Accounting Basics PDF

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Oracle Advisor Webcast
JD Edwards EnterpriseOne
Accounting Basics
Frank Dumonteil
Principal Support Engineer
Accounting Basics
Objectives
Learn basic accounting terms.

Example typical entries.
Learn how it all ties in with
EnterpriseOne General Ledger
processes.
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Accounting Basics
Agenda
Overview General Ledger

Journal Entries
Balance Sheet vs. Income Statement
Data Integrity
Reverse Sign
Summary
Top Articles and Community Links
Questions and Answers
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Accounting Basics
Agenda

Journal Entries
Data Integrity
Reverse Sign
Summary
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What is a General Ledger?
The General Ledger is an accumulation of a companys financial transaction totals.
General Ledger:
Balance Sheet (Equity)

Asset
Liability Assets Liabilities = Equity
Equity
Income Statement (Profit and Loss)

Income
Expenses Income Expense = Profit and Loss
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General Accounting Terms
Balance sheet: contains assets, liabilities and owners equity:

Assets: resources owned by a business.
Assets are increased by debits, decreased by credits. Should have a debit balance.
Examples include Cash, Accounts Receivable, Fixed Assets, Inventory.
Liabilities: claims against assets.
Liabilities are increased by credits, decreased by debits. Should have a credit
balance.
Examples include short term and long term payables.
Equity: claims of the owners.
Increased by credits, decreased by debits.
Examples include paid-in capital and Retained Earnings.
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General Accounting Terms

Income: Revenue and Sales
The gross increase in owners equity results from providing a good or service.
Increased by credits and decreased by debits, should have a credit balance.
Expenses
The cost of assets consumed or services used in the process of earning
revenue.
Increased by debits and decreased by credits, should have a debit balance.
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Organizational Structure
Companies are organizational entities.

Business Units are part of the basic account and denotes transactions within an
organization, such as a warehouse or store.
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General Ledger Accounts
A companys listing of accounts to define items for which money is spent or received.
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Accounting Basics
Agenda

Journal Entries
Data Integrity
Reverse Sign
Summary
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Journal Entries
Examples Journal Entries
IPO Stock Proceeds of $15,000 $7,000 Payment Due for Equipment
15,000 15,000 7,000 7,000
Cash Paid-in Capital Credit Accounts Payable Cash
Debit
$5,000 Inventory Purchased Paid with Cash $2,000 Sale of Inventory, $1,500 Cost
5,000 5,000 2,000 2,000
Inventory Cash Accounts Receivable Sales
$7,000 Equipment Purchased on Credit 1,500 1,500

Cost of Goods Sold Inventory
7,000 7,000
$2,000 Payment Received from Sale
Equipment Accounts Payable
As per the Generally Accepted Accounting Principles 2,000 2,000

Cash Accounts Receivable
(GAAP) Journal Entry (debits and credits) have to balance .
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Journal Entries
Example Journal Entry
(P0911)
Journal Entry data is written

to the Accounts Ledger
(F0911) table.
T- Balance
5,000 5,000
Accounts Receivable Sales - Product Class 1

Journal Entries
Post Journal Entry (R09801)
Posting the Journal Entry updates the Account Balance (F0902) table.
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Accounting Basics
Agenda

Journal Entries
Data Integrity
Reverse Sign
Summary
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How does EnterpriseOne know which accounts are balance sheet and
which are income statement?
The GLG Automatic Accounting Instructions (AAI) indicates which objects are to be
considered as balance sheet or income statement.
Objects within the GLG2-GLG5 range are balance sheet, GLG6-GLG12 are income
statement. AAI Chart of Account Example
GLG2 Assets Balance Sheet 1.1000
GLG3 Liability and equity 1.4000
GLG4 Retained Earnings 1.4980
GLG5 Ending Balance Sheet 1.4999
GLG6 -GLG7 Income range Income Statement 1.5000 - 1.5999
GLG8 - GLG9 Cost of Goods range (Profit and Loss) 1.6000 - 1.7999
GLG11 Other income 1.9000
GLG12 Ending account Profit and Loss 1.9999
GLG13 Other Expenses 1.9200
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GLG AAI setup example:
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How are balance sheet and income statement accounts treated?
Account 60.1200 falls

between AAIs GLG2-GLG5
(Balance Sheet).
Balance sheet accounts
take into consideration the
balance forward amount,
which is an accumulation of
prior-year balances.
The balance forward
amount plus the current-year
period amounts comprise of
the cumulative amount for the
current year.
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How are balance sheet and income statement accounts treated?
Account 61.5100 falls

between AAIs GLG6-
GLG12 (Income
Statement)
No balance-forward
amount as part of the
calculation, only current
year amounts are
considered for the
cumulative amount for
the current year.
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How are balance sheet and income
statement accounts treated?
At the end of the Fiscal Year, the Annual
Close must be run.
The Profit and Loss amounts from the
GLG6-GLG12 objects are placed in the
GLG4 Retained Earning Accounts.
Retained Earnings are within the balance
sheet (GLG5) and comprise of the
cumulative Profit and Loss for a company
from its inception.
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Accounting Basics
Agenda

Journal Entries
Data Integrity
Reverse Sign
Summary
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Data Integrity
EnterpriseOne Safeguards to Ensure the Accounting Entries Balance
Ledger Type Setup: Ledger is

Required to Balance.
Journal Entry: Hard error when

attempting to save an entry where
the debits do not offset the credits;
prevents creating out of balance
entries.
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Data Integrity
Integrity Reports
Integrity reports identify data problems
and inconsistencies.
Ensure data accuracy so that the JD
Edwards EnterpriseOne systems
remain in balance.
Intercompany
Account in Balance
R097011
Batches Out of
Balance R007032
Batch to Detail
R007031
The Companies in Balance Integrity report
Companies by Batch Out
(R097001) ensures that debits and credits
of Balance R09706
Companies in for the entire company net to zero.
Balance R097001
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Data Integrity
Intercompany Transactions
If an entry is made where multiple companies are

involved with the GA constant flag set to *, after the
batch is posted, all companies are out of balance by
the offsetting amounts.
Intercompany Settlements prevent companies to be
out of balance.

Accounting Basics
Agenda

Journal Entries
Data Integrity
Reverse Sign
Summary
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Reverse Signs
Standard reports, such as the

Simple Income Statement, offer
choices for how signs should be
treated.
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Reverse Signs
Example reverse sign = 0; represents the amounts as they are stored.

Reverse Signs
Example reverse sign = 1 reverses signs so that revenues appear as positive,
expenses as negative.

Accounting Basics
Agenda

Journal Entries
Data Integrity
Reverse Sign
Summary
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Summary General Ledger
Setup Company Business Unit Accounts AAIs

F0010 F0006 F0901 F0012
General Ledger:
Balance Sheet (Equity)
Journal Account Ledger Post Asset
R09801 Account Balance Liability
Entry F0911 F0902 Equity
Income
Expenses
Reports General Ledger Trial Balance

Integrity Reports
Reports Reports
Detailed data Integrity reports Trial Balance is a worksheet that

analysis. identify data lists the balances (debit and credit)
problems and of all ledgers to ensure the
inconsistencies. companies entries are correct.
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Accounting Basics
Agenda

Journal Entries
Data Integrity
Summary
Reverse Sign
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Information Center: JD Edwards EnterpriseOne General Accounting Product (1485984.2)
Online User Guide:
JD Edwards EnterpriseOne Applications General Accounting Implementation Guide
Release 9.1
1561246.1:Getting Started In My Oracle Support JD Edwards Communities
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Continued Discussion: JD Edwards EnterpriseOne Accounting Basics (Doc ID 1615603.1)
April 23, 2014
https://community.oracle.com/thread/3542926
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1 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Oracle Advisor Webcast Program

Learn basic accounting terms.

Overview General Ledger

Overview General Ledger

The General Ledger is an accumulation of a companys financial transaction totals.

Balance Sheet (Equity)

Income Statement (Profit and Loss)

Balance sheet: contains assets, liabilities and owners equity:

Income Statement (Profit and Loss)

Companies are organizational entities.

Overview General Ledger

$7,000 Equipment Purchased on Credit 1,500 1,500

As per the Generally Accepted Accounting Principles 2,000 2,000

Journal Entry data is written

16 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Overview General Ledger

Account 60.1200 falls

Account 61.5100 falls

Overview General Ledger

Ledger Type Setup: Ledger is

Journal Entry: Hard error when

If an entry is made where multiple companies are

27 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Overview General Ledger

Standard reports, such as the

30 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

31 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Overview General Ledger

Setup Company Business Unit Accounts AAIs

Reports General Ledger Trial Balance

Detailed data Integrity reports Trial Balance is a worksheet that

Overview General Ledger

About Oracle Support Best Practices

Get Proactive in My Oracle Support

Get Proactive Blog

Ask the Get Proactive Team

Searching Effectively in My Oracle Support

Using MOS Premium KM Solutions

37 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

38 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

Do you have requests or ideas

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40 Copyright 2013, Oracle and/or its affiliates. All rights reserved.

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