What is Revaluation in GL

Revaluation adjusts liability or asset accounts that may be materially understated or overstated at the end of a period due to a fluctuation in the exchange rate between the time the transaction was entered and the end of the period.

Revaluation is performed only on Assets and Liabilities.

1. Revaluations are typically used to update foreign currency balances that will be cleared or settled at future date to the current exchange rates. An example of this is Accounts Payable. If you have an invoice that is over 60 days old, and the exchange rate has had a material change, you will want to revalue this balance to the current exchange rate.

2. Revaluations on Fixed Assets is useful to accurately describe true value of the goods after some period of time. This brings fair market value of your fixed assets in current period.

Example:

On 01-Dec-2009
-Functional Currency is USD
-Foreign Currency is ABC
-Conversion Rate is 2.
-Created invoice for 100 ABC, validated and accounted. Not Paid.

Accounting..
                                           EnteredAmount(ABC)   AccountedAmount(USD)
ItemExpenseA/C---------Dr----100---------------------200
LiabilityA/C--------------Cr----100---------------------200

As per the above journal lines on 01-Dec-2009, customer is liable to pay 200 USD to the supplier.

-End of the period, conversion rate has been changed to 2.5.
-So customer's liability will get increased to 250 USD(100*2.5).
-So customer suppose to pay 250 USD instead of 200 USD to the supplier.
-This is the true liability at the end of the period and this need to be reflected in customer's General Ledger. Loss 50 USD should be populated in Loss account.
-Revaluation adjusts these amounts and keeps gain/loss amounts in UnrealizedGain/Loss accounts defined in Revaluation window.

You can define and run revaluation as shown below
Navigation Path: General Ledger->Currency->Revaluation
It is two step process.
1. Define Revaluation(one time job)
2. Run CP 'Program - Revalue Balances'

When the Rounding Account is used and when the Suspense Account is used?

A. During Journal Import of a foreign currency journal
1.If the currency conversion type in GL_INTERFACE is not provided, and the accounted amounts are provided, then any imbalance in the accounted amounts will go to Suspense.

2.If the currency conversion type is provided in GL_INTERFACE for the  foreign currency journal, and the currency conversion type is User with a currency conversion rate of 1, then any imbalance in the accounted amounts will be posted to the Suspense account.

3.If the currency conversion type is provided for a foreign currency journal, and it is not User with a rate of 1,  then and only then will the imbalance go to the rounding account.

This is because when Journal Import and consequently Posting is presented  with user-defined accounted amounts, GL has no way of knowing the if the difference in the accounted amounts is due to suspense or rounding. Currently, we are assuming that the difference should go to suspense.

B. In the Enter Journals form:
1. If the user manually overrides the    accounted amounts, the assumption is that the difference in the accounted amounts is due to suspense and not rounding, since the user explicitly chose to override the accounted amounts.If you manually change the accounting amount the conversion_flag is set to  'N' in    the created headers, therefore, posting is rejecting the batch instead of balancing it by adding the rounding difference to a  journal lines.

Source=>Note.340341.1

Rounding Account in GL

Payables creates journal entries in the transaction currency and your ledger currency for all invoices and payments. Payables continues to record gains and losses in the Gain/Loss Accounts you assign. When you pay invoices in a different currency than the payment currency, Payables uses the Rounding account that you define in the Currencies region of the Payables Options window to record the rounding error.

For example, Your ledger currency is FRF and you enter an invoice in 1000 FRF and enter EUR as the Payment Currency. The Payment Amount converts to 152.53917 EUR, at the fixed conversion rate of 6.555693, and rounds to 152.54 EUR. The payment, converted back to your ledger currency is 1000.0054, which rounds to 1000.01. The .01 FRF difference is recorded in the Rounding account. The following shows the accounting entries for the previously described example.

Invoice Accounting
Item Expense -----------1000 Dr--------FRF
Liability------------------1000 Cr---------FRF

Payment Accounting:(Paid in EUR)
Liability-----------------1000.01 Dr----FRF
Cash--------------------152.54 Cr------EUR

Liability------------------0.01 Cr---------FRF
Rounding A/C-----------0.01 Dr---------FRF

Suspense Account in GL

Allows suspense posting of out-of-balance journal entries. If you have multiple companies or balancing entities within a ledger, General Ledger automatically creates a suspense account for each balancing entity. You can also define additional suspense accounts to balance journal entries from specific sources and categories using the Suspense Accounts window.

Note that if you update the suspense account for the ledger, the default suspense account is updated in the Suspense Accounts window. Likewise, if you update the default account in the Suspense Accounts window, the account will be updated for the ledger. If you do not enter a suspense account, you can only post journal entries that are balanced.

Some examples:
Ex 1:
Consider one wants to use the suspense account to collect payments when, for example, the destination account is unknown and when it is known to recycle it to the right account.

Ex 2:
Consider one needs to collect payments that must be allocated to multiple accounts. For example, a 1000$ check has been received from our distributor and this check is supposed to pay a 60$ bill on account 1, a 40$ bill on account 2, a 120$ bill on account 3 and so on. We may also want to use the suspense account to collect the payment as a repository of the global payment, and then recycle this global payment to the multiple destination accounts.


Ex 3: 
When you create accounting entries for cross-currency payments, the resulting accounting entry consists of two currencies: the invoice currency and the payment currency. Payables ensures that the entry balances in your ledger currency. The entry, however, does not balance in the entered currency. General Ledger identifies cross-currency entries created in Payables. These entries have a category of 'Cross-Currency'. For each of these entries, General Ledger separates the entries by currency before balancing them. General Ledger ignores the out of balance errors. Then General Ledger creates a balancing journal entry that is charged to a clearing account. A clearing account is called a 'Suspense Account' in Oracle General Ledger.

Note: The entry to the clearing account will always be zero in your ledger currency because the journal entry already balances in your ledger currency. You do not need to enable suspense accounting for your ledger to create cross-currency payments in Payables. You only need to define a suspense account for journal entries created by cross-currency payments. When defining a Suspense Account for your ledger in the Suspense Accounts window in General Ledger, enter a source of Payables.

What is Financial Statement Generator Reports (FSG)?

Oracle General Ledger’s Fiancial Statement Generator (FSG) is a powerful and flexible tool you can use to build your own custom reports without programming.

You can define custom financial reports, such as income statements and balance sheets, online with complete control over the rows, columns, and content of your report. You can control account assignments, headings, descriptions, format, and calculations in addition to the actual content. The reusable report components make building reports quick and easy. You can copy a report component from one report, make minor edits, then apply the report component to a new report without having to create a new report from scratch.

What is Enterprise Planning and Budgeting (EPB)?

An application built on the integrated multi-dimensional and relational technology in Oracle10g.
An application for planning, budgeting, forecasting, reporting, monitoring, and analysis.
An application that provides sophisticated data modeling and multi-dimensional analysis.
A keystone of Oracle's CPM initiative.
An application tailored for customer's own business processes.

Types of reporting available in GL?

Online Account and Transaction Analysis:
Drilldown to account balances and journal entries to their source. For example, you can drill down from a Payables journal entry to the original transaction in Oracle Payables.

Standard Reports and Listings:
Oracle General Ledger provides over 70 different standard reports and listings to help you view financial and non-financial information.

Financial Statement Generator reports:
The Financial Statement Generator (FSG) is a powerful tool that allows you to create custom financial statements without programming.

Web ADI Report Manager:
With Report Manager, you can define reports graphically in Excel, then upload the report definitions to General Ledger as Financial Statement Generator (FSG) report objects. You can also download existing FSG reports, modify them in Report Wizard, then save the modified definition to General Ledger. You can select amounts from spreadsheet-based FSG reports and drill into the underlying financial information within Oracle Applications.

Oracle Enterprise Planning and Budgeting:
Use Oracle Enterprise Planning and Budgeting, Oracle's On Line Analytical Processing (OLAP) application, to perform in depth analysis, modeling, budgeting, reporting, and forecasting functions using General Ledger data without additional data entry.

How to transfer data from Subledger to GL?

Transferring information from Oracle subledgers is a two-step process:

• Data is pushed into the GL_INTERFACE table from the subledger using a transfer program.
• Then Journal Import pulls the information from the interface table to create valid, postable journal entries in General Ledger.

When you initiate the transfer program from Oracle subledgers, such as Oracle Payables or Oracle Receivables, you can choose to also submit the Journal Import process. If you do not choose to run Journal Import from the subledger, you must run Journal Import separately in General Ledger, using the Import Journals window, in order to create postable journal entries.

Explain Flexfield Qualifiers in GL?

Need to assign qualifiers to individual accounting key flexfield segments to identify or represent the purpose in COA.

Natural Account Each Accounting Flexfield structure must contain only one natural account segment. When setting up the values, you will indicate the type of account as Asset, Liability, Owner's Equity, Revenue, or Expense.

Balancing Account Each structure must contain only one balancing segment. Oracle General Ledger ensures that all journals balance for each balancing segment.

Cost Center This segment is required for Oracle Assets. The cost center segment is used in many Oracle Assets reports and by Oracle Workflow to generate account numbers. In addition, Oracle Projects and Oracle Purchasing also utilize the cost center segment.

Intercompany General Ledger automatically uses the intercompany segment in the account code combination to track intercompany transactions within a single ledger. This segment has the same value set and the same values as the balancing segment.

What are all different Journal Entry Types available in GL?

Within Oracle General Ledger, you can work with the following types of journal entries:
Manual Journal Entries: The basic journal entry type is used for most accounting transactions. Examples include adjustments and reclassifications.
Reversing Journal Entries: Reversing journal entries are created by reversing an existing journal entry. You can reverse any journal entry and post it to the current or any future open accounting period.
Recurring Journal Entries: Recurring journal entries are defined once, then are repeated for each subsequent accounting period you generate. You can use recurring journal entries to define automatic consolidating and eliminating entries. Examples include intercompany debt, bad debt expense, and periodic accruals.
MassAllocations: MassAllocations are journal entries that utilize a single journal entry formula to allocate balances across a group of cost centers, departments, divisions or other segments. Examples include rent expense allocated by headcount or administrative costs allocated by machine labor hours.

Using Secondary Ledgers for Consolidated Reporting

Use secondary ledgers for consolidated reporting to prevent the need to perform balance transfer consolidations, and to obtain a cross-company view of your enterprise. For example, assume the two accounting setups described in the following picture defined for the company's legal entities. The France legal entity uses a primary ledger for corporate accounting purposes and a secondary ledger for statutory reporting purposes. Both ledgers use different charts of accounts and accounting calendars. The US subsidiary uses its own chart of accounts and currency to account for its transactions in its main record-keeping ledger, the primary ledger.

For ease of consolidation, the US subsidiary can assign a secondary ledger to its primary ledger. The secondary ledger should use the same chart of accounts, accounting calendar, and currency as the parent entity, France. Then, by using a ledger set to group the secondary ledger of the US subsidiary with the primary ledger of the parent entity, consolidated results can be obtained by simply running an FSG report using the ledger set. This prevents the need to perform balance transfer consolidations every period.

Primary Ledger Vs Secondary Ledger Vs Reporting Currency

Primary Ledger Vs Secondary Ledger
Use secondary ledgers for supplementary purposes, such as consolidation, statutory reporting, or adjustments for one or more legal entities within the same accounting setup. For example, use a primary ledger for corporate accounting purposes that use the corporate chart of accounts and subledger accounting method, and use a secondary ledger for statutory reporting purposes that use the statutory chart of accounts and subledger accounting method. This allows you to maintain both a corporate and statutory representation of the same legal entity's transactions in parallel.

Reporting Currency Vs Secondary Ledger
Reporting Currencies are not the same as secondary ledgers. Looking at the 4 C's that define a ledger, we have a chart of accounts, calendar, accounting method, and currency. If you only need multiple currencies to support your reporting requirements, use reporting currencies. If you need to account for your data using different calendars, charts of accounts, accounting methods in addition to currency, use a secondary ledger.

What is Reporting Currency and It's Coversion Levels

Reporting Currencies are integrated with ledgers. You specify the reporting currency as a part of the ledger with which you are working. Using Reporting Currency, you can maintain additional currency representations of your primary ledger at three different levels:
- Balance level
- Journal level
- Subledger level

Balance level maintains translated balances. Every time you run translation in General Ledger, balances are stored in a balance level reporting currency.

Journal level, is a currency representation of only your GL journals and balances. Every time you post a journal in GL, the journal will be converted to one or more journal level reporting currencies.

Subledger level is a complete currency representation of your subledger transactions, GL journals entries and balances.

What is ASM(Accounting Setup Manager)?

It is central place for defining and maintaing accounting setup for following:
1.Legal Entities
2.Operating Units
3.Ledgers(Primary and Secondary)
4.Reporting Currencies
5.Subledger Accounting
6.Intercompany and Intracompany balancing
7.Sequencing

Secondary Ledger and it's Conversion Levels

Additional ledgers to the primary ledger called Secondary Ledgers. They can optionally be assigned to an accounting setup to maintain multiple accounting representations for the same legal entity.

Each secondary ledger can be maintained at one of the following data conversion levels:
Subledger level secondary ledger maintains subledger journals, general ledger journal entries, and balances in the additional accounting representation. This data conversion level uses both Subledger Accounting and the General Ledger Posting program to create the necessary journals in both the primary and secondary ledgers simultaneously. Subledger Accounting creates the journal entries from subledger transactions if the subledger integrates with Subledger Accounting. General Ledger Posting creates the journal entries for all other transactions that do no integrate with Subledger Accounting, including manual journal entries.

Journal level secondary ledger maintains primary ledger journal entries and balances in an additional accounting representation. This type of secondary ledger is maintained using the General Ledger Posting program. Every time a journal is posted in the primary ledger, the same journal can be automatically replicated and maintained in the secondary ledger for those journal sources and categories that are set up for this behavior.

Balance level secondary ledger maintains primary ledger account balances in another accounting representation. This type of secondary ledger requires Oracle General Ledger Consolidation to transfer primary ledger balances to this secondary ledger.

Adjustments only secondary ledger level is an incomplete accounting representation that holds only adjustments. The adjustments can be manual adjustments or automated adjustments from Subledger Accounting. This type of ledger must share the same chart of accounts, accounting calendar/period type combination, and currency as the associated primary ledger. To obtain a complete secondary accounting representation that includes both the transactional data and the adjustments, use ledger sets to combine the adjustments-only secondary ledger with the primary ledger when running reports.

Foreign Currency Concepts: Conversion, Revaluation, Translation

What is Conversion?
Conversion refers to foreign currency transactions that are immediately converted at the time of entry to the ledger currency of the ledger in which the transaction takes place.

Whtat is Revaluation?
Revaluation adjusts liability or asset accounts that may be materially understated or overstated at the end of a period due to a fluctuation in the exchange rate between the time the transaction was entered and the end of the period.

What is Translation?
Translation refers to the act of restating an entire ledger or balances for a company from the ledger currency to a foreign currency.

What is a Value Set?

A value set defines the boundaries for the attributes that you assign to a key or descriptive flexfield segment. Value sets control what types of values can be used as Accounting Flexfield segment values. Value sets determine the attributes of your segments such as length, zero-fill, right-justify, alphanumerics, and value security. Value sets also control how validation is performed. For example, with independent validation, a list of values must be created and used.

Assigning Value Sets to Segments
• Assign one value set to each Accounting Flexfield segment.
• Share the same value sets across multiple ledgers to facilitate consolidation.
• You can use the same value set more than once within the same Accounting Flexfield structure (You can use same value set for the Balancing and Intercompany segments).

Segment Qualifiers in GL?

When you define a segment value, you must also assign qualifiers for that value to determine the account type, whether budgeting is allowed, whether posting is allowed, and other information specific to that segment value. You must enter segment qualifier information whenever you define segment values for any value set used to create an Accounting Flexfield combination. Segment qualifiers vary by segment.


They are:

Allow Budgeting Enter Yes to perform detailed budgeting for accounts with this segment value. If set to No, you cannot assign accounts with this segment value to budget organizations and you cannot define budget formulas for those accounts. If you are defining a parent segment value, you must enter No.

Allow Posting If set to No, you cannot use accounts with this segment value to enter journals. If you are defining a parent segment value, you must enter No because you cannot not post to parent accounts.

Account Type Defines the account type for the natural account segment value. You can enter only valid account types. Enter the type of proprietary account (Asset, Liability, Owners' Equity, Revenue, or Expense) or enter the type of budget account (Budgetary Dr or Budgetary Cr). For statistical accounts, enter either Asset, Liability, or Owners' Equity. If you choose an account type of Revenue or Expense for a statistical account segment value, your statistical balance zeros-out at the end of the fiscal year. The default for this field is Expense.

Third Party Control Account Enter ‘Payables’, ‘Receivables’, ‘Yes’ or ‘No’ for the Third Party Control Account to designate the account as a Control Account. Access to this account will be restricted to Oracle Payables, Receivables, and Inventory, for which Subledger Accounting automatically creates detailed balances. If you do not specify the account as a control account, you will be able to use the account for all Oracle Applications.

Reconciliation Flag Enter Yes for Reconciliation Flag to allow reconciliation for natural accounts that should balance to zero.

Define Control Accounts in GL?

Control accounts are General Ledger accounts accessed from Oracle Payables, Receivables, and Inventory, for which Subledger Accounting automatically creates detailed balances. Control Accounts prevent users from entering data from unauthorized sources.

Benefits of Control Accounts
• Improved Data Integrity
- Only allow approved source to post to an account
• Streamlined Reconciliation
- Enforce consistency between source system and GL account balance


Control Accounts Setup and Process
When defining your natural account segment values, you can designate an account as a control account using the qualifier in the segment values window.
1) You can select the journal source from which data can originate for each control account.
2) SLA and GL will verify that only data from the specified source can be posted to the control account.

Accounting Calendar in General Ledger

Sample Calendar:

Prefix Type    Year  Quarter Num  From              To                     Name

Jan     Month  2003  1          1       01-JAN-2003 31-JAN-2003  Jan-03

Feb    Month  2003  1          2       01-FEB-2003 28-FEB-2003  Feb-03

 

 Points to Remember
-Foreign currency translations cannot be performed in the initial period opened for your ledger.
-Choose the earliest period carefully. Once you open your first accounting period, Oracle General Ledger does not allow you to open prior accounting periods.
-Set up the number of periods you want to budget for, up to a maximum of 60 periods.
-You can create your own Period Types(Month, Quarter, Year are predefined type by Oracle)

What is Adjusting Period?
Typically, the last day of the fiscal year is used as an adjusting period to perform adjusting and closing journal entries. Once you begin using your accounting calendar, you cannot change its structure to remove or add an adjusting period. Choosing whether to include an adjusting period or not in your calendar is a very important decision. You can have an unlimited number of adjusting periods.