As you know there are three types of items

:

Inventory Expense Item

Inventory Asset Item

Expense item

Definition of above Items used in Purchasing can be best understood as:

Asset flag means means it is an asset and the items value will show in your inventory valuation.
Inventory Item

Expense Item
These are one which is used for consumable items purchase for your organization. More
importantly , for creating an expense item you have to perform following setup doing in the
Master Item form.Go to same path in oracle inventory
Oracle Inventory -> Items -> Master Items
When master items form open Go to Inventory Menu you need to tick followings

Asset Item
As discussed above , the following attributes need to be enabled for such an item.

Inventory item

Stock able

transact able

Costing flag

Inventory asset value

For entering on purchase orders
It should have purchased and purchasable flags enabled and you have to make sure you are
assigning this item to the Purchasing org which you have defined at
Oracle Purchasing > Setup > Organizations >
Financial Options > 'Supplier-Purchasing' alternate region 'Inventory Organization' field.
The accounting can be best described for such kind of items is;

Is there any effect on Step 5 in all three cases, that mean do matching have different
accounting entry?
The answer is no; as per my understanding purpose of setting the PO to a 2way, 3 way or 4 way
match is to ensure that the corresponding hold is generated on the invoice.
The holds are basically designed for control purposes, they do not have any accounting effects.

Procure to Pay:
First let’s see what the heading itself means? Procure to Pay means Procuring Raw Materials
required to manufacture the final or finished Goods to Paying the Supplier from whom the material
was purchased. But this is not just two steps. It involves many steps. Let’s see the steps and Oracle
Application involved in performing those steps.
1.

Oracle Purchasing: You enter Suppliers of different materials and products you want to
purchase to manufacture a finished good that your organization plans to sell.

2.

Oracle Purchasing: You prepare a Request for Quotation (RFQ) and send it to different
suppliers to get the best and/or economical price for the product.

3.

Oracle Purchasing: Suppliers sends their quotations and you upload those quotations in
Oracle Purchasing to get the best three quotes and further to get the one best quote.

4.

Oracle Purchasing: You prepare a Purchase Order(PO) against the best RFQ to buy the
goods from the supplier who quoted the suitable price and sends the PO to that supplier

5.

Oracle Purchasing: The supplier receives the confirmation of purchase from PO and ships the
ordered goods. You receive the goods enter a Goods Received Note (GRN) in Oracle
Purchasing.

6.

Oracle Inventory / Oracle Assets: It’s up to you whether you want to receive the goods at
your head office or you Inventory directly. In either case you move the received goods to your
different Raw Material Inventory from Oracle Purchasing to Oracle Inventory and the Item Count
increases. If the item is Asset Type then it will move to Oracle Assets at the time of Invoice
creation in Oracle Payables.

7.

Oracle General Ledger: Once you move the goods to Oracle Inventory, it sends the Material
Accounting to Oracle General Ledger.

8.

Oracle Payables: After this the supplier sends you the invoice for the purchased goods and
you Enter or Match the invoice against the PO from Oracle Purchasing in Oracle Payables. As
said before, if the item is Asset in nature then it will move to Oracle Asset.

9.

Oracle General Ledger: When you enter the invoice it means that you have created a
Liability against that supplier and also you have recorded the expense incurred or asset
purchased. Oracle Payables sends the invoice accounting to Oracle General Ledger.

10.

Oracle Payables: You pay the invoice and settle the Liability.

11.

Oracle General Ledger: The liability is settled and your cash movement account is updated.

12.

Oracle Cash Management: As you pay the invoice Oracle Payables sends the payment
information to Oracle Cash Management for Bank Reconciliation. Once reconciled, Oracle Cash
Management sends the updated Bank/Cash accounting entry to Oracle General Ledger.

13.

Oracle General Ledger: Your cash at bank is updated with actual balance.

14.

Oracle Process Manufacturing(OPM) / Oracle Discrete Manufacturing(ODM): You start
the manufacturing of your final product. Both OPM or ODM requests the different raw materials
from you inventory organizations and manufactures a finished good.

Oracle Receivables: The customer pays and you receive the cash/check. 9. As the finished good is prepared. 2. Oracle Inventory: Check the available unit and the quantity ordered by the customer. Oracle Order Management: You enter the customer order 3. Oracle Inventory: As the raw materials are issued to OPM and ODM the inventory sends the issuing material accounting to General Ledger and decreases the Item Count from the Raw Material Store. Oracle Order Management: You ship the product to customer site and decreases the Finished Goods inventory. 7. inventory item) at a specific price. 6.e. Oracle Inventory receives the finished good in Finished Good Store and increase the Item Count. 8. Now the final product is ready to be sold in the market and from here the O2C cycle starts. Oracle Receivables: The customer receives the product and you invoice the customer. 5. After reconciliation. When you enter the order into the Order Management . Oracle Cash Management: Oracle Receivables sends the customer receipt for Bank Reconciliation. A sales order is an agreement between you and your customer to sell them a product (i. When your final product is ready to be sold.15. Oracle General Ledger: You record your revenue and receivables. Oracle Cash Management send the actual bank balance or Oracle General Ledger. 1. The customer gets fascinated with the marketing campaign and decides to buy your product and from here starts the O2C cycle. you market it. 4. Oracle General Ledger: You have the actual bank balance. Order to Cash Cycle: Order to Cash means Customer’s Order Placing to Vendor’s Cash Receiving. Oracle Order Management: Customer places the order.

Step 1] Order Entry: Customer sends details of order or sales dept brings order from customers. When you have completed the order (and the customer agrees to the order). you will perform step 3 and pick release the order Pick releasing the order will allocate on-hand inventory to your order and tell the warehouse to move the item from inventory to the shipping staging area. At this point you are ready to perform step 4 and ship confirm the order. If you do not manually close the order. Closing the order will prevent you from adding additional lines to the order. The process of closing orders helps Order Management and Shipping programs run more efficiently because they only look for open orders. Oracle’s workflow will close all orders that do not have open lines at the end of the month. During this process. then you perform step 2 and book the order. it is ready to be shipped. Booking the order notifies the planning and shipping modules that the order has been finalized and can be included in the supply chain planning process. Invoice lines will also be generated this process for the shipments on your order. you can configure the order to only generate invoice lines when all order lines have been shipped.module. you are ready for step 5 – closing the order. After the shipment process is complete. you will specify the customer. the ship-to location. If you wish. Once your item is in the shipping staging area. Oracle will also print out any shipping documents that you need. The planning modules will determine if you need to buy or make the item. Once the item has been purchased or manufactured. After that the order is entered in Order Management (OM) Navigation: Order Management Super User> Orders Returns >Sales Orders . and the item’s selling price. Ship confirming the order tells Oracle that the shipment is complete and to decrement the onhand inventory. the item.

Step 2] Order Book : When we book the order. After Order Booking: Order Header: Booked Order Line : Awaiting Shipping Shipping Transaction form: Ready to release Table Level :  OE_ORDER_HEADERS_ALL : Flow_Status_code –Booked  OE_ORDER_LINES_ALL : Flow_Status_code – Awaiting Shipping  WSH_DELIVERY_DETAILS : Released_Status – R ( means – Ready to release) Step 3] Launch Pick Release : Pick Release is the process in which the items on the sales order are taken out from inventory.  OE_ORDER_LINES_ALL – All the line information is stored here.).Here we need to enter the Customer Details (Customer Name . In the Lines tab we need to enter the Item to be ordered and the quantity required. Contact Ship to and Bill to address etc. Here we can save the order. Select the Book Order button. The Entry Status of the Order will change to Booked. This signifies that the Order Entry process is complete and that the order is eligible for the next stage in the line flow for this order. Key Tables:  OE_ORDER_HEADERS_ALL – All header information is stored here. we are just confirming and freezing our order. Here we can also check the availability of the order. Number. Once saved the Order Status is changed to ‘Entered’. Order type. Navigation: Order Management Super User> Shipping > Release sales Orders > Release sales order Based On rule: Select the Grouping rule the reaming details will default in Order. Shipping and Inventory tab . The final step in the Sales Order Entry process is to Book the order. as defined by its Transaction Type.

 Ship Set: Select the Ship Set to be released.  Auto Pick Confirm –Yes/No Inventory tab:  Warehouse: Select the Warehouse  Sub inventory: Select the Sub inventory  Pick Slip Grouping Rule: To determine how released picking lines are grouped onto pick slips. Once the program get completed these are the table get affected:  OE_ORDER_LINES_ALL (flow_status_code ‘PICKED’ )  WSH_DELIVERY_DETAILS (released_status ‘S’ ‘submitted for release’ )  mtl_txn_request_headers  mtl_txn_request_lines  Mtl_material_transactions_temp (link to above tables through move_order_header_id/line_id Step 4] Pick Confirm the Order: . The Order Number must be selected first. Shipping Tab:  Auto creates Deliveries : Select Yes in this box to automatically create deliveries for delivery lines once they are released  Release Sequence Rule: Select Rule to specify the order in which the picking lines are released.Order Tab:  Order Number: Select the Order Number. Values for the Order Type and Customer fields of this form default to those for the order number you enter here.  Default Stage Sub inventory: Select the Default Stage Sub inventory Click on Execute Now Button to complete the pick release of the order. Normally pick release SRS program runs in background .

Step 6] Enter Invoices in Receivables: . Here ship confirm interface program runs in background . Click FIND. pick releasing. and ship confirming.If Auto Pick Confirm in the above step is set to NO. Navigation: Order Management Super User>Shipping >Transactions. Click on VIEW/UPDATE Allocation. Data are removed from wsh_new_deliveries. Navigation: Inventory Super User > Move Order> Transact Move Order In the HEADER tab. enter the BATCH NUMBER (from the above step) of the order.  oe_order_lines_all (flow_status_code ‘shipped’)  wsh_delivery_details (released_status ‘C’ ‘Shipped’)  mtl_transaction_interface  mtl_material_transactions(linked through Transaction source header id)  mtl_transaction_accounts Data are deleted from mtl_demand.  Items are transferred from salable to staging Sub inventory. then the following should be done. then Click TRANSACT button. mtl_reservations and Item is deducted from mtl_onhand_quantities.  mtl_material_transactions  mtl_transaction_accounts  wsh_delivery_details (released_status ‘Y’ ‘Released’ )  wsh_delivery_assignments Step 5] Ship Confirm the Order: The Shipping Transaction window provides a centralized workbench that consolidates three major shipping functions: planning. Then Transact button will be deactivated then just close it and go to next step.

The column INTERFACE_LINE_ATTRIBUTE1 will have the Order Number.  oe_order_lines_all (flow_status_code ‘shipped’.  oe_order_lines_all (flow_status_code ‘closed’. Step 7] COMPLETE LINE: In this stage order line level table get updated with Flow status and open flag . In this stage only oe_order_lines_all table get updated . Step 1: Sales order creation - No entries .Run workflow background Process. Navigation: Order Management >view >Requests Underlying tables:  RA_CUSTOMER_TRX_ALL will have the Invoice header information. open_flag “N”) Step 8] CLOSE ORDER: This is last step of Order Processing . The column INTERFACE_HEADER_ATTRIBUTE1 will have the Order Number. open_flag “N”) Accounting entries For Order to Cash Entries.  RA_CUSTOMER_TRX_LINES_ALL will have the Invoice lines information. Workflow Background Process inserts the records in RA_INTERFACE_LINES_ALL with  INTERFACE_LINE_CONTEXT  INTERFACE_LINE_ATTRIBUTE1 = Order_number  INTERFACE_LINE_ATTRIBUTE3 = = ’ORDER ENTRY’ Delivery_id Then it spawns Auto invoice Master Program and Auto invoice import program which creates Invoice for that particular Order.

Step 2: Pick release : Inventory Stage A/c Dr To Inventory Finished goods a/c Step 3: Ship confirm : Step 4: In Receviable : Step 5: Cash Cogs A/c Dr Inventory Organization A/c. Receviable A/c dr To Revenue A/c To Tax To Freight : Cash A/c Dr Receivable A/c cr .

In accrual basis accounting revenues are recognized when they are (1) realized or realizable and (2) earned no matter when cash is received. In cash basis accounting revenues are simply recognized when cash is received no matter when and how the services were performed or goods delivered. .Revenue Recognition and Invoicing Rules explained Revenue recognition principle is an important accounting principle. which is the main difference between cash basis accounting and accrual basis accounting.

the number of periods and the percentage of the total revenue to recognize in each period can be specified. clients use the Actions wizard to recognize the revenue. Accounting Rules: Accounting rules determines revenue recognition schedules for invoice lines. Using Accounting rules. Delivery has occurred or services have been rendered. When these details are known. Invoicing rules determine the accounting period in which the receivable amount is recorded. Collectability is reasonably assured Invoicing Rules and Accounting Rules: In Oracle AR. The seller's price to the buyer is fixed or determinable. Different accounting rules can be assigned to each invoice line. 3. . 2. Also accounting rules can be Fixed or Variable Duration. Clients can also create rules that will defer revenue to an unearned revenue account. and 4. the invoicing and accounting rules help create invoices that span several accounting periods.Revenue recognition criteria according to US GAAP: USSEC's SAB104 states that revenue generally is realized or realizable and earned when all of the following criteria are met: 1. This helps in the delay of specifying the revenue recognition schedule until the exact details are known. Accounting rules determine the accounting period or periods in which the revenue distributions for an invoice line are recorded. Persuasive evidence of an arrangement exists.

Invoicing Rules: Invoicing rules determines when to recognize receivable for invoices that span more than one accounting period. Oracle Receivables updates the GL Date and invoice date of the invoice to the last accounting period for the accounting rule. • Once the invoice is saved. you cannot update an invoicing rule. Using Invoices with Rules: Assigning Invoicing Rules: • Invoicing rules determine whether to recognize receivables in the first or in the last accounting period. Receivables provides the following invoicing rules: • Bill In Advance: Use this rule to recognize your receivable immediately. • Bill In Arrears: Use this rule if you want to record the receivable at the end of the revenue recognition schedule. Clients can only assign one invoicing rule to an invoice. . • If Bill in Arrears is the invoicing rule.

• For Bill in Arrears. the offset account to accounts receivable is Unbilled Receivables. • For Bill in Advance. • Each invoice line can have different accounting rule. Running The Revenue Recognition Program: • The Revenue Recognition program gives control over the creation of accounting entries. • Submit the Revenue Recognition program manually through the Run Revenue Recognition window.Assigning Accounting Rules To Invoice Lines: • Accounting rules determine when to recognize revenue amounts. the offset account to accounts receivable is Unearned Revenue. • Accounting distributions are created for all periods when Revenue Recognition is run. Creating Accounting Entries: • Accounting distributions are created only after the Revenue Recognition program is run. .

For example. run the program daily for the current open period (from the first day of the open period to the last day in the open period). When you submit the Revenue Recognition program. You can determine how often you need to run the program by examining your data volume.• The Revenue Recognition program will also be submitted when posting to Oracle GL. rather than by accounting period. • Only new transactions are selected each time the process is run. • The program processes revenue by transaction. Recognizing Revenue Run the Revenue Recognition program to generate the revenue distribution records for your invoices and credit memos that use Invoicing and Accounting Rules. Suggestion: We recommend that you run Revenue Recognition at regular intervals. The Revenue Recognition program will only create revenue distribution lines for the invoices or credit memos in Receivables that recognize revenue during this period. you specify the GL date range of the invoices and credit memos you want the program to process. You assign accounting rules to recognize revenue over several accounting periods. The Revenue Recognition program uses the accounting distributions that you specify in the Transaction window or pass into Receivables using AutoInvoice to determine the accounts of your newly created revenue distribution records. . The Revenue Recognition program will create distribution records for the invoices and credit memos that you create in Receivables and import using AutoInvoice.

Enter the range of GL Dates of the accounting period in which to create distribution records. and AutoInvoice clearing account assignments which correspond to the GL date of each invoice included in your submission. Revenue Recognition will use the new accounts when it creates new revenue distribution records. Choose a print format of either Summary or Detail and whether to Commit your work. freight. Prerequisites Enter invoices with rules To run the revenue recognition program: 1. Navigate to the Submit Requests window. and the Printer to use. When you invoke the program in future periods. 4. it will not modify your existing revenue distribution records. including the number of Copies to print. check the Save Output check box. Choose OK. You can invoke Revenue Recognition more than once for the same accounting period without creating extra distribution records that overstate your revenue. If you update an invoice's account set distribution. Receivables associates all of the reversing account assignments for a credit memo that you enter against an invoice with the credit memo itself. 7. Receivables automatically creates the correcting account assignments when you enter your credit memo. If you set Commit Work to No. tax. Revenue Recognition will create the correcting account assignments of credit memos for those periods. Enter Print Options. If the Revenue Recognition program has already created the account assignment for an invoice that you want to credit. 2. the Style. Enter Yes to Commit the distribution records created by Revenue Recognition. 3. . To save the output of the Revenue Recognition program to a file.The Revenue Recognition program also creates the receivable. Note: Creating a credit memo against an invoice does not change how the Revenue Recognition program creates its account assignments. Receivables rolls back the creation of the distribution records when it completes your Revenue Recognition submission. 6. Enter 'Revenue Recognition' in the Name field. 5. Receivables verifies that the dates are in an open accounting period.

You can only assign one invoicing rule to an invoice. You can use the Request ID to view your submission in the Concurrent Requests Summary window. enter Run Options. Accounting rules determine the accounting period or periods in which the revenue distributions for an invoice line are recorded. You can assign a different accounting rule to each invoice line. To run Revenue Recognition more than once.20 below). Invoices with rules are therefore not applicable for this method of accounting. Accounting rules let you specify the number of periods and the percentage of the total revenue to recognize in each period. including the time and date To Start and End Resubmission. Accouning rules of Variable Duration let you define the number of periods during invoice entry. Invoicing rules determine the accounting period in which the receivable amount is recorded.8. You can assign invoicing and accounting rules to transactions that you import into Receivables using AutoInvoice and to invoices that you create manually in the Transactions window. Attention: With Cash Basis Accounting. you only recognize revenue when payment is received. o Bill In Arrears: Use this rule if you want to record the receivable at the end of the revenue recognition schedule (see Figure 1 . Receivables displays the Request ID of your concurrent request and creates the Revenue Recognition Program Execution report. Invoicing Rules Use invoicing rules to determine when to recognize your receivable for invoices that span more than one accounting period. Receivables provides the following invoicing rules: o Bill In Advance: Use this rule to recognize your receivable immediately (see Figure 1 . Invoices with Rules Invoicing and accounting rules let you create invoices that span several accounting periods. You can also specify whether the accounting rules are of Fixed or Variable Duration.19 below). 9. Use the Revenue Recognition Program Execution report to see all of the revenue distribution lines that the program creates. Accounting rules of Fixed Duration span a predefined number of periods. Accounting Rules Use accounting rules to determine revenue recognition schedules for your invoice lines. as they are designed to distribute revenue over several periods before . Choose Submit.

You can change account sets from period to period to meet your business requirements. lines with associated invoicing and accounting rules will be rejected by AutoInvoice. and the cost center of one of the accounts changes during the twelve months. you have an invoice with revenue that you want to recognize over a twelve month period. For example. You can update the account sets to the new cost center account for all of the revenue distributions still to be created. AutoAccounting creates the initial revenue and offset account sets for your invoice.receipt of payment. If you import invoices into a cash basis accounting system. These account sets enable you to split revenue for a line over one or more revenue or offset accounts. . Account Sets Account sets are templates used to create revenue and offset accounting distributions for individual invoice lines with accounting rules.

Revenue Recognition The Revenue Recognition program identifies all transactions with rules within a given period or range of GL dates and creates the revenue distributions for those transactions. using the rules associated with the transactions. . The distributions are created for the current period only.

Unbilled Receivable. Receivable The receivable account controls the account in your general ledger to which you post your receivable amounts. You can select constant. salesperson. the Revenue Flexfield that you specified in the setup window is used. transaction type. In addition. the Revenue Flexfield that you specified in the setup window is used. Receivables only uses the AutoInvoice clearing account if you enabled the Create Clearing option for the batch source of your imported invoices. however. Receivables uses the AutoInvoice clearing account to store any differences between the specified revenue amount and the price times the quantity for imported invoice lines. customer bill-to sites. If you select salesperson or standard item. if you choose standard item you will not be able to import invoices with header level freight through AutoInvoice. AutoInvoice Clearing. transaction type. Variable Description AutoInvoice Clearing Account AutoInvoice uses the AutoInvoice Clearing account for your imported transactions. Tax. you must define a clearing account in either case. and standard item values for your AutoInvoice clearing account. and standard item values to specify your freight account. Receivable. You must define your AutoAccounting structure before you can enter invoices and credit memos and you can only define one structure for each account type. If you choose standard item. and constant values to specify your receivable account. salespeople. Revenue. You can use transaction types. customer bill-to site.AutoAccounting Structure Receivables automatically creates default Accounting Flexfields for your Freight. and Unearned Revenue Accounts. Revenue The revenue account controls the account in your general ledger . salesperson. customer bill-to site. You can use constant. If the transaction has a line type of "LINE" with an inventory item of freight. "FRT". AutoAccounting will use the accounting rules for the freight type account rather than the revenue type account. Freight The freight account controls the account in your general ledger to which you post your freight amounts.

Receivables uses the Revenue Flexfield that you specified in the setup window. You can use information from your tax codes. salesperson. salesperson. salespeople. Unearned Revenue Receivables uses the unearned revenue account for transactions that have invoicing and accounting rules. Below is a table showing what types of information you can use to create each type of account. If you select salesperson. customer bill-to site. transaction type. customer bill-to sites. and constant values to specify your revenue account. If your accounting rule recognizes revenue before your invoicing rule bills it. transaction type.to which you post your revenue amounts. If you select salesperson or standard item. Unbilled Receivable Receivables uses the unbilled receivable account for transactions that have invoicing and accounting rules. customer bill-to site. You can select constant. Receivables uses the Revenue Flexfield that you specified in the setup window. customer bill-to site. and constant values to specify your tax account. transaction type. Receivables posts this amount to your unbilled receivable account. If you select salesperson or standard item. Tax The tax account controls the account in your general ledger to which you post your tax amounts. salesperson. Receivables uses the salesperson's Receivable Flexfield. and standard item values for your unbilled receivable account. the Revenue Flexfield that you specified in the setup window is used. You can select constant. If you select standard item. You can use transaction types. standard item. If your accounting rule recognizes revenue after your invoicing rule bills it. (Rec) and (Rev) indicate whether the account information will be taken from the corresponding Receivables or Revenue Accounting Flexfield. Receivables posts this amount to your unearned revenue account. Information Source / AutoAccountin g Type AutoInvoice Consta nt Custome r Bill-to Salespers Site on Tax Transactio Standar Cod n Type d Item e Yes Yes Yes Yes (Rev) Yes (Rev) No . standard items. and standard item values for your unearned revenue account.

Unbilled Receivable. Receivables uses the segment from the standard item's Revenue Accounting Flexfield. then multiple distributions will be created. and there are multiple salespersons. One salesrep gets 60% revenue credit and the other gets 40%. Note: If AutoInvoice Clearing. Receivables uses the account segment from the Salesperson's Revenue Flexfield. Revenue. Tax. Tax. or Unearned Revenue are based on Salesperson. If AutoAccounting for AutoInvoice Clearing. Tax. and you have two salesreps. you have $100 of Unearned Revenue based on Salesreps. For example. If AutoAccounting for Unbilled Receivable is based on salesperson. Then. or Unearned Revenue is based on the standard item.one for $60 and the other for $40. . Unbilled Receivable. Receivables uses the segment from the salesperson's Receivable Flexfield. or Unearned Revenue to be based on salesperson.Clearing Account Freight Yes Yes Yes Yes Yes (Rev) No Receivable Yes Yes Yes Yes No No Revenue Yes Yes Yes Yes Yes No Tax Yes Yes Yes (Rev) Yes Yes (Rev) Yes Unbilled Receivable Yes Yes Yes (Rec) Yes Yes (Rev) No Unearned Revenue Yes Yes Yes (Rev) Yes Yes (Rev) No If you set up AutoAccounting for AutoInvoice Clearing. two distributions will be created for Unearned Revenue .

and AutoInvoice clearing (suspense) accounts using the information specified in your AutoAccounting structure. Receivables creates default accounts for revenue. finance charges. for the portion that is recognized: DR Receivables CR Unbilled Receivables CR Tax (if you charge tax) CR Freight (if you charge freight) If you enter an invoice with a Bill in Advance invoicing rule. freight. Invoices When you enter a regular invoice through the Transactions window. receivable. unearned revenue. tax. Receivables creates the following journal entry: DR Receivables CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) If you enter an invoice with a Bill in Arrears invoicing rule. Receivables creates the following journal entry: In the first period of Rule: DR Unbilled Receivables CR Revenue In all periods of Rule. unbilled receivable. Receivables creates the following journal entries.Accounting for Transactions This essay describes the accounting entries created when you enter transactions in Receivables using the Accrual method of accounting. In the first period of the rule: DR Receivables CR Unearned Revenue CR Tax (if you charge tax) .

Revenue. or chargeback through the Credit Transactions window. When you enter a credit memo against an invoice with invoicing and accounting rules. Receivables creates the following journal entries: DR Receivables (Invoice) CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Unearned Revenue . Receivables lets you choose between the following methods: LIFO. Receivables creates the following journal entry: DR Revenue DR Tax (if you credit tax) DR Freight (if you credit freight) CR Receivables (Credit Memo) DR Receivables (Credit Memo) CR Receivables (Invoice) When you credit a commitment.CR Freight (if you charge freight) In all periods of the rule for the portion that is recognized. If the profile option AR: Use Invoice Accounting for Credit Memos is set to Yes. debit memo. Receivables keeps the original accounting information as an audit trail while it creates an offsetting entry and the new entry. Receivables creates the following journal entry: DR Receivables (Deposit) CR Unearned Revenue When you enter an invoice against this deposit. and Prorate. Receivables credits the accounts of the original transaction. If this profile option is set to No. See: Crediting Transactions. Prorate. Receivables creates the following journal entries: DR Revenue CR Receivables When you enter a credit memo against an installment. DR Unearned Revenue CR Revenue Credit Memos When you credit an invoice. Receivables lets you update accounting information for your credit memo after it has posted to your general ledger. and Tax accounts. Receivables lets you choose between the following methods: LIFO. and Unit. Receivables uses AutoAccounting to determine the Freight. Receivables uses the account information for on-account credits that you specified in your AutoAccounting structure to create your journal entries. Commitments When you enter a deposit. Receivables. FIFO.

Receivables creates the following journal entry: DR Cash CR Receivables When you enter an unapplied receipt. Receivables creates the following journal entry: DR Cash CR Receivables (Deposit) When you enter a guarantee. Receivables creates the following journal entry: DR Cash CR Unidentified When you enter an on-account receipt.CR Receivables (Invoice) When you apply an invoice to a deposit. Receivables creates the following journal entry: DR Cash . Receivables creates the following journal entry: DR Receivables (Invoice) CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Unearned Revenue CR Unbilled Receivables When you apply an invoice to a guarantee. Receivables creates a receivable adjustment against the guarantee. Receivables creates a receivable adjustment against the invoice. Receivables creates the following journal entry: DR Cash CR Unapplied When you enter an unidentified receipt. Receivables creates the following journal entry: DR Cash Receipts CR Receivables (Invoice) When you enter a receipt and fully apply this receipt to an invoice. Receivables creates the following journal entry: DR Unbilled Receivables CR Unearned Revenue When you enter an invoice against this guarantee. When cash is received against this deposit. Receivables uses the account information you specified in your AutoAccounting structure to create these entries. When cash is received against this guarantee. Receivables uses the account information you specified in your AutoAccounting structure to create these entries.

Receivables creates the following journal entry: DR Cash CR Unapplied Cash To close the receivable on the credit memo and increase the unapplied cash balance. and Earned accounts that you specified in the Remittance Banks window for this receipt class. Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Receivables (Invoice) CR Write-Off When you enter a receipt and combine it with a Chargeback. Receivables creates the following journal entry: DR Receivables CR Revenue DR Cash CR Receivables DR Earned/Unearned Discount CR Receivables Receivables uses the default Cash. Receivables creates the following journal entry: DR Receivables CR Unapplied Cash When you enter a receipt and combine it with a negative adjustment. When you enter a receipt and combine it with an on-account credit (which increases the balance of the receipt). On-Account. Unapplied. Receivables creates the following journal entries: DR Cash DR Write-Off CR Receivables (Invoice) CR Receivables (Invoice) You set up a Write-Off account when defining your Receivables Activity.CR On-Account When your receipt includes a discount. When you enter a receipt and combine it with a positive adjustment. Unidentified. . Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Receivables (Chargeback) CR Receivables (Invoice) DR Chargeback CR Receivables (Chargeback) You set up a Chargeback account when defining your Receivables Activity. Unearned.

Receivables creates the following journal entry: DR Write-Off CR Receivables (Invoice) When you enter a positive adjustment against an invoice. Receivables creates the following journal entry: DR Factor CR Confirmation When you clear the receipt. An example of a receipt requiring remittance would be a check before it was cashed. and assumes that you are liable for the receipt amount until the customer pays the balance on the maturity date. Receivables creates the following journal entry: . Receivables debits the Confirmation account instead of Cash. If you remit your receipt using the standard method of remittance. Receivables reverses the short term liability and creates the following journal entry: DR Short-Term Debt CR Factor Adjustments When you enter a negative adjustment against an invoice. The factoring process let you receive cash before the maturity date. When you receive payment.Remittances When you create a receipt that requires remittance to your bank. Receivables creates the following journal entry when you enter such a receipt: DR Confirmation CR Receivables You can then remit the receipt to your remittance bank using one of the two remittance methods: Standard or Factoring. Receivables creates a short-term liability for receipts that mature at a future date. Receivables creates the following journal entry: DR Remittance CR Confirmation When you clear the receipt. Receivables creates the following journal entry: DR Cash DR Bank Charges CR Remittance If you remit your receipt using the factoring remittance method. Receivables creates the following journal entry: DR Cash DR Bank Charges CR Short-Term Debt On the maturity date.

Receivable. Receivables creates the following journal entries: DR Receivables DR Receivables CR Revenue (if you enter line amounts) CR Tax (if you charge tax) CR Freight (if you charge freight) CR Finance Charges On-Account Credits When you enter an on-account credit in the Applications window. Receivables creates the following journal entry: DR Revenue (if you credit line amounts) DR Tax (if you credit tax) DR Freight (if you credit freight) CR Receivables (On-account Credit) Receivables uses the Freight. .DR Receivables (Invoice) CR Write-Off Debit Memos When you enter a debit memo in the Transactions window. Revenue. Once the on-account credit is applied to an invoice. and Tax accounts that you specified in your AutoAccounting structure to create these entries. the following journal entry is created: DR Receivables (On-account Credit) CR Receivables (Invoice) This document describes the accounting entries for Oracle AP Invoices.

Oracle Accounting Entries in AP: This document describes the accounting entries created when we enter Invoices in Payables using the Accrual method of accounting. or even multiple days like “every 15th and last day of month”. User can skip weekends when determining billing dates. User can also elect to bill on a specific day of the week. -Choose to exclude weekends. Easily create daily. payable creates the following journal entry: DR Liability CR Cash Clearing After reconciliation of payment to the bank statement. quarterly. payables creates the following journal entry: DR Liability CR Item Expense When the Credit/Debit Memo is refunded. payable creates the following journal entry: DR Prepaid Expense CR Liability When the Prepayment is paid. This means one bill can be sent for each billing location. journal entries are: DR Cash Clearing CR Cash Expense Report: When an Employee raises an expense through expense Report Window. journal entries are: DR Cash Clearing CR Cash Credit/Debit memo: When we enter a Credit Memo or Debit Memo against an Existing Invoice. such as every Friday. •Billing Cycles -Billing cycles are no longer just monthly. monthly. journal entries are: CR Cash Clearing DR Cash Prepayment: When we enter a prepayment for a supplier. so billing dates only fall on workdays -For importing transactions with specific dates. or by each billing site. payable creates the following journal entry: DR Liability CR Cash Clearing CR Tax (if charged tax) CR Fright (if any) After reconciliation of payment to the bank statement. Invoice: When we enter a standard invoice through the Invoices window. weekly. journal entries are: DR Cash Clearing CR Cash Balance Forward Billing in 12i: Balance Forward Billing replaces Consolidated Billing feature with enhancements to bill creation and presentation. payable creates following Journal Entries: DR Item Expense CR Liability When the Expense is paid. there is an External Billing Cycle •Consolidate invoices at different customer levels •Activity can be consolidated across account sites. and annual billings -Bill on specific days of the month. or a single bill can be sent incorporating all invoices for that customer account within an organization . User can not only specify the day of the month for the billing date. payable creates the following journal entry: DR Liability CR Cash Clearing After reconciliation of payment to the bank statement. bi-monthly. payable creates the following journal entry: DR Cash Clearing CR Liability After reconciliation of payment to the bank statement. payables creates the following journal entry: DR Item Expense DR Tax (if charged tax) DR Fright (if any) CR Liability When we pay the Invoice.

Flexibility •In 11i. If a site prefers to receive individual invoices. you had to choose between consolidating all invoices for a customer into one monthly bill. This meant that the due date on an individual invoice may be different then on the consolidated bill if the payment term assigned to the invoice was different than the default payment term assigned to the customer. Aging is based on due date of the individual invoice. the payment term assigned to the transaction was ignored if consolidated billing was enabled. •specific invoices can be excluded from the Balance Forward Bill. By changing the payment term on an invoice. there are five consolidated bill programs. it can be printed separately Enhanced viewing and printing: •Balance Forward Billing integrates with Oracle Bill Management. or printing all invoices separately. varied levels of consolidation. and unlimited formats that are easily created and maintained and selected automatically by a rules engine 2. A site can be excluded from the account level bill. the ability to exclude specific invoices. Plus. In 11i. This caused aging to be out of sync with bills due date. while payment due date was based on the payment term assigned to the customer. that site can be excluded from the Balance Forward bill. which provides formats with a more appealing layout that can be easily modified. if you needed different billing formats that meant customizing print layouts.•Not all billing sites for a customer must consolidate their invoices. The new feature consolidates these programs into three. Clearer communication with the customer •User views the balance forward bill online exactly as the customer sees it Accurate Aging •In 11i Consolidated Billing. Now all Invoices that . Benefits: 1. •Now you have expanded billing periods definition by using the new billing cycle concept.

you can choose a daily cycle that is every 5 days. you may elect to run Generate Balance Forward Bill Program in the create Final Bill format. or set it up to run automatically •The generate program will kick off the print program in BPA to create either draft or final bills. they can be reviewed before sending. The process is then executed as follows: 1. 3. •If the process is mature.Define Billing Cycle: •Responsibility: Receivables •Navigation: Setup:Print > Balance Forward Billing Cycles •For Daily.Run the Generate Balance Forward Bill Program to create the bills as either draft or final. choose the day of .Enter transactions or import them using AutoInvoice or Transaction API 2. •You can choose to reprint draft bills via the BPA Print Program by selecting the concurrent request ID. Balance Forward Billing Setup . guaranteeing the individual invoices will age simultaneously.Define a Billing Cycle 2. Also choose whether to include weekends in the number of days. not including weekends in the daily count. Setup and Process: The key setup steps are: 1.Define or update the Payment term and assign it the Billing Cycle 3. In which case. •In Draft format. the BPA program will create final bills.If you create bills in draft mode. For example. you can pick the number of weeks before the next bill.are consolidated on the same bill have the same payment term and due date. you can either reject or accept the bills using the Confirm Balance Forward Bills Program.Enable Balance Forward Billing for customers wishing consolidated bills at either the site or account level. Also. you can pick the number of days before the next bill. •For Weekly.

For example.Define Payment Term: •Responsibility: Receivables •Navigation: Setup : Transactions > Payment Terms •Billing Cycle is a new attribute of the Payment term and must be assigned to the payment term to process balance forward billing. •By choosing Type of Day. For example. When you chose “Exclude Saturdays and Sundays”. •Cutoff Date information is now setup on the billing cycle. Balance Forward Billing Setup . you can set it so billing occurs on the 15th and last of day of each month. you can choose bi-weekly billing that occurs every other Friday. the Due Date is not enterable for Balance Forward Bills -The Due Days field can indicate how many days after the billing date the bill is due for daily and weekly cycles -Day of Month and Months ahead can be used with the Monthly billing cycle. you can elect to create the bills only on the workdays Monday through Friday. choose 3 months if you need quarterly billing. •Also choose the day of the month to create the bill. This field is not updateable if the payment term has been used. For example. This option allows you to choose more than one date so billing can occur bi-monthly on the same days each month. if the billing date falls on a Saturday or Sunday. Balance Forward Billing Setup . therefore the Cutoff Date block has been removed from the payment term setup window.the week the bill will be created. •The payment schedule dates: -Due Date is calculated based on the cycle and billing date therefore. the billing date automatically changes to the date of the following Monday. .Define Billing Cycle: •For the monthly cycle. or 6 months if you need bi-annual billing. choose the number of months before the next bill. It is recommended that these only be used when a single bill day is used otherwise the due date will be the same for all the bills created during the calendar month.

-Note: The default print formats use this customer profile. •Consolidated or Proxima billing terms created in 11i will automatically be updated to balance forward billing payment terms. •The Enable Checkbox must be checked to select a payment term with a Balance Forward Billing cycle. If you do not want to use this option. Balance Forward Billing Setup . Changing the payment term on the invoice means that you do not want this invoice to be included on the bill. detail is at the invoice line level. •The Payment Term field allows you to choose either a Balance Forward if the Enabled checkbox is selected. which can then default to the profile on the customer account record. •Existing payment terms cannot be updated to balance forward billing payment terms and vice versa. •This region replaces the Consolidated Bill region in 11i. . You can only select a non-balance forward payment term if you are overriding the default. Imported is used for the Imported Billing Number feature that was introduced in 11i. •Note: This is different functionality then 11i Consolidated billing which included all in voices on the bill regardless of the payment term assigned if consolidated billing was enabled. or a Non-balance forward term if the Enable checkbox is not selected.•After a balance forward billing payment term has been attached to a customer profile. When creating a rule.Customer Profile Class: •Responsibility: Receivables •Navigation: Customers > Profile Classes •The customer profile class can be updated with the Balance Forward Billing information. the cycle will not be updateable. •The Override Terms checkbox means that the default Balance Forward bill payment term on an invoice can be changed. you can create rules in BPA to ignore this value. •Balance Forward Bills can be created in summary or detail format: summary is at invoice total level. use the attribute “Display Format” to look at the value in this field.

Ssss Balance Forward Billing is just a new name of "Consolidation Invoice billing" in Release 12. 2) another rule uses the attribute “Display Format” = Summary -These rules are then included in the rule hierarchy. -There are two Default rules: 1) one rule uses the attribute “Display Format” = Detail. which provides enhanced billing options with a more complete and flexible solution. If you wish to create new BPA rules. •BPA uses the following information to create the default rules: -The Primary Data Source must be Oracle Receivables Balance Forward. You can use the delivered summary and detail templates provided by BPA. Rules are created and then the templates get assigned to them. use the BPA attribute called “Display Format”. or create and use your own templates •When you run Generate Balance Forward Bills. use the default rules delivered with the feature. BPA looks at the customer profile for the value assigned to the Summary/Detail Type to determine which template to choose.Oracle BPA Rules Setup: •Rules in BPA determine which template is used for printing and viewing Balance Forward Bills. Use this source when creating your own BPA rules. -Templates are assigned to each of rules. •If you wish to have similar functionality as was provided by Consolidated Billing. and you want to use the Summary/Detail Type assigned to the customer profile option. Oracle R12 Vanilla Features of Balance Forward Billing .

This way user can not only specify the day of the month for the billing date. User can also elect to bill on a specific day of the week. such as every Friday. in this case if user skip weekends when determining billing dates.If you compare with R11i Consolidated Billing Invoice.  A balance forward bill can have a daily. there are five consolidated bill programs.  You can also choose to exclude weekends. so billing dates only fall on workdays  A balance forward bill is consolidated at either the customer account or site level depending on the Bill Level value at the customer profile and account profile levels. R12 : The key setup steps The key setup steps are: Define a Billing Cycle . weekly. The Bill Level at the site profile level is a read-only field defaulted from the account profile level. Additional feature you can get like  You can also bill on specific days of the month. The detail format lists all line items.  Bill Presentment Architecture (BPA) configured formats provide a more appealing layout that can be easily modified and this can be viewed the completed bill online  In 11i. The new feature consolidates these programs into three. You can change the Bill Level defaulted from the customer profile class at the account profile level. Both the detail and summary formats present invoice totals.  A balance forward bill can be either detail or summary.  A balance forward bill includes all of a customer's transactions for the billing period and any balance carried forward from the previous billing period. or monthly billing period depending on the balance forward billing cycle assigned to the payment term. there are some enhanced feature you can see.  You can generate a balance forward bill in either Draft or Final formats similar to R11i. or even multiple days like “every 15th and last day of month”.

Case 3: If you are doing setup for monthly cycle. you can pick the number of days before the next bill. the billing date automatically changes to the date of the following Monday. For example.This is first step for your setup. case 2 :If you doing for Weekly. choose the day of the week the bill will be created. You need to navigate: Setup:Print > Balance Forward Billing Cycles Couple of things your quick note: Case 1 :If you are doing for daily. you can choose bi-weekly billing that occurs every other Friday. Define or update the Payment term and assign it the Billing Cycle . There is options where you can choose whether to include weekends in the number of days. Also. By choosing Type of Day. There is no way that this will exclude public Holiday's. you can pick the number of weeks before the next bill. choose the number of months before the next bill. if the billing date falls on a Saturday or Sunday. When you chose “Exclude Saturdays and Sundays”. you can elect to create the bills only on the workdays Monday through Friday.

 in R12. Billing Cycle is tagged with payment term. billing Cycle is a new attribute of the Payment term and must be tagged to payment term to process balance forward billing.  Payment term setup screen does not have any cutoff Date information in R12 as had in 11i. this is part billing cycle setup.Your should do setup from this navigation Setup : Transactions > Payment Terms  Proxima billing/Payment terms created as in 11i is no more exist.  The payment schedule dates: o Due Date is calculated based on the cycle and billing date therefore. the Due Date is not enterable for Balance Forward Bills o The Due Days field can indicate how many days after the billing date the bill is due for daily and weekly cycles o Day of Month and Months ahead can be used with the Monthly billing cycle. . It is recommended that these only be used when a single bill day is used otherwise the due date will be the same for all the bills created during the calendar month.

It is essentially used to consolidate transactions based on cut-off date.A note on Cutoff date Cut-off Date in Payment Terms in 11i is primarily provided for consolidated billing. In R12 consolidated billing feature is replaced by Balance Forward Billing and cut-off date on payment term setup is replaced with Billing Cycle.Enable Balance Forward Billing for customers wishing consolidated bills at either the site or account level. Next .. Follow this step: Create a Customer Profile and attach the information as created in step 1 and step 2 Customers > Profile Classes . It is not expected to be used when consolidated billing feature is not used.

Next is to create Transaction which is discussed in next section. .This way you can create the step up.

You can run these processes and see the report output and verify the details agaist the booked transaction.Here . Oracle R12 Balance Forward Billing Vanilla Functionality The process is then executed as follows:  You can enter transactions or import them using auto invoice or Transaction API  Once Transaction get booked .  The generate program will kick off the print program in BPA to create either draft or final bills. . run the Generate Balance Forward Bill Program to create the bills as either draft or final. or set it up to run automatically. you can see there is only 3 program as compare to 5 underline program as in R11i.