Oracle R12 Ledgers

Ledgers

Definition: A ledger contains summarized financial information that is classified by assignment to a specific account number using a Chart of Accounts.

1.      General Ledger

We can understand General Ledger as a principal ledger (sometimes called Nominal Ledger) used together with subsidiary ledgers that contains all of the balance sheet and income statement accounts. So General Ledger is a list of accounts showing changes in them during the accounting period and final balances in the accounts at the end of that particular period.

It can contain large number of different accounts. Each account has its purpose, name and number to distinguish it from the other accounts.

 Plant and machinery – cost (fixed asset)
 Plant and machinery – accumulated depreciation (reduction in fixed asset)
 Vehicles – cost (fixed asset)
 Inventories (current asset)
 Accounts Receivable (current asset)
 Cash (current asset) 

2.      Subsidiary Ledger

This is a ledger containing individual accounts with a common features and characteristics. Examples can be Accounts Receivable ledger, Accounts Payable ledger and other.

 Ledgers consists of 4 c’s

1.      Chart of Account

Chart of accounts (COA) is a list of the accounts used by an organization. The list can be numerical, alphabetic, or alpha-numeric. The structure and headings of accounts should assist in consistent posting of transactions.

Uses:

1.      Accounting combinations defined in Chart of Accounts is used to various transactions happening in the organization.

2.      Helps in generating account balances.

3.      Helps in Reporting

4.      Helps in Analyzing financial information

What is Flexfield?

A flexfield is a field made up of segments. A flex field is a flexible data field that your organization can customize to your business needs without programming. Oracle Applications uses two types of flexfields, key flexfields and descriptive flexfields.

key flexfield is a field made up of segments, where each segment has both a value and a meaning. You can think of a key flexfield as an “intelligent” field that your business can use to store information represented as “codes.”

Types:

1)      Category KFF

Oracle Assets uses the category flexfield to group your assets by financial information. You design your category flexfield to record the information you want. Then you group your assets by category and provide default information that is usually the same for assets in that category.

2)      Catalog KFF

If you make entries for your items in a standard industry catalog or want to group your

items according to certain descriptive elements, you need to configure your Item

Catalog Group Flexfield.

3)      Stock location FF

If you keep track of specific locators, you need to configure your Stock Locators Flexfield and implement locator control in your organization.

4)      Account Alias FF

If you want to define logical references to frequently used account number

combinations and use them as transaction source types, you need to configure your

Account Aliases Flexfield and define account aliases.

5)      Sales order FF

6)      If you want to ship items from inventory to meet customer demand as specified in a

7)      sales order, then you must configure sales order FF

Descriptive Flexfields (DFFs) enable to capture additional pieces of information from transactions entered into Oracle Applications. Descriptive flexfields provide customisable ”expansion space” on your forms.

  

What is segment?

A segment is a single sub–field within a flexfield. You define the appearance and meaning of individual segments when customizing a flexfield. A segment is represented in your database as a single table column.

2.      Currency

currency refers to a generally accepted medium of exchange.

Types:

Functional currency:

The functional currency is the currency you use to record transactions and maintain your accounting data within the Oracle E-Business Suite. In the primary set of books, the functional currency is always the primary functional currency

Reporting Currency:

 This type is related to Reporting of account. The currencies are automatically converted according to country.

Eg USD -> INR.

Multi currency conversion rate:

It is  a new functionality that is available in R12.

3.      Calender

Fiscal Calender   refers to financial calendar.

In a Fiscal Calendar, the first month of the year is usually not January (which is the usual first month of a normal calendar). Companies decide when they want to start a year. For e.g in India, most of the businesses start their new year during Diwali. Lets say a company decides their first month of their fiscal year is going to be Jun so the last month is May.

Accounting calender is used for recording the transactions for the financial year and it will share across the application.

Workday calendar controls the scheduling of work orders(WIP jobs)

4.      Accounting  method

The accounting method that a company decides to use to determine the costs of inventory can directly impact the balance sheet, income statement and statement of cash flow. There are three inventory-costing methods that are widely used by both public and private companies:

• Average Cost
  This method is quite straightforward. Standard cost Standard cost systems are usually Process cost systems in which accountants use set eg. Consumer goods
• Standards Cost

Instead of attempting to compute an actual cost per unit for each period. Eg. Manufacturing company

• First-In, First-Out (FIFO)
  This method assumes that the first unit making its way into inventory is the first sold. Eg Perishable goods like vegetables
• Last-In, First-Out (LIFO)
  This method assumes that the last unit making its way into inventory is sold first. Eg.old goods like wine, gold
• PMAC(periodic moving average cost) Iterative Periodic Average Costing (IPAC) is an alternative approach to standard periodic average costing and differs in the method of valuating the inter-organization transfers across cost groups.eg OPM Companies