions that are accounted for using French GAAP criteria. As another example, a Cash Basis Accounting Method can be defined to group application accounting definitions that are used to account for transactions on a cash basis.
By assigning different subledger accounting methods to ledgers, the AMB enables users to create multiple accounting representations of transactions.
To Define a Subledger Accounting Method
Note: Oracle recommends that users do not modify a seeded method or any other seeded component as it could get overwritten in an upgrade. Instead, copy a seeded component and then modify it appropriately. The modified component has an Owner type of User.
| Field | Description |
|---|---|
| Owner | Automatically populated. For components seeded by Oracle, the value is Owner. For components created on site by users, the value is User. When selecting component names from a list of values in AMB windows, users are presented with the name as well as the Owner of the component. This enables users to distinguish between seeded and user-defined components. |
| Enabled | If selected, makes this subledger accounting method available for use |
| Chart of Accounts region | Note: The transaction and accounting chart of accounts are optional. If they are entered, then the following rules apply:
|
| Application | Application that owns the application accounting definition for this subledger accounting method |
Copy and Modify a Subledger Accounting Method
See: Copy and Modify Functionality
When a subledger accounting method is copied, the new method is assigned all the application accounting definitions and associated header and line components of the original subledger accounting method. For example, if the subledger accounting method US GAAP is copied to a new subledger accounting method called US Management, then all the components of the AMB associated with US GAAP are now also associated with US Management.
To customize any of the components associated with the new subledger accounting method, copy the relevant component or create a new one and associate it with the new subledger accounting method.
To Copy a Subledger Accounting Method
The Transaction and Accounting charts of accounts defaults from the original subledger accounting method. Note that if a value has defaulted for these fields, they cannot be updated. However, if the original subledger accounting method does not have a transaction or accounting chart of accounts, enter them in this window.
These entries serve as the charts of accounts for the subledger accounting method created. If entered, only components defined with the same or no charts of accounts are available for assignment to the new subledger accounting method. The accounting chart of accounts, if entered, must match the chart of accounts of the ledger that this new subledger accounting method is to be assigned to.
See: Transaction and Accounting Charts of Accounts
Accounting Definitions Inquiry
Accounting definitions inquiry enables users to:
-
Identify accounting definitions in which a certain component is included
-
Query all application accounting definition assignments by application accounting definition, event class, or event type
Use this inquiry to plan and assess the impact of modifications to the application accounting definitions. For example, you may want to add the customer name to the journal entry description for cash receipts, but they are unsure whether the same journal entry description is being used for miscellaneous receipts which do not have an associated customer. In another scenario, you can change an account derivation rule to take the cost center from a mapping set based upon Oracle Projects expenditure types but are unsure whether the same account derivation rule is used for other cases in which the mapping set might not apply.
Accounting Definitions Inquiry Windows
Find Accounting Definitions Window
In the Find Accounting Definitions window, navigate to the following windows:
-
Accounting Definition Headers window, described below, when querying accounting header descriptions
-
Accounting Definitions Lines window, described below, when querying the following line components:
-
Accounting line type
-
Account derivation rule
-
Accounting line description
-
Accounting Definition Headers Window
In this window, navigate to the following windows:
-
Accounting Definition Lines window, described below, to examine the line assignments associated with each header
-
Application Accounting Definition window
If the application accounting definition is unlocked, navigate to the corresponding line assignment in the Assignments window.
Accounting Definition Lines Window
In this window, view the following:
-
Assignments
-
Journal line types
-
Account derivation rules
-
Application accounting definitions
From this window, navigate to the following windows:
-
Application Accounting Definition window
If the application accounting definition is unlocked, users can navigate to the corresponding line assignment in the Assignments window.
-
Journal Lines Definitions window to view line assignments
Copyright © 2006, 2010, Oracle and/or its affiliates. All rights reserved.
A
A
https://www.google.com/#sclient=psy-ab&q=accounting+method+for+builders+accounts&oq=Accounting+method+for+Builders+account&gs_l=hp.1.0.33i29i30.2618.12392.0.15508.38.27.0.11.11.0.281.4159.0j24j3.27.0....0...1c.1.21.psy-ab.Tij5kHt_65I&pbx=1&bav=on.2,or.r_cp.r_qf.&bvm=bv.49478099,d.eWU&fp=b26ea42ea86ca5fd&biw=1366&bih=598
Accounting for Construction Contracts - Construction Tax Tips
What is Taxable Income?
- Are paid by cash or check,
- Get a credit on a bill,
- Receive other goods or services in exchange,
- Collect the payment later, or
- Receive a Form 1099 or W-2 (or not) showing the amount of income you earned.
What is an Accounting Method?
How Do I Choose a Method?
- The type of contracts you have,
- Your contracts' completion status at the end of your tax year, and
- Your average annual gross receipts.
Cash Method of Accounting
How Does the Cash Method of Accounting Work?
- If a customer called you in December and told you that a payment for a job was ready, but you didn't pick it up until January, you would have constructive receipt of the income in December.
- If someone else receives the money for you, you have constructively received the money.
What are the Limitations on the Use of the Cash Method?
Exception to the Merchandise Limitation
Accrual Methods of Accounting
Choosing an Accrual Method
Are You a Small or Large Contractor?
Y: Answer the next question.
N: As a Large Contractor, you must use the Percentage of Completion Method (PCM) for your general construction contracts.
Y: Use Percentage of Completion Method (PCM) for your longer-duration general construction contracts.
N: As a Small Contractor, you should use either: Accrual, Exempt Percentage of Completion Method (EPCM), Completed Contract Method (CCM), or Percentage of Completion Method (PCM) for all your general construction contracts.
| TYPE OF CONTRACTOR* | ACCRUAL | EPCM | PCM | CCM |
|---|---|---|---|---|
| Small Contractor | YES | YES | YES | YES |
| Large Contractor | NO | NO | YES | NO |
Types of Costs
General and Administrative Expenses
Job Costs
Allocating Indirect Costs
6 mo. X $12,000 = $6,000 Allocated Indirect Costs
12 mo.
4 mo. X $12,000 = $4,000 Allocated Indirect Costs
12 mo.
2 mo. X $12,000 = $2,000 Allocated Indirect Costs
12 mo.
- Repair & maintenance expenses for equipment & facilities
- Utilities
- Rent of equipment & facilities
- Quality control
- Taxes relating to labor, materials, supplies, equipment or facilities
- Administrative costs
- Indirect materials and supplies
- Tools & Equipment
- Depreciation
- Insurance on equipment & machinery
- Indirect labor and contract supervisory wages
- Production period interest expense
Small Contractor Methods
Accrual Method of Accounting
- When it's earned, or
- When it's due from the customer, or
- When it's received from the customer
- Whichever is earlier
Generally, advance payments for services are included in income when you receive the payment. You may delay including an advance payment in income until the next tax year for services you will perform in a subsequent year per the provisions of Revenue Procedure 2004-34.
- When the merchandise or services are received, or
- When the amount of the expense can be accurately determined
- It provides better matching of income and expenses
- It gives a more accurate picture of your financial position than the cash method
Exempt Percentage of Completion Method - General Rule
- It is the most accurate way to measure income
- It evens out the reporting of income over the life of the contract
- Losses may be recognized based on the percentage of the contract completed
- It is the method preferred by most banks and bonding companies
EPCM Cost Comparison Method
Total estimated costs $250,000
| $300,000 | Contract Price |
| X 30% | Percentage of Completion for 2000 |
| $ 90,000 | Income to be reported in 2000 |
| $ 90,000 | Contract Income |
| (75,000) | Job Costs |
| (10,000) | G&A Costs |
| $ 5,000 | Net Income |
EPCM Work Comparison Method
Estimated Work to be Performed
| Contract Price | $1,500,000 | |
| Completed | X 33.33% | |
| Income to be Reported in Year 1 | $ 500,000 | |
| Job Costs | ( 410,000) | |
| G&A Costs | ( 20,000) | |
| Year 1 Net Income | $ 70,000 |
Estimated Work to be Performed
| Contract Price | $1,500,000 |
| Completed | X 100 % |
| Total Income | $1,500,000 |
| Income Reported in Year 1 | ( 500,000) |
| Income to be Reported in Year 2 | $1,000,000 |
| Job Costs | ( 840,000) |
| G&A Costs | ( 30,000) |
| Year 2 Net Income | $ 130,000 |
| Year 1 | Year 2 | Total | |
|---|---|---|---|
| Income | $500,000 | $1,000,000 | $1,500,000 |
| Job Costs | (410,000) | (840,000) | (1,250,000) |
| Contract Profit | $90,000 | $160,000 | $250,000 |
| G&A Costs | (20,000) | (30,000) | (50,000) |
| Net Income | $70,000 | $130,000 | $200,000 |
Completed Contract Method
| Year 1 | Year 2 | |
|---|---|---|
| Income | $750,000 | $300,000 |
| Job Costs | (525,000) | (225,000) |
| G&A Costs | (75,000) | (85,000) |
| Net Income (Loss) | $150,000 | ($10,000) |
| Year 1 | Year 2 | |
|---|---|---|
| Gross Income | $750,000 | $800,000 |
| Job Costs | (525,000) | (625,000) |
| G&A Expenses | (75,000) | (85,000) |
| Net Income | $150,000 | $90,000 |
- The books and records do not show clear information on operations
- Income can be bunched into a year when a lot of jobs are completed, and
- Losses on contracts are not deductible until the contracts are completed
From: Diya Jain <diyarakeshjain@yahoo.com>
To: "aaykarbhavan@yahoogroups.com" <aaykarbhavan@yahoogroups.com>; "caclubindia@yahoogroups.com" <caclubindia@yahoogroups.com>; "caassociation@yahoogroups.com" <caassociation@yahoogroups.com>; "cvoca@yahoogroups.co.in" <cvoca@yahoogroups.co.in>; "dahisarcas@yahoogroups.co.in" <dahisarcas@yahoogroups.co.in>; "meraconsultant@yahoo.co.in" <meraconsultant@yahoo.co.in>; "mumbaica@yahoogroups.co.in" <mumbaica@yahoogroups.co.in>; "ThaneCAs@yahoogroups.com" <ThaneCAs@yahoogroups.com>; "taxonclick@yahoogroups.com" <taxonclick@yahoogroups.com>
Sent: Monday, 22 July 2013 8:08 AM
Subject: [aaykarbhavan] Builder Accounting Method
__._,_.___
No comments:
Post a Comment