Step by step Guide

Step 4

General Ledger
Setup & Maintenance Part 1
Ledgers and Legal Entities

Mohammed Raouf
 Ledger and Legal Entity Setups

Part 1
o Setting Up Legal Entities
o Setting Up Ledgers
o Reporting currency

o Inter- and Intracompany Setups

o Document Sequences
o Secondary Ledgers and additional setup options

Restricting ,Grouping Data and Security

Part 2
o Ledger Sets to Group Ledger Access
o Data Access Sets
o Security Rules

General Ledger Profile Options

2
Ledger
and
Legal
Entity
Setups
Setting Up Legal Entities
Legal Entities are required in specific instances, such as when transactions are fed into the General Ledger from
subledgers. Where the GL is used as a standalone or with non-EBS feeders, or where it is a reporting ledger, Legal
Entities are not required. Setting up a Legal Entity allows you to assign Tax ID numbers and addresses that EBS uses for
specific reporting, such as 1099s [in United States] and payroll. In EBS, Legal Entities own the following data and
transactions: [balancing segments, ledgers, eTax Tax Rules, Bank Accounts, Payables and Receivables invoices and
finally, Inter- and Intracompany relationships, accounts, and processing rules.

Setup | Financials | Accounting Setup Manager | Accounting Setups | Legal Entity tab | Create Legal Entity

4
The EIN/TIN is utilized on
some reports, such as
1099 reporting. Selecting
YES for the TRANSACTING
ENTITY will allow
transactions in any
subledger to be created;
selecting NO identifies
this as a Registration
against another Legal
Entity in a specific region
and does not allow
transactions in EBS.
Enter the LEGAL
ADDRESS, either by
SELECTING an EXISTING
ADDRESS or CREATING a
NEW ADDRESS.
Additional information
can be added for the
PLACE OF REGISTRATION,
INCEPTION DATE of the
entity. NAICS 1997
(North American Industry
Classification System), as
well as a TYPE OF
COMPANY from the list of
values.
2 Select the TERRITORY
from the list of values,
and enter the LEGAL
ENTITY NAME. Assign an
ORGANIZATION NAME,
which can be the same or
different as the LEGAL
ENTITY NAME, and a
unique value for the
LEGAL ENTITY IDENTIFIER.
Creating the IDENTIFIER
similar to the NAME,
where the spaces are
replaced with
underscores, will make
identification easier .
Clicking SAVE AND ADD
DETAILS will allow
information to be added
for REGISTRATIONS,
ESTABLISHMENTS,
CONTACT INFORMATION,
and INTERCOMPANY
EXCEPTIONS. The
intercompany is required
if you are using the
Advanced Global
Intercompany System
(AGIS), Later in Part 2.
Some Address Errors need
this Profile Option to be
Blank at the Site level.

6

the Main Establishment can be
modified from the default.
Establishment = the business or the
purpose, like educational /financial
establishment .
Allows names and addresses
to be stored for reference.
EBS will allow intercompany transactions
between all Legal Entities, but this can be
restricted by updating the INTERCOMPANY
EXCEPTION tab and clicking UPDATE to add
the name of the legal entity with which
intercompany transactions cannot be
performed.

Still empty because there is no transactions

If you found the Legal Entity Configurator to

set up your Legal Entity (a responsibility
called Legal Entity Manager), be aware that
the last tab to set up, BALANCING SEGMENT,
does not appear here

In the United States, Select a tax classification to use as a

Consumer's Use tax determining in tax rules. [ Later ]

Save and Add Details

7
Setting Up Ledgers
Under the Accounting Setups tab, Ledgers are defined. Each Ledger will have Legal Entities, Journal Processing setups,
Reporting currencies, Balancing Segment Assignments, Subledger Accounting Options, Operating Units, and
Intercompany and Intracompany accounts and rules, as well as Sequencing setups. If any of the data in each of these
areas is different for a legal entity, a new, secondary Ledger can be set up to accommodate the differences.

1
The
common
seeded is
Standard
Accrual
where the
owner is
Oracle,
Customized
SLA will be
2 explained
in detail
Defined in step 1+2, here you choose them
later.

Later in this part

Secondary Ledgers are defined in Part 2 8
 Review your work 3

4
Let’s Create
Accounting
Options

9
Selecting ADD BALANCING SEGMENT will allow values to be added to
this Legal Entity, at least one company (based on the values in a specific
Value Set), and doing so will restrict transactions in this legal entity to
only the added balancing segments. If this data is updated after the
legal entity or accounting setups are complete, ensure
the General Ledger Accounting Setup Program runs successfully.

You should Complete

all this steps starting
with Ledger options
And turn them to
1
2
3
4
5
6
7
10
 1 Ledger Options [ Contains 4 Steps ]

Add the NUMBER suitable for

your organization. A future
period not for entering of
journal entries, but also the
generation of Reversing,
Recurring, and Mass
Allocation Journals, or
future-dated invoices in
Payables (such as a recurring
invoice generated for the
next period). But Future
periods will not allow these
transactions to be posted to
the General Ledger.
Optionally used when
journal entries get entered in
multiple currencies to
balance any small conversion
differences. EBS requires that
the Debits and Credits for
each currency balance, and
any variances, are posted to
this account (usually pennies,
Cents or 0.01 of any unit of
money).

To account for the invoices in both will balance any

the Project costing and billing subledger journal
module and when payables invoice is entry by both
paid as opposed to when it was currency and
entered; this should be selected balancing segment.
along with a cash basis SUBLEDGER If this is not enabled,
ACCOUNTING METHOD. Selecting then unbalanced
this will create debits to expense and transactions will
credits to cash, and not generate an error out in the
Accounts Payable liability account General Ledger
transaction. interface.
11

Will be used during the year-end
processing to record cumulative
retained earnings.
is a feature that will balance
any journal entry that is
unbalanced to a SUSPENSE
ACCOUNT, it is enabled when
an account is entered here.
This is the default SUSPENSE
ACCOUNT EBS will use, you
can set up Source and
Category-specific accounts in
the General Ledger | Setup |
Accounts | Suspense form.
2
Utilized when currency conversions
are performed. If this account is
not populated, then EBS will add
any rounding differences into the
Next Page largest line of the journal entries
created in the General Ledger. For
subledgers, journals will error out
if this account is not populated and
the journal is out of balance due to
conversion rounding.
When you are using multiple
balancing segments in your ledger,
EBS will create a rounding
difference account combination for
each balancing segment
will balance any journal entry
created where the balancing
segments all belong to the same
Ledger. The Intracompany balancing
rules will need to be defined if you
select this option – Part 2
12
Net Closing R12.1.2
Balance and
Higher

You have two choices at close period of the year end:

A. Let the open new period close down all the income statement accounts and put the results in the retained
earnings in the same way it has always done. This also rolls the balance sheet accounts into the first period of the
new year like it does any other period.

B. Create a journal showing the movement of the income statement accounts into retained earnings or an account
of your choice. You can also create a journal for the balance sheet accounts showing what will be used as opening
balances next year. This is to fulfill a legal requirement in some countries specially France.

If you choose B then the option in the 'Net Closing Balance Journal' choice in the Accounting Setup Manager comes
into effect. This will close the balances either as a net figure to the closing journal (when ticked) or as Cr and Dr
figure to the closing journal (by default).

Functionality before this fix - closes the account by posting the debit sum in the credit and vice versa.

The Net closing flag was introduced to allow users to choose between closing balances by journalling out both the
Dr and the Cr balance or just the net balance on a code combination [ Retained Earnings ]. Detailed Later

13
 2
will require all journal
sources that have Journal
Approval selected to be
approved prior to posting.
See Step 3.
If Currency Translations
are to be performed,
select a DEFAULT PERIOD
END RATE TYPE and the
DEFAULT PERIOD
AVERAGE RATE TYPE.
Enter the CUMULATIVE
TRANSLATION
ADJUSTMENT ACCOUNT
where EBS will record the
cumulative adjustment
for translations. Once this
account is used in a
translation, it cannot be
updated.
Allows tax codes to
be added to journal lines,
and tax calculated on
these lines (you must also
set up the tax codes
General Ledger | Setup |
Tax | Tax Options). Later
To automatically reverse a
journal in the secondary
ledger(s) when the
corresponding journal in the
primary ledger is reversed
manually.
Select from the list
of values to use
the AutoReverse
feature.
The AutoReverse
settings that were
made earlier will
appear in this list.
14
Turns on budgetary 3
controls, this setting is
used most often in
Government agencies,
where the expenses are
fixed for a given year This feature is most often used
based on the approved with VAT or clearing accounts.
budget and cannot be
exceeded.
Will require journal entries for all
The account where any budgets, will require journal entries for
out-of-balance all budgets, not just funded budgets.
encumbrance
transactions will be
posted. The company
segment of this account If you want to track average
will be overridden to balances for your ledger.
the balancing segment
on the out-of-balance will allow the updates to both
transaction. the standard and average
balances to be done
Assign to capture your independently. Basically, this
net income on the For calculating your average balances – in Step 2 feature allows you to create
average balances. standard journal entries and
average journal entries
independently in consolidated
books, it is only applicable for a
consolidated Ledger.
[Consolidation – Later]

15
 3

Choose the RATE TYPE to be

used converting average
balances (USER is not a valid
rate type here, as it must be
a defined rate as opposed to
a rate entered by the user at
time of transaction). EBS will
track translated average
balances based on your
selections here. The default
for EBS is to maintain the
translations based on a
Period Average to Date
amount. Selecting one of
these settings will be in
addition to this.

16
Review your work

17
 2 Reporting Currencies
Reporting currencies are additional currency representations of primary or secondary ledgers. Unlike secondary
ledgers, reporting currencies can only differ by currency from their source ledger and must share the same chart of
accounts, accounting calendar/period type combination, subledger accounting method, if used, and ledger
processing options. Reporting currencies can be used for supplementary reporting purposes, such as consolidation
or management reporting. They can also be used if you operate in countries with highly inflationary economies.

You have two options to Assign RC to a Ledger

When you define your Ledger

OR
After you finish your Ledger Options

18
Balance Level: [primary and secondary ledgers] Using translation to convert the balances from
the ledger currency to the reporting currency, track your balances in more than one currency for
the balances only.
Detail / Journal Level: [primary and secondary ledgers] Each time you post a journal entry in the
associated primary or secondary
ledger, another journal is created and posted to the Journal level reporting currency within the
same journal batch.
Subledger Level: [primary ledgers only] creates the foreign currency transactions when the
subledger accounting is performed, They maintain a currency representation of the subledger
journals, journal entries, and balances.

EBS will use the rates defined under these types to complete the conversions.
Using this feature requires that the Rate Type selected is maintained at all times.

19