Observation: There is no set of books in R12, instead a Ledger had to be
created. In addition to the 3 C’s of Calendar, Chart of Accounts and Currency
which were the components of Set of Books in R11i, R12 introduced a 4th C,
Convention. The Convention represents the accounting method used at
subledger level like Accrual basis of accounting or Cash basis of accounting

The following are the major steps we performed during our demo of a
Ledger creation and usage:
1. Defining Accounting Flexfield
2. Defining Legal Entity
3. Defining Ledger
4. Completing mandatory Accounting Options
5. Assigning a Ledger to a Responsibility
6. Using the Ledger

1. Defining Accounting Flexfield
We all know that the accounting flexfield indicates the accounting
representation of a company’s financial data. The client wanted the financial
information to be represented in the structure: Company. Cost Center.
Account. Intercompany which we used for our Demo.

Navigations ->
• Value Set: GLSuperuser>Setup>Financials>Flexfields>Validation>Sets
• Values: Superuser>Setup>Financials>Flexfields>Key>Values>Choose
Application as General Ledger, Title as Accounting Flexfield, Structure
as ,Segment


Observations: Before we assigned segments, WE HAD to enable “Allow
Dynamic Inserts” Option for the Accounting Flexfield until the Accounting
Setups were done (this can be later disabled if required), otherwise, we
faced issues when assigning the Retained Earnings account in Step 4 to be
discussed later

a) Minimum of one value for each segment had been defined
b) A value in the Natural Account with Type as ‘Ownership/Stockholder's
Equity’ was used for Retained Earnings
c) If Dynamic Insert was not to be enabled, the proposed retained
earnings account was to be created manually in the Setup > Financials
> Combinations form.

2. Defining Legal Entity
Legal Entity had to be defined to store the legal and statutory
information for the client’s business. Though it was not a mandatory
step in defining a Ledger and or completing the setup options, from
the client’s reporting and legal obligations, Legal Entity was required
for our demo.

Observations:
• In prior releases Set of Books definition a.k.a Ledger definition
did not link with that of legal entity, but in this release we could
define all the important organizations at the time of defining
ledger only
• Legal Entity has the same meaning as in prior releases

Navigation
GL Superuser>Setup>Financials>Accounting Set up Manager>Accounting
Setups


Unlike the prior application releases’ majority set up screens being form
based, the Accounting set up manager is a user friendly HTML based
interface guiding the user in performing all the steps. The first screen is a
multi screen use screen which allowed users create/update both legal
entities and Accounting setups.


Since we started from the scratch, we navigated to click on Create Accounting Setup, and then the Assign Legal Entities screen opened up as
shown below:


The above screen was also a multi use screen that allowed us to query the
predefined Legal Entities as well as create new legal entities. Then we
clicked on Create Legal Entities button to open the Create Legal Entities
screen which appeared as below:


Observations
• A completed legal entity is required for assigning balancing
segment values as part of completing the Accounting Set up
Options
• A Legal Entity is required for associating an Operating Unit where
Oracle Subledgers are used in the Organization
• For usage / definition of Ledger, usage of Legal Entity is not a prerequisite,
so we can have ledgers which are not associated to any
Legal Entity.