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Accounts Payable

(Invoices, Payments)

Project Accounting
(Revenue Adjustments)

Cost Management
(WIP, Inventory Transactions)

Fixed Assets
(Depreciations)

General Ledger

Accounts Receivable
(Invoices, Cash Receipts)
Purchasing (Purchase Order
Accrual Receipts)

Profile Options Owned by General Ledger


You can set the following profile options in General Ledger applications.
User
SysAdmin
Profile Option User

User

Resp

Budgetary Control Group

Dual Currency

Dual Currency Default Rate Type


FSG: Accounting Flexfield
FSG: Allow Portrait Print Style

FSG: Enforce Segment Value Security


FSG: Expand Parent Value

FSG: Message Detail

GL AHE: Saving Allowed

GL Set of Books ID

GL Set of Books Name


GLDI: AutoCopy Enforcement Level
GLDI: Budget Wizard Privileges
Submit
GLDI: Journal Wizard Privileges
Submit
GLDI: Report Wizard Privileges
Journals: Allow Multiple Exchange
Rates

App

Requirements
Site
Required?

Default Value

Optional
Optional

Optional

Optional Account

Optional No

Optional No

Optional No

Optional Minimal

Optional Yes

N/A

Required

Optional None

Optional Entry, Upload,

Optional Entry, Upload,

Optional Define, Submit

Optional No
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When you add periods, keep in mind these important rules:

There can be no gaps between accounting periods.


Accounting periods cannot overlap, except for adjusting periods.
Period ordering must be based on the period starting dates.
You cannot perform foreign currency translations for the first accounting period in a calendar. You
must define at least one period preceding, as well as the period immediately following, the first period
for which you will perform translations.
------------------------------------------------------------------------------------------------------------------------To add periods to your calendar:
Enter the period Type : When you define a set of books, you assign it a period type. When you
assign a calendar to a set of books, only the periods with the corresponding period type apply.
Thus, you can define an accounting calendar with periods of more than one period type; however,
each set of books will only use periods of a single period type.
Enter the Year of the accounting period. This is the year in which your fiscal year ends. For
example, if your fiscal year begins in 1994 and ends in 1995, enter 1995 for all periods in the
fiscal year.
Enter a number to specify which Quarter of your fiscal year your accounting period is in. General
Ledger uses this number to determine how your accounting periods roll up for quarter-to-date
balances.
Enter the Number of the period within the fiscal year. Be sure to number your accounting periods
sequentially, based on the period starting dates you specify in the From/To range.
Enter the range of dates (From and To) when the accounting period begins and ends. Use the date
format DD-MON-YYYY (for example, 01-OCT-1994).
General Ledger automatically creates and displays a period Name for each accounting period. The
name consists of your period prefix and the last two digits of either your calendar year or your
fiscal year, depending on the year type you assigned in the period type definition. General Ledger
displays the period name whenever you choose an accounting period.
If you choose to make an accounting period an Adjusting period, it can overlap the dates of other
accounting periods. For example, you can define a period called DEC-94 that includes 01-DEC1994 through 31-DEC-1994. You can also define an adjusting period called DEC31-94 that
includes only one day: 31-DEC-1994 through 31-DEC-1994. Both your adjusting and nonadjusting periods should have the period type associated with your set of books.
Adjusting periods only apply to General Ledger. They are not used in Oracle feeder systems. In addition,
if you have average balance processing enabled for a set of books, General Ledger will ignore adjusting
periods.
Enter the number of accounting Periods per Year. For example, you could define a Week period type
and specify 52 periods per year. You can assign up to 366 accounting periods per fiscal year for any period
type, and maintain actual balances for those periods. However, for budgets you can only use the first 60
periods.
Enter the Year Type to specify whether the period is part of a fiscal or calendar year. General Ledger uses
the year type to assign a year in the accounting period system name when you set up your calendar.
Choose Calendar to use the year in which an accounting period begins for the system name.
Choose Fiscal to use the year in which your fiscal year ends for the system name.
For example, assume you have a July 1 to June 30 fiscal year and the current date is July 15, 1995. If you
choose the Calendar year type, General Ledger appends the year 1995 to the period name (JUL-95) because

July begins in 1995. If you choose the Fiscal year type, General Ledger appends 1996 to the period name
(JUL-96) because the fiscal year ends in 1996.
Using the same July to June fiscal year example, if the current date is March 15, 1995 and you choose the
Fiscal year type, General Ledger appends the year 1995 to the period name because the fiscal year ends in
1995.
ACCOUNTS TO BE DEFINED IN SET OF BOOKS
When you define your set of books, you always specify a Retained Earnings account. You also might set
up other accounts depending upon the functionality you plan to use.
Retained Earnings account: When you open the first period of a fiscal year, General Ledger posts the net
balance of all income and expense accounts from the prior year against your retained earnings account. If
you have multiple companies or balancing entities within a set of books, General Ledger automatically
creates a retained earnings account for each company or balancing entity.
Suspense account: If you choose to allow suspense posting of out-of-balance journal entries, General
Ledger automatically posts the difference against this account. If you have multiple companies or
balancing entities within a set of books, 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 in the Set of Books window, 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 in the Set of Books window is updated.
Cumulative Translation Adjustment account: This account is necessary if you choose to translate your
functional currency balances into another currency for reporting. General Ledger automatically posts any
net adjustments as a result of currency translation to this account in accordance with SFAS 52 (U.S.). If
you have multiple companies or balancing entities within a set of books, General Ledger automatically
creates a translation adjustment account for each company or balancing entity.
Set the account type of your Cumulative Translation Adjustment account to Owner's Equity to create a
translation adjustment on your balance sheet.
Set the account type of this account to Revenue or Expense to create a translation gain/loss on your income
statement.
Intercompany account: If you choose to automatically balance intercompany journals, General Ledger
ensures that all journal entries balance (debits equal credits) within a balancing entity within your set of
books. If a journal entry is out-of-balance for a particular balancing entity, General Ledger automatically
posts any difference against the appropriate intercompany account. If you have multiple companies or
balancing entities within a set of books, General Ledger automatically creates an intercompany account for
each balancing entity.
You can define additional intercompany accounts that are used to balance journal entries from specific
sources and categories using the Intercompany Accounts window.
Note that if you update the intercompany account in the Set of Books window, both debit and credit default
accounts are updated in the Intercompany Accounts window. Likewise, if you update the debit default
account in the Intercompany Accounts window, the account in the Set of Books window is updated.
However, if you update the credit account in the Intercompany Accounts window, the account in the Set of
Books window is not updated.
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Reserve for Encumbrance account: If you enter an out-of-balance encumbrance entry, General Ledger
automatically posts the difference against the account you specify here. If you have multiple companies or
balancing entities within a set of books, General Ledger automatically creates a Reserve for Encumbrance
account for each balancing entity.
Net Income account: General Ledger uses this account to capture the net activity of all revenue and expense
accounts when calculating the average balance for retained earnings.
OPENING & CLOSING OF A PERIOD
Open and close accounting periods to control journal entry and journal posting, as well as compute periodand year-end actual and budget account balances for reporting.
Accounting periods can have one of the following statuses:
Open: Journal entry and posting allowed.
Closed: Journal entry and posting not allowed until accounting period is reopened. Reporting and inquiry
allowed.
Permanently Closed: Journal entry and posting not allowed. You cannot change this period status.
Reporting and inquiry allowed.
Never Opened: Journal entry and posting are not allowed. General Ledger assigns this status to any period
preceding the first period ever opened in your calendar, or to any period that has been defined, but is not yet
future-enterable. You cannot change this period status.
Future-Entry: Journal entry is allowed, but posting is not. Your period is not yet open, but falls within the
range of future-enterable periods you designated in the Set of Books window. You cannot change this
period status without using the concurrent process to open the period.
You can open new accounting periods, close accounting periods, reopen closed accounting periods, and
open an encumbrance year (if you are using encumbrance accounting).
Note: When you define a new set of books, choose carefully the first accounting period you want to open.
Once you open your first accounting period, General Ledger does not allow you to open prior accounting
periods.
Additionally, you cannot translate account balances for the first period ever opened. Therefore, we
recommend that you open at least one period prior to the first accounting period in which you wish to enter
transactions.
To close an accounting period
1.
Navigate to the Open and Close Periods window.
General Ledger displays all accounting periods defined for your calendar with the period type of your set of
books.
2.

Select the open period that you want to close.

3.

Enter a new status for the period.

Enter Closed to prevent entering or posting journals to that period. You can reopen a closed period
at any time.

Enter Permanently Closed to prevent entering or posting journals to that period. You cannot
reopen a permanently closed period.
4.

Save your work.

To reopen an accounting period:


4

1.

Navigate to the Open and Close Periods window.

General Ledger displays all accounting periods defined for your calendar with the period type of your set of
books.
2.
Select the period that you want to reopen. You can reopen any closed period that is not
permanently closed.
3.

Change the status to Open.

4.

Save your work.

REVALUATION
Date
Event

Rate

15/01/1999
15/01/1999
31/01/1999

0.8
0.8
0.78

15/02/1999

Sales
Sales
Revaluation
Reporting
Reverse
Revaluation
Collection

15/02/1999

Collection

01/02/1999

Debit
amount
10,000
8,000
200

Credit a/c
(foreign)
Inventory
Inventory
AR

Credit
amount
10,000
8,000
200

Currency

0.78

Debit a/c
(Foreign)
AR
AR
Unrealized
loss
AR

200

200

Functional

0.75

Cash

10,000

Unrealized
loss
AR

10,000

Foreign

0.75

Cash
Realized Loss

7500
500

AR

8000

Functional

Foreign
Functional
Functional

Steps of Revaluation
Note It is done for the accounts receivable and payable accounts (assets & liabilities)
1.
2.
3.
4.
5.
6.
7.

Define Unrealized gain/ loss account in Set of Books


Define period-end currency conversion rate for the foreign currencies
Run revaluation for a period, currency and account ranges it creates a journal batch naming Revalues
<Period> <Date> <Time>
Post Revaluation batch in unrealized gain/ loss account
Obtain report on revalued balances
Reverse revaluation journals
Eliminate foreign dominated balances at the time of Collection by posting the difference between the
functional equivalent of original transaction and that at the time of collection at the realised gain/ loss
account

MASTER DETAIL BUDGET


Assume that your account structure contains three segments: Company, Cost Center and Account. Account
5000 is your Travel and Entertainment Expense account, and your company value is 01. The cost center
values are defined as follows:
Cost
Center
Value
600
500
510
599
100
110
110
199
200
210
299

Name
Corporate
Sales Region
Division
Marketing
Division
Total Divisions
Western
Region
Eastern Region
Central Region
Total Sales
Region
Public Relation
Trade Show
Total
Marketing
Expenditure

Parent

YES

Children

Rollup Group

500-598, 600

YES

100-198, 500

Master
Budget
Corporate

900,000
600,000

Corporate

300,000

Divisions

900,000
Sales

200,000

Sales
Sales

300,000
200,000

Sales Region
200,000
150,000

YES

200-298, 510

Marketing

BUDGETING CYCLE
#
1.
2.
3.
4.
5.
6.
7.
8.
9.

Budget Amt

Action
Determine Degree of Control
Define Budget Periods
Define Budget Accounts
Create Budget Journals
Enter Budget Amounts
Post Budget Journals
Review Budgets
Freeze Budgets
Reports on Budgets

BUDGET ENTRY METHODS


Budget Entry Method

Journal
Created

Posts Straight
to Balances

Enter Budget Amounts


Enter Budget Journals
Desktop Integrator Budget Wizard

NO
YES
NO

YES
NO
YES

Increments or
Replace Budget
Balances
Replace
Increment
Increment / Replace

Budget Upload
Budget Formula
Mass Budgeting
Budget Transfer
Budget Carry Forward
Budget Balance Consolidation

NO
NO
YES
YES
NO
YES

YES
YES
NO
NO
YES
NO

Increment / Replace
Replace
Increment
Increment
Increment
Increment

If Require Budget Journal is YES


Enter only
Budget Journal
Mass Budgeting
Budget Transfer
Budget Balance
If Require Budget Journal is NO
Use any method

The Average Balance feature of Oracle General Ledger provides organizations with the ability to track
average and end-of-day balances, report average balance sheets, and create custom reports using both
standard and average balances. Average balance processing is particularly important for financial
institutions, since average balance sheets are required, in addition to standard balance sheets, by many
regulatory agencies. Many organizations also use average balances for internal management reporting and
profitability analysis.
The difference between an average and standard balance sheet is that balances are expressed as average
amounts rather than actual period-end amounts. An average balance is computed as the sum of the actual
daily closing balance for a balance sheet account, divided by the number of calendar days in the reporting
period.
With General Ledger you can maintain and report average balances daily, quarterly, and yearly. General
Ledger tracks average balances using effective dates which you enter for each of your transactions.
General Ledger stores both average and end-of-day balance amounts. These amounts can be used with
many other General Ledger features, such as translation, consolidation, multi-currency accounting, and
formula journals.
You can use General Ledger's on-line inquiry features to display information about average balances for
specified effective dates. You can also request standard average balance reports, as well as create your own
custom reports.

General Example (Average Balance)


Assume that you have three balance sheet accounts (Account A, Account B, and Account C). Each has an
opening period balance of $ 0.00.

Day One
The following transaction is the only activity which takes place on the first day of an accounting period:
Dr. Account A . . . . . . . . . 1,000
Cr. Account B . . . . . . . . . . 1,000
The above activity yields the following results:

Day 1 Account Balances


Activity End-of-Day Balance
Aggregate Balance
Average Balance
Account A
1000
1,000 1,000 1,000
Account B
(1,000) (1,000) (1,000) (1,000)
Note that on day one the aggregate balance for each account is the same as the end-of-day balance. The
average balance equals the aggregate balance divided by 1, the number of days in the period.
Day Two
On day 2, the following transaction takes place:
Dr. Account A . . . . . . . . . 100
Cr. Account C . . . . . . . . . . 100
The above activity yields the following results:

Day 2 Account Balances


Activity End-of-Day Balance
Aggregate Balance
Average Balance
Account A
100
1,100 2,100 1,050
Account B
0
(1,000) (2,000) (1,000)
Account C
(100) (100) (100) (50)
Note that the aggregate balance for each account equals the end-of-day balance for day 1, plus the end-ofday balance for day 2. Another way to state this is: aggregate balance equals the previous aggregate
balance plus the current day's end-of-day balance.The average balance for each account equals the
aggregate balance divided by 2, the number of days in the period-to-date.
Day Three
On day 3, the following transaction takes place:
Dr. Account B . . . . . . . . . 200
Cr. Account C . . . . . . . . . . 200
The above activity yields the following results:

Day 3 Account Balances


Activity End-of-Day Balance
Aggregate Balance
Average Balance
Account A
0
1,100 3,200 1,066.66
Account B
200
(800) (2,800) (933.33)
Account C
(200) (300) (400) (133.33)
Note that the aggregate balance for each account equals the sum of the end-of-day balances for days 1
through 3. The average balance for each account equals the aggregate balance divided by 3, the number of
days in the period-to-date.

Relationship Between Aggregate and Average Balances


When you enable average balance processing in General Ledger, the system calculates and stores three
aggregate balances for each balance sheet account in your set of books, for every calendar day. The three
amounts are the period-to-date, quarter-to-date, and year-to-date aggregate balances. Every time you
post a transaction, General Ledger updates the standard period-end balances, as well as the three aggregate
balances.
Note that General Ledger does not actually store average or end-of-day balances. Instead, the system
performs a quick and simple calculation whenever you need one of these balances. For example, when you
perform an on-line inquiry or run a report, the required average balances are quickly calculated from the
aggregate balances, using the following simple formulas:
Average balance = aggregate balance divided by number of days in the range.
End-of-day balance = current day's aggregate balance minus previous day's aggregate balance.
This relationship between aggregate and average balances is a key concept in General Ledger average
balance processing. Throughout the remainder of this document, whenever we refer to tracking average
balances, average balance processing, or maintaining average balances, we are implicitly referring to the
relationship described above.
Types of Average Balances
To satisfy different reporting and analysis requirements, General Ledger can track three types of average
balances:

Period average-to-date

Quarter average-to-date

Year average-to-date

Note: General Ledger tracks average balances for actual transactions only. You cannot track average
balances for budget or encumbrance balances.
Example: Period Average-to-Date Balance
The following example illustrates how period average-to-date balances are calculated by General Ledger.
This example assumes that we are looking at the activity and balances for one account in a set of books.
The ending balance for May 31st was $100,000.

Example: Period Average-to-Date Calculation


Day
Activity Ending
Balance PTD Aggregate Balance PTD
Range
June 1 $5,000 $105,000
$105,000
June 2 $8,000 $113,000
$218,000
June 3 $4,000 $117,000
$335,000
The period average-to-date balance for June 3rd:
=

1
2
3

PTD Aggregate Balance (as of June 3)


divided by PTD Range (number
of days: period-to-date)

$335,000 / 3 days

Example: Quarter Average-to-Date Balance


Expanding on the period average-to-date example, the following example illustrates how quarter averageto-date balances are calculated by General Ledger.
In this example, the ending balance for March 31st was $70,000.
Example: Quarter Average-to-Date Calculation
Day
Daily Activity
Ending
Balance PTD
Aggregate Balance
QTD
Aggregate Balance
QTD
Range
April 1 $2,000 $72,000 $72,000 $72,000 1
April 2 $3,000 $75,000 $147,000
$147,000
2
April 3 ($1,000) $74,000 $221,000
$221,000
3
:
:
:
:
:
:
:
:
:
:
:
:
June 1 $5,000 $105,000
$105,000
$5,145,000
June 2 $8,000 $113,000
$218,000
$5,258,000
June 3 $4,000 $117,000
$335,000
$5,375,000
The quarter average-to-date balance for June 3rd:

62
63
64

= QTD Aggregate balance (as of June 3)


divided by QTD Range (number
of days: quarter-to-date)
= $5,375,000 / 64 days
= $83,984.38
Note: The QTD aggregate balance is reset to zero at the beginning of each quarter. Accordingly,
throughout the first period of a quarter, the PTD and QTD aggregate balances for any day are the same.
Additional Information: Some financial institutions calculate quarter average-to-date balances by summing
the three period ending averages-to-date for the quarter and dividing by three. You can use General
10

Ledger's Financial Statement Generator to create a custom report using this calculation method for quarter
average-to-date.
Example: Year Average-to-Date Balance
Expanding on the previous two examples, the following example illustrates how year average-to-date
balances are calculated by General Ledger.
In this example, the ending balance for December 31st of the previous year was $50,000.
Example: Year Average-to-Date Calculation
Day
Daily Activity
Ending
Balance PTD
Agg. Bal.
QTD
Agg. Bal.
YTD
Agg. Bal.
YTD
Rng
Jan. 1 $4,000 $54,000 $54,000 $54,000 $54,000 1
Jan. 2 $2,000 $56,000 $110,000
$110,000
$110,000
2
Jan. 3 $0
$56,000 $166,000
$166,000
$166,000
3
:
:
:
:
:
:
:
:
:
:
:
:
:
:
Apr. 1 $2,000 $72,000 $72,000 $72,000 $5,711,000
91
Apr. 2 $3,000 $75,000 $147,000
$147,000
$5,786,000
92
Apr. 3 ($1,000) $74,000 $221,000
$221,000
$5,860,000
93
:
:
:
:
:
:
:
:
:
:
:
:
:
:
June 1 $5,000 $105,000
$105,000
$5,145,000
$10,784,000
June 2 $8,000 $113,000
$218,000
$5,258,000
$10,897,000
June 3 $4,000 $117,000
$335,000
$5,375,000
$11,014,000
The year average-to-date balance for June 3rd:

152
153
154

= YTDAggregate Balance (as of June 3)


divided by YTD Range (number
of days: year-to-date)
= $11,014,000 / 154 days
= $71,519.48
Note: The YTD aggregate balance is reset to zero at the beginning of each year. Accordingly, for every day
in the first period of a year, the PTD, QTD, and YTD aggregate balances are the same.Also note that all
three aggregate balances, for all asset, liability, and equity accounts, are reset to zero at the beginning of a
new year.
Additional Information: Some financial institutions calculate year average-to-date by summing all the
period ending averages-to-date within the year and dividing by the number of periods, excluding any
adjusting periods. Another alternative is to sum the four quarter averages-to-date and divide by four. You
can use General Ledger's Financial Statement Generator to create a custom report using either of these
calculation methods for year average-to-date.

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FEATURES OF AVERAGE BALANCE PROCESSING :


Enable Average Balance Processing for Specified Sets of Books
If you want to use average balance processing in General Ledger, you must enable the functionality for a
specific set of books. With this feature, you can enable average balance processing only for those sets of
books that require it. This ensures that you incur no additional overhead unless you need average balance
processing.
Capture Average Balances
General Ledger calculates and stores the necessary aggregate balance information needed to compute
average balance amounts as of any day in the year.
Effective-Date Transaction Processing
A transaction's effective date determines which end-of-day and aggregate balances are updated by General
Ledger. These balances, in turn, determine the calculated values of your average balances.
Transaction Calendar Control
Certain organizations that need average balance processing, such as financial institutions, are required to
post transactions only on business days. Posting on weekends or holidays is not allowed, although some
organizations do post period-end accruals on non-business days.
In General Ledger, you control transaction posting with a transaction calendar. When you define a
transaction calendar, you choose which days of the week will be business days. You also specify the
holidays, using a form provided for maintaining the transaction calendar.
Each set of books, for which average balance processing is enabled, is assigned a transaction calendar.
When transactions are posted, General Ledger checks the effective dates against the transaction calendar. If
the dates are valid, the transaction is posted. For invalid dates, you can tell the system how you want the
transaction handled.
Other features of transaction calendar control are as follows:

Multiple sets of books may share a transaction calendar.

You can set a profile option to allow certain individuals to post transactions on non-business days.

Controls are applied to imported journals, as well as manual journals.

Control Transaction Balancing by Effective Date


Normally, General Ledger requires that total transactions balance for an entire period. When average
balance processing is enabled, the system checks total transactions for each effective date to ensure that
debits and credits balance. When they do not, General Ledger rejects the transactions, or, if you have
enabled suspense posting, the system creates a balancing entry to the suspense account.

12


Manual journals are balanced directly, since the effective date is entered at the journal level, not
for individual journal lines.

Imported journals are sorted and must be in balance by effective date within each source.

Allowing Back-Value Transactions


You can post transactions with effective dates prior to the current date. When you do so, the effect on
average balances is determined by the effective date, rather than the system or current accounting date.
General Ledger adjusts the ending and aggregate balances of the affected accounts as of the effective date
and all subsequent dates.
Additional Information: The back-value date is not limited to the current period. It can be in the prior
period or even in a period from a prior year.
Maintain Averages for Summary Accounts
If you use summary accounts, and choose to enable average balance processing, General Ledger will
maintain average, as well as standard, balances for your summary accounts. General Ledger automatically
updates your summary average balances, as well as the standard average balances. You can use summary
average balances in allocations and financial reports.
On-line Inquiry
You can use the Average Balance Inquiry form to review on-line information about the average or end-ofday balance of any balance sheet account. You can view summary or detail balances, as well as drill down
from your summary balances to see the detail. Also, you can customize your view of the average and endof-day balances to show only the information you want, in the order you want it.
Standard Reports
General Ledger provides two standard average balance reports:

Average Balance Trial Balancedisplays standard and average balances for selected accounts, as
well as period, quarter, and year average-to-date balances, for any as-of date you specify.

Average Balance Audit Reportdisplays the detail activity used to create aggregate balances and
related average balances maintained by General Ledger.

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