Oracle R12 General Ledger
As discussed in the previous Blog, Ledger consists of 4C's. Let us understand each 'C' in detail :
Currency - A currency has to be defined for analysis and reporting of the transactions of the company
In Oracle we have 196 countries with 250 currencies since some countries might have more than 1 currency. E.g. Afghanistan has 2 currencies.
You may also create a new currency if required. GL---Currencies---Define)
Precision – If the currency rate is 75.56743 and precision is 2 then the system will take it as 75.56
Calendar - Calender are used to identify the dates in the accounting transactions.
The calender are of two types:
1) Accounting Calendar - It is used to record to record the accounting information of the organization.
Accounting year are of two types:
- Calender year (1st January -31st December)
- Fiscal year (Depends on country e.g India follows 1st Apr-31st March)
Process
a) Create Period types
Periods have to be defined, periods can be defined as monthly, weekly, Quarterly, yearly etc. A calender may also have 365 periods(daily calendar)
Generally, we define 12+1 periods, 12 defining a monthly calendar and 1 representing adjustment period ,in which all the adjustments pertaining to previous periods will be done.
b) Define Accounting Calendar - We then define the calendar.
2) Transaction Calendar - It is prepared to ensure that journals created in Oracle General Ledger and Oracle Sub ledger Accounting, if used, are only posted on valid business days.
Enable security feature- Its a delta feature in R12, whereby we can define if a user is allowed to Use, View or Update the various fields.
Calendar Period Status
Chart of accounts define the accounting structure of the organization. Let us understand this with the help of an illustration:
Lets consider that two friends start up an organization from their home, selling 2 products ( Chips and Soft Drinks). Since the firm has only one office they record their expense as :
1)Expense on Chips
Therefore the firm has only 1segment in which it records its transactions i.e. Product. The accounting is only restricted to the product the sell.
The organization expands and now they open two stores and have 3 departments as well i.e. Finance, HR and Operations.
The firm now records its expense as:
1) Shop 1 --- Expense done by finance department--- on Chips
So we see that the firm now has 3 segments in which it will record its transactions:
1) Company
2) Department
3) Product
The firm now becomes of Wall mart's size and if now the firm wants to track any expense it shall further drill down to identify the expense done by the organization.
The COA structure now may look like:
1) Company
2) Location
3) Department
4) Product
5) Building
6) Salesperson and so on
In a nutshell, the segments in COA structure will increase as the firm expands thereby enabling the organization to get to the most granular level of accounting a transaction.
Before going ahead, we must understand the concepts of Flexfields, and its types:
Flexfield is nothing but a Flexible data
Oracle Application uses Flexfield to capture information about your organization.
Flexfields are of two types:
Oracle Application uses Flexfield to capture information about your organization.
Flexfields are of two types:
1)Key Flexfield – Key flexfield contains key information. Without completing key flexfield we cannot have a successful implementation of the module.
E.g. Accounting flexfield in General Ledger is a key flexfield.
E.g. Accounting flexfield in General Ledger is a key flexfield.
102.12.23 / 345.123.124.1.1223.145.1 – might represent expense account.Both represent same thing but in a different way (3 Vs. 7 Segment COA)
Oracle gives an option to customize but represents necessary information.
Oracle gives an option to customize but represents necessary information.
2)Descriptive Flexfield-
- Customizable ‘expansion space’ on your forms
- To track additional information important and unique to your business, that would otherwise not be captured by the form.
- E.g. while Adding assets in Asset Addition field ( Fixed Assets)
Example: While entering an asset in the asset addition window, oracle has provided some field like Asset cost, Asset category etc. However there will be certain information which we would like to capture, specific to our organization.
Maruti suzuki driving school may include the Car color, year of make, Fuel variant, Model details etc. while adding assets in the Asset addition window.
Oracle has provided the flexibility to add extra fields to capture important business specific information.
Accounting Flexfield Explained
Freeze flexfield Definition - Once frozen, you can only make very limited changes to the flexfield structure definition. If you need to change the flexfield structure definition, first uncheck the Freeze flexfield check box and make the changes. Next, reactivate the Freeze flexfield check box.
Cross Validate Segments & Allow dynamic Inserts– Once you define the segments and their corresponding values, there might be some combinations which should not be allowed. e.g. HR Department should not have access to Sales commission account. In that case we can either define all the valid account code combinations or allow dynamic inserts and command for cross validation of segments. It means that we shall only mention the accounts which are not valid and allow the user to dynamically insert any account code combinations.
Freeze Rollup Groups – These are created for summary accounts. In this we define the parent values and their corresponding child values. Thus i can view the summary level information instead of having child values.
E.g. The higher level management will only be interested in knowing the Total Expenses rather than expenses on each and every item/transaction.
