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O A W P A R12 O R: Racle Pplications Hite Aper Ccounting in Racle Eceivables
O A W P A R12 O R: Racle Pplications Hite Aper Ccounting in Racle Eceivables
Author:
Mohamed Nazih
CPA, PMP, Oracle Financials Consultant
m.nazih@gmail.com
Version
1.0
Contents
About the Author ................................................................................................... 4
Introduction ........................................................................................................... 4
Purpose.................................................................................................................. 4
Scope ..................................................................................................................... 4
Audience ................................................................................................................ 5
Accounting in R12 Oracle Receivables ................................................................... 6
Determinants - Accounts .............................................................................................................. 6
System Options Accounts ......................................................................................................................................... 7
Transaction Type....................................................................................................................................................... 8
Customer Bill-To Site ................................................................................................................................................ 9
Remittance Bank ..................................................................................................................................................... 10
Receivables Activities.............................................................................................................................................. 11
Salesperson ............................................................................................................................................................. 11
Standard Line Inventory Item .............................................................................................................................. 12
Standard Line Memo Lin ...................................................................................................................................... 12
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Introduction
Accounting Journal Entries are embedded in every aspect of Oracle Financials Applications.
Since they are Financials, you must have a good understanding of how these journals are
generated and integrated. This understanding affects how you design and implement solution
and it is the ground of discussion with customers representatives in this sector. They may
have little knowledge of Oracle but, mostly, are good accountants.
Purpose
This whitepaper will provide a detailed overview of accounting events, entries, and source.
This overview may help designing better chart of accounts and justifying decisions taken to
setup system parameters and options
Scope
This whitepaper will cover Oracle R12 Receivables accounting except those of:
Bills Receivable
Credit Cards
Trade Management and Claim Investigation
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Audience
This whitepaper is aimed to super users and functional consultants and implementers as well
as applications auditors.
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Qualifier
Receivable
Asset
Revenue
Sales
Person
Standard
Line
Revenue
Freight
Revenue
Clearing
Asset
Unbilled receivable
Asset
Unearned revenue
Liability
Tax
Liability
Realized Gain
Revenue
Realized Losses
Expense
Unallocated Revenue
Revenue
Expense
Header Rounding
Expense
Offset
Asset
Cash
Asset
Bank charges
Expense
Receipts Confirmation
Asset
Remittance
Asset
Factoring
Asset
Liability
Unapplied Receipts
Asset
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Account
Qualifier
Unidentified Receipts
Asset
On Account Receipts
Liability
Unearned discount
Expense
Earned discount
Expense
Adjustment (write-off)
Revenue
Bank Error
Expense
Finance Charges
Revenue
Refund
Liability
Misc. Cash
Revenue
Figure 1
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Sales
Person
Standard
Line
Transaction Type
Figure 2
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Figure 3
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Remittance Bank
Figure 4
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Receivables Activities
Figure 5
Salesperson
Figure 6
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Figure 7
Figure 8
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Determinants - Options
AutoAccounting
If an account can be defined in more than one window, AutoAccounting Setup determines
which account segment will be picked from which source. That does apply only to
transactions accounting since receipts accounting has one source (i.e., Receipt Class Remittance Bank). AutoAccounting applies to the following accounts:
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Debit
Credit
Revenue
Tax
Freight
Debit
Credit
Revenue
(Last Period)
Accounts
Receivables
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Debit
Credit
Unbilled Receivables
Tax
Freight
Debit
Credit
Unearned Revenue
Tax
Freight
Debit
Credit
Revenue
Credit
Revenue
Tax
Freight
Accounts
Receivables
Late Charges
(1)
Debit
Debit
Credit
X
(1)
Late Charges account is defined in a Receivable Activity of type Finance Charges. This
activity assigned to System options and can be overridden on customer Bill-To site.
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Debit
Revenue
Tax
Freight
Receivables
(2)
Credit
(2)
The profile option AR: Use Invoice Accounting for Credit Memos determines how JE for
credit memos are generated. If Yes, Receivables credits original transaction. If No,
Receivables uses AutoAccounting to determine accounts.
(3)
Debit
Credit
Receivables
(4)
(3)
(4)
Invoice account
Credit
X
(6)
(5)
(6)
Invoice account
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Debit
Debit
Revenue
Tax
Freight
Receivables
(7)
(7)
Credit
(8)
Debit
Credit
Receivables
(9)
(8)
(9)
Invoice account
Debit
Credit
Receivables
(10)
AR-11 Deposit
Accounts
Receivables
Offset
(11)
(12)
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Debit
Credit
X
X
(12) Offset account can be an account such as unearned revenue and is controlled by profile
option = AR: Deposit Offset Account Source (AutoAccounting or deposit's transaction type)
Debit
Credit
X
Receivables
(13)
(14)
Debit
Credit
Revenue
Tax
Freight
Offset
Receivables
(15)
AR-13 Guarantee
Accounts
Receivables
(16)
Revenue (17)
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Debit
Credit
X
X
(18)
Debit
Credit
Revenue
Tax
Freight
Revenue
Receivables
(19)
Debit
Credit
X
Receivables
(20)
Credit
Bank Charges
(21)
Unidentified Receipt
(21)
Debit
X
X
Bank Charges can be entered if profile option "AR: Create Bank Charges" = Yes and
receipt's creation status is 'Cleared' (clearance method of receipt class is set to 'Directly').
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Debit
Credit
Unapplied Receipt
Debit
Cash
Bank Charges
Unapplied Receipt
Credit
Debit
Credit
Receivables
Debit
Cash
Bank Charges
Receivables
Credit
Debit
Cash
Bank Charges
On Account
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Credit
Debit
Cash
Receivables
Credit
Debit
Cash
Bank Charges
Credit
Debit
Credit
X
(23)
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Debit
Credit
X
X
Debit
Credit
Receipt Confirmation
Debit
Cash
Bank Charges
Remitted Receipt
Credit
Debit
Credit
Receipt Confirmation
Debit
Credit
Factored Receipt
Debit
Cash
Bank Charges
Short-Term Debt
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Credit
Page 23 of 28
Debit
Credit
X
X
Notes Receivable
NR-01 Note Receivable requiring Remittance
Accounts
Notes Receivable
Debit
Credit
Receivables
Debit
Credit
Notes Receivable
Debit
Cash
Bank Charges
Credit
Debit
Credit
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Debit
Credit
X
X
Debit
Cash
Bank Charges
Short-Term Debt
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Credit
Special Accounts
Cross Currency Rounding
Is used to record rounding error amounts created during a cross currency receipt application
for currencies that have a fixed rate relationship. These errors:
May occur because there are usually more decimal places defined for an exchange rate
than for the standard precision of functional currency. When a receipt amount is
multiplied by an exchange rate and then rounded to match standard precision, the
result can be slightly different from the transaction amount specified in the
transmission file.
May be expected if receipt in foreign currency (USD) is to be applied to invoices in
different foreign currency (EUR) while functional currency is EGP.
Header Rounding
Is used to record any rounding differences occur upon converting foreign currency
transactions to functional currency.
Upon creating a transaction with several line items, total amount in the two currencies may
vary slightly (usually by the minimum accountable unit defined for functional currency). These
differences occur due to rounding.
Example:
Item
A
B
C
Amount in EUR
15
12
23
Exchange Rate
8.639
8.639
8.639
Total
Rounding Difference
50
8.639
Amount in EGP
129.59
103.67
198.70
431.96
431.95
0.01
Total amount of lines after conversion is EGP 431.96 while header amount is 431.95. This
results in a rounding difference of 0.01. The journal entry would be:
Accounts
Receivables
Header Rounding
Revenue
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Debit
Credit
431.95
0.01
431.96
Unless its a legal requirement, Header Level Rounding is not recommended. If so, Receivables
rounds amounts at line level (EUR 50), multiply by exchange rate (EGP 8.693), and posts any
rounding difference to the Receivables account. When more than one receivable account is
used according to AutoAccounting setup the account with largest amount is affected by
the rounding difference.
Accounts
Debit
Receivables A
129.59
Receivables B
103.67
Receivables C
198.96
Revenue
Credit
431.95
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Information Sources
o AutoAccounting Setup White Paper [ID 215376.1]
o Oracle Recivables User's Guide Release 12.1 Part No. E13522-04
o Oracle Payables Implementation Guide Release 12.1 Part No. E13510-04
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