Sunday, February 1, 2015

Create Accounting Structure

Accounting structure consists of 3Cs in terms of oracle applications because the structure is completed with below components :-
  • Chart of Account
  • Calendar
  • Currency
1. Chart of Account : The chart of account is the accounting structure in the general ledger of an organization. Before you define the chart of account you should carefully access your business and decide how many segment you are going to have in your structure. The COA provides unique account number which we use to capture day to day transactions and later use those details to determine asset, liability , profit and loss.

In terms of Oracle application the COA is defined by defining Key Flex Field ‘Accounting Structure’. In R12 General Ledger uses two types of KFF for the COA. The Accounting Flexfield and the GL Ledger Flexfield. The Accounting Flexfield is the primary Accounting Flexfield and should be the only key flexfield used to define and update your chart of accounts.

The GL Ledger Flexfield is a copy of the Accounting Flexfield with an added Ledger segment that is created by running the Generate Ledger Flexfield Program. You should never make changes to the GL Ledger Flexfield directly.By doing this you can cause data corruptions. This flexfield is used exclusively for certain General Ledger features, such as Mass Allocations, Recurring Journals and FSG reports.
Lets have a look at a sample account which we are gonna create for our implementation -
Image 249

Here we have used 6 segment to create the accounting structure (Company – The balancing segment, Department – The costing segment, Account – Accounting Segment, Intercompany – Intercompany segment, Product – to capture product specific accounting and Future Use – To be used in future if need arise). The future use segment is very import and we should have it in out structure, If we have it and later there is need arise to differentiate the accounting based on another factor we can use it and there will not be any issues in the structure. But if we don’t have it and its added later then our accounting structure will have discrepancy, before the new segment we have accounting with 5 segment and after its added we will have of 6 segments.

Not lets go and define the Chat of Account :

Navigate to – XX GL Super User –> Setup –> Financials –> Flexfields –> Segments
Image 220

Query the record (F11), enter ‘Accounting Flexfield’ in Flexfield Title and run the query (Ctrl + F11).
Create an new record and enter the details :

Title – OAF Corp Chart of Accounts
Save the record. Now click on Segments.
Image 222

Enter the details of the segment and value set. Click Here to see the definition of value set.
Image 121
Image 223
Now the most important thing. Map the segments with Flexfield qualifiers. This will tell the system that what is the significance and use of a particular segment. Here we assign :

Company –> Balancing Segment
Department –> Cost Center
Account –> Natural Accounting
Intercompany –> Intercompany Segment
Image 224Image 225Image 226

Once you done with flexfield qualifier assignment close the window. It will take you to Flexfield window. Check the required checkboxes :

Freeze Flexfield Definition : This will freeze the definition. It is recommended that we should freeze when we are done and should not make any changes afterwards.

Enabled : Identifies that the chat of account is active or not.

Segment Separator : Identifies the segment separator (e.g ‘-‘ or ‘.’). If its ‘-‘ account will look like 01-001-0010-0000.

Cross Validate Segments : If checked we can create Cross Validation rules that will prevent the user to create wrong accounting codes.
Once you have checked required check boxes save the record and compile it. If you don’t compile you will be able to use and may get this error while trying to create ledgers.
Image 227Image 228

2. Calendar : Calendar determines your accounting period. First define a calendar type and then use it while creating the Accounting Calendar. We have taken 13 periods per year because 12 period will based on the month and we have one adjustment period. Details of it is beyond the scope of this discussion.

To Create Calendar Type navigate to : XX GL Super User –> Setup –> Financials –> Calendars –> Types.
Image 230

Once you have period type defined define accounting calendar. For that navigate to : XX GL Super User –> Setup –> Financials –> Calendars –> Accounting

Create 12 periods based on months and have an adjustment period. You may have different start date and end date, its not required to have start and end of the month. But make sure the day one period ends, next day the next period should open.
Image 231Image 232

3. Currency : The third item while creating a ledger is currency. We don’t have to define the currency but we have to enable it. In Oracle all the international currencies are defined.

To enable the currency navigate to : : XX GL Super User –> Setup –> Currencies –> Define.

Query desired currency and make sure its enabled.
Image 343
Now ingredients to create a Ledger is complete. You can Create a Ledger now.

No comments :

Post a Comment