Accounting For Oracle Receivables

Flow of Accounting Information: - If you are using Oracle Order Entry (without customizations), no accounting information is available until you run AutoInvoice. You pass the transactions to Oracle Receivables using the Receivables Interface. You then run AutoInvoice which creates the actual transactions and uses AutoAccounting to derive the segment values for the GL Accounts. If you are using Oracle Projects the account segment values are derived by a Projects¶ process also called AutoAccounting and passed as values to Oracle Receivables via the Streamline process, also using AutoInvoice. - Whether you are manually entering your receipts or processing them through AutoLockbox, the accounting information is automatically determined by Oracle Receivables when you create and apply the receipts (not when it is still a "QuickCash" batch). The values used are based on the setup values for the bank where the receipts were deposited and the invoices they are paying. General Ledger Interface: - You pass accounting information from Oracle Receivables to Oracle General Ledger using the General Ledger Interface. If you have properly set up Oracle Receivables, you should never have to create manual journal entries in your General Ledger and the two systems should always be in sync. - When you invoke the General Ledger Interface process, you initiate multiple programs that: Finds all of the records for the period you specified that have not yet been passed to the General Ledger; 1. Determines if the debits equal the credits; 2. Passes the data to GL for editing; and 3. Marks the records as having been passed (so they will not pass twice). - If you have specified that you want the Journal Import to also run, this process verifies that the individual segments and combinations of segments are valid. Only when the Journal Import completes successfully are the Journals available for posting. Tips: 1. Always run the General Ledger Interface using the starting date of the period through the last day of the period. This is applicable no matter when you are running the process or if you know you will never have activity for that date, since sometimes the system uses dates other than the dates you expect. 2. Depending on which patches you have applied, you may or may not see the Unposted Items Report. If this report does run, always check each page to ensure that you have no items that could not be passed to the General Ledger. If anything besides headings appears, work with your IT department to resolve (since this is usually caused by a bug). Verify that the amounts in the General Ledger Interface Report are reasonable and that the debits equal the credits. 3. Verify that the Journal Import has a status of "SUCCESS." If not, you had a problem that will need to be resolved or none of the items in the batch will be available for posting. Generally you

then 1. Note what you did and why and storing the notes in a handy binder so you will be prepared when the auditors ask why you did what you did. These reports may be run at anytime before or after you run the General Ledger Interface. Your options are: Detail by Account (very large). Should this occur. An example of this is your Accounts Receivable account that may have been valid when the invoice was originally created but it is not longer valid. Detail by Category (also large) and Summary by Category. as you know. create an offsetting entry using the proper account. 3. There are actually four reports that give you varying levels of details regarding the journal entries you will be creating or have already created. but you lose the audit trail of what you did and why. When you apply a receipt to an invoice it always causes an offsetting entry against the original Accounts Receivable account. Run the Detail by Category (just for that category and account) to see which specific activities used the funny account. Balance your AR activity to the Aging: Old Aging Balance -----(Aged Trial Balance . and a receipt was just applied against it. Re-disable the segment or combination. Period Close Procedures: Tip:Never have more than one AR period open at one time. Summary by Account.be sure to include the applicable id). If not possible (i. and 4. Tip: Run the Summary by Category and review to insure that there are no invalid or illogical accounts. someone has since disabled either a segment or the combination. prior to running the General Ledger Interface. you may accidentally enter activities in a period other than the period you intended. If you find funny accounts. You have the option to correct in the Import Corrections form (in GL).e. Tip: If you run this report for Unposted Items only. so you will not forget anything. There have been problems with entries appearing partially in one period and partially in another.have a problem if an account was valid when the activity was created. Journal Entries Reports: The Journal Entries reports are the best way to verify the actual accounting for Oracle Receivables¶ activities and the only way to view the accounting for the foreign currency gains and losses. 2. Also. By making the corrections in this way you are able to keep your GL in sync with your AR activity and you have an audit trial of what you did to make the correction. Correct the activity if possible. you can correct or create offsetting entries prior to posting. Re-enable the segment or combination. Create a manual journal entry (also in GL) to move the activity from the bad account to the proper account (this is my one exception to never creating manual journal entries). Create a checklist to insure that you always know where you are and what you have to do next..7 Buckets by Account) ________________________________________________ + New Invoices -------Transaction Register . adjustment). you cannot save with invalid values but. you must leave the Posted Date range blank or nothing will appear on the report. Re-run the Journal Import (in GL -.

Taxes .Revenue .+ Debit Memos ------. You may get one segment value for one type of account from a different place than for another. Tax and .Possible sources of this information are the values you set up for the following: .Credit Memos -----.(Accounts) Receivable . credit memos.Salesreps .Items Not Aged ----.Aged Trial Balance . 3) what you may change and/or override and what is out of your control.Transaction Register .Unbilled Receivable (for deferred receivables recognition) .Unapplied Receipts Register +/. For each type of account select the source of each segment (based on the list of available sources) and fill in that box. You can use a similar worksheet to test the setup of your AutoAccounting rules.Summary by Category and the Account Analysis report (in GL). Accounting Details The GL Accounts may or may not appear on the form (depending on what you are doing) but almost every activity you perform has an accounting impact. debit memos. Item.AutoInvoice Clearing (for problems with extended amount) .Tax .Freight .Standard Lines (Items or Memo Lines) . chargebacks and commitments) using the rules that you specify. In order to understand this impact it is necessary to know: 1) what accounts are impacted by each transaction. AutoAccounting : AutoAccounting a very powerful setup feature that tells Oracle Receivables how to determine the individual segment values for your Transactions (invoices. List your Accounting Flexfield segments in the left column. 2) what are the related set ups.Receipts Applied ---.Transaction Register + Chargebacks --------Transaction Register . Salesrep.And/or hard coded values.Invoice Exceptions Report ____________________________________ New Aging Balance --. You may use this feature when creating Transactions manually or through AutoInvoice.7 Buckets by Account Also balance your AR activity to your GL activity using the Journal Entries Report . Note any manual journal entries that used "your" accounts.Transaction Types . The types of accounts impacted by AutoAccounting include: .Unearned Revenue (for deferred revenue recognition) . Test your theory by listing what all the setup accounts would be for a Transaction Type. See Appendix 1 for an example of a typical AutoAccounting setup.Adjustments ------Adjustment Register .

may override) 1000 b) For each of the next 11 periods: DR : Unearned Revenue (AutoAccounting) 1000 CR : Revenue (AutoAccounting) 1000 If you are using deferred revenue recognition.may override) 12000 CR :Unearned Revenue (AutoAccounting) 1000 DR : Unearned Revenue (AutoAccounting) 12000 CR : Revenue (AutoAccounting . For a standard Invoice: DR : AR (AutoAccounting . Verify that you have not created invalid account values as the defaults. If you defined Memo Lines for use with your debit memos.. Once you are satisfied with the results. run Revenue Recognition prior to the time when you are actually closing (e.Memo Line.g. it really is just another invoice with different dates. for each type of account.000 split evenly over 12 periods: For invoices with deferred revenue: a) When first created: DR : AR (AutoAccounting .may override) You may also create invoices with special accounting and invoicing rules that allow you to defer revenue recognition for the percentage and number of periods that you specify.may override) CR : Revenue (AutoAccounting . Debit Memos: Debit memos work just like standard invoices (you even create them on the same forms) -. Then use a white-board and fill in each segment.may override) :Tax (AutoAccounting . For manual invoices you have the option to override the default values. Once you have created an invoice copy. This will process the majority of the updates prior to the actual close. Verify that the combinations are actually valid. Recurring Invoices (Transaction Copy) are treated like regular invoices.may override) :Freight (AutoAccounting . Tip: To reduce the time it takes to close the period.taking advantage of AutoAccounting but with overridable segments. Invoices: When you create an invoice either through AutoInvoice or manually. the night before the close). if not. you take advantage of AutoAccounting to provide the default Accounting Flexfield values. redesign how they will be set up or redefine your AutoAccounting rules. enter your AutoAccounting rules into your test system and start creating manual invoices. with the values from each of the related sources. Tip: I prefer to assign all segments to sources versus using hard coded values. they will provide the default accounting segments if . except they have different GL dates. The following is an example of an invoice created with deferred revenue recognition for $12. This seems more flexible for future changes. you need to run the revenue recognition process for each period (Run Revenue Recognition) and runs automatically as part of the General Ledger Interface.

may override) : Tax (from the related invoice . You may not override these values.may override) CR : Freight (from the related invoice . You may override the default values at entry time if you are entering manually. . Tip: Often AP and AR share the same bank account but it is helpful to use a different but sequential GL account for each. at any time. you debit the credit account you used when you created the on-account credit. the unapplied and discount accounts). The key accounts are: . you may share the GL Accounts for multiple bank accounts (i.may override) On-account credits take advantage of AutoAccounting and Standard Lines (Memo Lines) depending on how you set up your AutoAccounting rules for the default credit and debit GL Accounts. Credit Memo tied to an invoice: DR : Revenue (from the related invoice . which does not allow you to split the Unapplied. Earned Discount and Unearned Discount account for each bank and class.may override) : AR (from the related invoice . except for Miscellaneous Receipts. Credit Memos And On Account Credits: There are two types of credit memos: credit memos that you create to offset an individual invoice are called "Credit Memos. DR : Revenue (Memo Line . You may override the default values if you are entering manually. Or.Your unapplied payments account (the default used until you match the payment to an invoice). Unidentified. Unapplied. accounts for the applicable cost center or division.you have set up AutoAccounting to use Standard Lines values for your Revenue accounts. You may set up different values for each bank and class that you use (especially important for the cash account). The accounting for Credit Memos usually offsets the applicable accounts from the original invoice (if you set your System Profile option AR: Use Invoice Account For Credit Memo to "Yes"). NOTE: You have one Cash." Credit memos that impact a customer¶s account but are not initially tied to a specific invoice are called "OnAccount Credits. is totally controlled behind the scenes by Oracle Receivables. The Accounts Receivable account for the invoice being offset is credited. This eases the reconciliation but you can roll together for FSG reporting..may override) When you apply an on-account credit to invoice(s). On-Account. etc. The GL Accounts are determined by the values you defined in Receipt Class for the batch. .may override) CR : AR (AutoAccounting . DR : AR (from the On-Account Credit) CR : AR (from the invoice) Cash Receipts (Excluding Miscellaneous Receipts): The accounting for receipts.e. Credit memos and on-account credits that are created using AutoInvoice take advantage of AutoAccounting and/or hard coded values." On-account credits may be tied to invoice(s) using the Receipts Applications window.Your cash account (the default debit account for that bank account).

Payment applied to an invoice without discount terms: DR : Cash (Receipt Class) : Unapplied (Receipt Class) CR : Unapplied (Receipt Class) : AR (from the invoice) Payment applied to an invoice with discount terms: DR : Cash (Receipt Class) : Unapplied (Receipt Class) : Discount (Receipt Class) CR : Unapplied (Receipt Class) : AR (from the invoice) When you leave a receipt as unapplied: DR : Cash (Receipt Class) CR : Unapplied (Receipt Class) When you identify a receipt is as a pre-payment or deposit: DR : Cash (Receipt Class) CR : On-Account (Receipt Class) For unidentified receipts: DR : Cash (Receipt Class) CR : Unidentified (Receipt Class) When you apply unapplied.Your earned and unearned discount accounts (used when a client pays invoices in accordance with the early payment terms.Your on-account account (used to account for pre-payments until you apply them to invoice(s)). on-account and unidentified. The Accounts Receivable account (credit) defaults from the invoice that is being paid. Oracle still creates credits and debits to the unapplied account. The accounts used are based on the accounts you currently are using for the Receipt Class. the cash account (debit) defaults from the Receipt Class for the Receipt batch. Tip: Often companies use the same GL Account for unapplied. unearned discounts are paid after the discount term but are allowed anyway. This is fine as long as: the account is not used for anything else and it is not an Accounts Receivable or cash account.Your unidentified account (used for receipts where you do not know which customer sent the receipt). Earned discounts are for payments made within the discount terms. NOTE: Even if you instantly match a payment to an open invoice. These are also often the same. on-account or unidentified receipts. When you match a receipt to an invoice. . .. The Accounts Receivable account still comes from the invoice. . the accounting is determined by the original status.

If you re-open the invoices.DR : Unapplied (Receipt Class) On-Account (Receipt Class) or Unidentified (Receipt Class) CR : AR (from the invoice) When you unapply a receipt. You may override the Accounts Receivable account when you enter the payment reversal. The Accounts Receivable account for the new invoice is based on the Accounts Receivable account for the Chargeback but you may override it at entry item. Transaction Types where you specify the default AR account. You need to set up values for Chargebacks in 3 places: Receivables Activity where you specify the "wash" account used when creating a Chargeback. DR : Unapplied (Receipt Class) : AR (from the invoice) CR : Cash (Receipt Class) : Unapplied (Receipt Class) If you create a debit memo. You debit the AR account for the original invoice and credit the unapplied account based on the current unapplied account for the Receipt Class: DR : AR (from the invoice) CR : Unapplied (Receipt Class) When you reverse a receipt.may override) CR : Cash (Receipt Class) Chargebacks: You create Chargebacks when you are applying cash to close the original invoice and create a new invoice for the amount that the customer short paid. Oracle credits the Accounts Receivable account for the original invoice (note that these two accounts may be different). Note that this process also impacts the unapplied account. In the Category of Adjustment: DR : Chargeback Adjustment (Receivables Activity) CR : In the Category of Adjustment (AR): DR : CR : AR (from the original invoice) . you credit the original cash account but debit the Accounts Receivable Account for the Debit Memo type you selected. By definition. you have two possible options: re-open the invoices you previously paid or create a debit memo for the amount of the reversed payment. A Memo Line ("Chargeback Line") is seeded by Oracle but it is just used for the line description when you print the Chargeback and has no accounting impact. DR : AR (Transaction Type . there is a one to one relationship between a Chargeback and the original invoice. the system offsets the accounts used when you originally applied the payment (from the invoice and the cash account). the accounting is just the opposite of the application accounting.

You may pre-define the credit accounts that you usually use to speed entry (using Receivables Activity) but you also have the flexibility to override the values at entry time.In the Category of Chargeback: DR : CR : Chargeback Adjustment (Receivables Activity) In the Category of Chargeback (AR): DR : AR (from the chargeback . or the addition of finance charges. This speeds entry. When you enter Miscellaneous Receipts. If you will always be splitting the accounts. utility refunds. Examples include Cobra payments. If you find that you may not use an account that you need. You also have the ability to split a single receipt into multiple accounts (you may also pre-define those accounts using Distribution Sets).may override) Receivable Adjustments: Receivable Adjustments are generally write-offs. or changes to the invoice balance due for over. The Distribution Window in the Receipts form allows you to do just that. The cash account used defaults based on the Receipt Class for the bank you specified on the Batch Screen. work with your System Administrator to change the Account Security Rules. but you may override the default values as you enter the adjustments. However. A distribution set is a name and one or more GL Accounts and percentages that you define. you should define a Distribution Set. the individual segments. You may run into an Account Security Rule set up to restrict usage of accounts by application. you may override the default GL Accounts.you may override) CR : In the Category of Trade Receipts: DR : Cash (Receipt Class) CR : In the Category of Trade Receipts (AR): DR : Unapplied (Receipt Class) CR : AR (from the original invoice) : Unapplied (Receipt Class) Miscellaneous Receipts: Miscellaneous Receipts are any receipts that are not for open receivables. You must create a Receivable Activity that refers to the Distribution Set. the percentages and/or the amounts. and you may not override or view the value.or under-payment by the customer. NOTE: Always define a GL Account and not a Distribution Set when you define Receivable Activities . and returns on investments. you may need to credit any account within the chart of accounts. you refer to the Receivables Activities that you defined above. Due to the nature of this activity. Pre-define commonly used adjustment types using the Receivables Activity form. T-shirt sales. DR : Cash (Receipt Class) CR : Miscellaneous Account(s) (Receivables Activity or Distribution Set .

The gain or loss is determined based on the difference in the value of the money (in your base currency) between when the invoice was created and when the receipt was created. You can only view the gain/loss accounting activity by running the Journal Entries Report. and increase the invoice balance) or negative (credit AR and decrease the invoice balance).now worth more: . The gain and loss accounts are derived based on the values in your System Options and how you set up Flexbuilder. Note that there is no gain or loss if you apply an adjustment since both the adjustment and the invoice use the same rate. Gain . Receivables adjustments may either be positive (debit AR.for adjustments. The Accounts Receivable account credited is the Accounts Receivable account for the transaction. Note that ALL adjustments made during this process will use that exact same "write off" account even if the original invoices are for different companies. You can predict Gains and Losses using the Projected Gains/Losses Report. When you enter the Transaction. A Receivables Adjustment is always applied to a specific invoice so it impacts the Accounts Receivable account for that invoice.may override) CR : AR (from the invoice) You may use AutoAdjustments to perform mass cleanup of open invoices and on-account credits. Oracle Receivables already automatically offsets the AR account for the invoice being adjusted and you will create a wash entry. Foreign Currency Gains and Losses: Transactions that are not in your base currency may cause gains or losses to occur due to fluctuations in the exchange rates. When you enter the related receipt the applicable exchange rate for the date you enter the receipt is stored with the receipt. the applicable exchange rate for the date you enter it is stored with the transaction. Examples include: Add a finance charge (note that this is a positive adjustment that increases the balance due): DR : AR (from the invoice) CR : Finance Charges (Receivables Activity . Note that most companies use the default setup for Flexbuilder. This may be a consideration in determining if you can actually utilize AutoAdjustments. or if you want to run multiple passes of AutoAdjustment by Transaction Type and Adjustment Activity. or cost centers.may override) CR : AR (from the invoice) Write-off the invoice balance: DR : Cost of Doing Business (Receivables Activity . The account debited is based on the Receivables Activity you select when you submit the AutoAdjustment process. never use an Accounts Receivable Account. Tip: When entering an adjustment.may override) Reduce the freight amount: DR : Freight (Receivables Activity . This is automatically accounted for by Oracle Receivables.

DR : Cash (Receipt Class at the receipt rate) : Unapplied (Receipt Class at the receipt rate) CR : AR (from the invoice at the invoice rate) : Unapplied (Receipt Class at the receipt rate) : Gain (System Options .difference between the invoice and receipt values) CR : AR (from the invoice at the invoice rate) :Unapplied (Receipt Class at the receipt rate) .now worth less: DR : Cash (Receipt Class at the receipt rate) : Unapplied (Receipt Class at the receipt rate) : Loss (System Options .difference between the invoice and receipt values) Loss .

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