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R12 Ledger

This document provides an overview of ledgers in Oracle General Ledger Release 12. It defines a ledger as a container that holds all accounting information captured in other modules. A primary ledger is mandatory, while additional secondary ledgers can be created as needed. The key components required to set up a ledger are discussed, including chart of accounts, calendar, currency, and accounting method. The relationship between ledgers and the multi-organization structure is also explained.

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0% found this document useful (0 votes)
126 views21 pages

R12 Ledger

This document provides an overview of ledgers in Oracle General Ledger Release 12. It defines a ledger as a container that holds all accounting information captured in other modules. A primary ledger is mandatory, while additional secondary ledgers can be created as needed. The key components required to set up a ledger are discussed, including chart of accounts, calendar, currency, and accounting method. The relationship between ledgers and the multi-organization structure is also explained.

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com
Oracle Applications Release 12
ORACLE GENERAL LEDGER
LEDGER
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INTRODUCTION
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Hello Readers
! have taken some time to write on one o" the ke# chan$es made in Release 12 that is
Led$ers. Even thou$h the concept o" Led$er is not a new "eature it is onl# an
enhancement to %et o" &ooks in Release 11 and renamed as Led$er. However that
enhancement has caused man# chan$es which one must 'e aware o". !n this document
we will 'e re"errin$ to the usa$e o" led$er and newer "unctionalities it has 'rou$ht alon$
with it.
(he normal e)planation on an# concept in Release 12 is o"ten compared with how the
same "unctionalit# was used in Release 11. E)planations were not strai$ht to the readers
who are e)posed to Release 12 onl#. (here has 'een a compulsion to know how the
s#stem was per"ormin$ in Release 11 in order to appreciate concepts in Release 12. !
have taken care to put the e)planations in such a wa# it will act as $ood re"erence to
readers who are not e)posed to Release 11 also.
Also have taken enou$h care not to make this document sound like *ser Guide or
reproduce details stated in the user $uide. (here"ore ma+orit# o" the content will 'e 'ased
on what ! have understood "rom availa'le resources ,-etalink *ser Guides Other &lo$s
and .orum sites etc./
(his document will contain onl# conceptual part and clari"ications on concepts. ! have
not included an# setups0screen shots on this document. !t is purel# a 1hite paper and not
a presentation on how to per"orm setups. !" the setups are re2uired one can communicate
their willin$ness to the Author 'ased on the num'er o" responses he mi$ht write a
presentation on setups alone.
Author is reacha'le at ivruksha3$mail.com or ivadmin3ivruksha.com
! would re2uest ever# one who takes time to read this document to point out the
corrections i" an# on the e)planations have 'een made. Author would 'e incorporatin$
the chan$es at the earliest.
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WHAT IS A LEDGER?
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A Led$er is a container o" all accountin$ related in"ormation captured throu$h various
other modules. Oracle General Led$er -odule owns led$ers.
One has to desi$n the led$er in an appropriate wa# keepin$ in mind what in"ormation it
needs to hold. One can have as man# led$ers as the# want 'ased on their 'usiness
re2uirement and operations point o" view. -ost o" the setups related to led$ers are not
reversi'le which means it cannot 'e corrected it is one time onl#. (here"ore one must
take enou$h care to dra"t out their re2uirements in papers 'e"ore actuall# implementin$ it.
!n earlier releases ,&e"ore R12/ the concept o" led$ers was alread# present however the#
were termed as %et o" &ooks. (he introduction o" Led$er is nothin$ 'ut an enhanced
"unctionalit# o" %et o" &ooks.
(ransactions entered in various di""erent modules are all saved to their correspondin$
led$ers. One can never pro$ress settin$ up o" "inancials modules or a multi or$ structure
'e"ore decidin$ on the Led$er setup.
A led$er saves the accountin$ in"ormation in an or$ani6ed wa# as directed '# the
conditions speci"ied in the accountin$ options "or that led$er.
!n a non computeri6ed environment accountants normall# enter their re$ular0da# to da#
"inancial transactions in a manual led$er 'ook ,will 'e lookin$ 'i$ in si6e/ and total it up
at end o" the da# to "ind out the 'alances. (hat manual led$er 'ook has a "ormat in which
the entries are recorded so the person who is $oin$ to "ill the led$er should 'e "ollowin$
the "ormat and an# other additional in"ormation which he has is not relevant "or makin$
an entr# in led$er.
Oracle led$ers are also per"orm their operations in the same wa#. !mplementer de"ines
the "ormat rules restrictions "or a particular led$er usin$ di""erent setup screens makin$
the user to onl# enter the in"ormation what is relevant "or Oracle General Led$er to
process "urther. One ma# collect man# additional in"ormation in di""erent modules as per
their 'usiness re2uirement whereas those are o" least importance since the# are all onl#
data which are not su'+ected to an# "urther processin$ '# oracle.
A well planned0desi$ned led$er saves a lot o" time "or the compan# in processin$ the data
and preparin$ -!% reports "or the mana$ement in ke# decision makin$s.
One will also 'e knowin$ that &usiness intelli$ence module does this +o' o" producin$
e)cellent reports on the dail# operations o" compan# and points out ke# areas and red
"la$s. However 'usiness intelli$ence can 'e used to 'est e""ect onl# when the 'ase
setups which are in place are e""icient.
Led$er 'ein$ the "oremost setup "or an# "inancial modules in E 'usiness %uite one must
understand the power importance and its usa$e at later sta$e in man# other areas within e
&usiness suite.
1e will 'e usin$ the word led$er a lot in the whole discussion readers mi$ht $et
con"used as to whether it re"ers to primar# led$er or secondar# led$er to resolve the
indecision whenever author uses the word Led$er it purel# represents 7rimar# Led$er
onl# in case i" an e)planation is there "or secondar# led$er author will 'e usin$ the word
8secondar# led$er9 "or distinction.
1e will now discuss in detail a'out led$ers.

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COMPONENTS OF LEDGER
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!n order to setup a led$er one must complete de"inin$ the components o" a led$er. %ince
led$er is nothin$ 'ut a com'ination o" all those components. 1ithout usa$e o"
components led$er cannot "unction on its own.
(he components o" a led$er are<
1/ C hart o" Accounts 2/ Calendar 4/ Currenc# 5/ Accountin$ -ethod
(he# are also termed as 5 =9s.
Chart of Accounts
(he de"inition o" =hart o" Accounts structure is one o" the most comple) part there has
to 'e a 'rainstormin$ and man# levels o" discussions 'etween =lient and the
!mplementation team to decide on a structure that 'est suits the 'usiness need.
!n short =OA decides on what in"ormation needs to 'e collected "or ever# transaction
that is 'ein$ transacted '# the 'usiness considerin$ di""erent parameters and ke# "actors.
Caln!ar
=alendar presents the period "or which the 'usiness is carried "orward. =alendar here
represents Accountin$ calendar. One will 'e decidin$ on the calendar 'ased on their
statutor# re2uirement. Even thou$h ever# accountin$ period is $oin$ to have a span o" 12
months in it however there is a $reater di""erence on the start and end date o" the
accountin$ period.
Currnc"
=urrenc# represents the list o" currencies in which the customer is havin$ 'usinesses.
One needs to de"ine0ena'le the currencies as per their 'usiness re2uirement> there is no
harm in ena'lin$ all currencies.
Account#n$ Mtho!
Ever# 'usiness has to "ollow an accountin$ method to record their transactions in order to
compl# with the le$al commitments. Oracle '# de"ault has provided seeded accountin$
methods "or usa$e however i" the clients 'usiness demands "or customi6ation o" an
accountin$ method or creation o" new accountin$ method as per the statutor# re$ulations
then the# can create their own accountin$ method as well.
All the a'ove?discussed components are mandator# in order to de"ine a primar# led$er.
.or a secondar# led$er in addition to the a'ove component one needs to select the
method o" Data =onversion Level "ollowed.
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MULTI ORGANI%ATION
EN&IRONMENT
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(he -ulti or$ani6ation structure starts "rom &usiness Group and ends at !nventor#
Or$ani6ation or %u' inventor# level.
&elow "i$ure represents how the -ulti Or$ is de"ined<
Led$ers takes the place o" second level in the multi or$ structure onl# 'ased on which
the le$al entit# and operatin$ units are $oin$ to 'e decided on. Also remem'er it is not
mandator# "or a led$er to have a Le$al entit#.
Onl# 'ased on the de"inition o" led$er the multi or$ structure is desi$ned0"inali6ed.
(here"ore it is ver# vital to per"orm the led$er setup keepin$ in mind that it has a $reater
impact on the multi or$ani6ation structure to 'e "ollowed '# the client and setup '# the
implementation team.
Even thou$h Led$ers takes place second level in the a'ove "i$ure one can sa# it is the
startin$ point o" -ulti or$ structure since settin$ up o" a 'usiness $roup or validations 0
"unctionalities related to 'usiness $roup are less complicated when compared to other
elements in the -ulti or$ structure.
B
'USINESS GROUP
LEDGER
LEGAL ENTIT(
OPERATING UNIT
IN&ENTOR( ORGANISATION
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T(PES OF LEDGERS
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!n total there are two t#pes o" Led$ers availa'le the# are<
Pr#)ar" L!$r
!t is mandator# that ever# accountin$ operation must have one primar# led$er
!t acts as a 7rimar# repositor# which records all accountin$ related in"ormation related to
that particular 7rimar# Led$er. One cannot carr# out setups without havin$ primar#
led$er in place.
7rimar# led$er replaces the %et o" &ooks used in earlier versions prior to Release 12.
Scon!ar" L!$r
!t is not mandator# to have a secondar# led$er. One can have one or more secondar#
led$ers 'ased on their 'usiness re2uirement. One can never have a secondar# led$er
without primar# led$er is in place. %ince secondar# led$er does not per"orm an# new
operation on its own it onl# represents the in"ormation contain in primar# led$er in a
di""erent wa#. -ostl# it is used "or satis"#in$ the reportin$ needs. !t is necessar# "or one
to know when should one have a %econdar# led$er. One needs to maintain accountin$
records in a wa# when there is a di""erence in an# o" the parameters 'elow "rom the
primar# led$er<
=hart o" Accounts =urrenc# =alendar Accountin$ -ethod and Led$er processin$
options.
R*ort#n$ Currnc#s +L!$r,
Reportin$ currencies are purel# a representation o" transactions saved in the 7rimar# or
%econdar# led$er in di""erent currenc#.
(his concept was availa'le in Release 11 in the name o" Reportin$ set o" &ooks> it is
e)actl# the same in R12 no chan$e apart "rom the terminolo$#.
Reportin$ currencies are maintained at di""erent currenc# conversion levels.
Even thou$h it is not a separate led$er as such still it can 'e considered as a di""erent
led$er since it acts as a di""erent container apart "rom the primar# or secondar# led$er
in"ormation.
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PURPOSE OF LEDGERS
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1e have so "ar seen the meanin$s o" led$ers and its various t#pes now we will see what
is the actual purpose o" the led$ers and what the# do and when are the# re2uired.
LEDGER T(PE PURPOSE
7rimar# Led$er
-andator# "or an# setup related to .inancial modules
Ever# transaction o" the compan# will 'e recorded
Acts as a 'ase repositor# 0 container o" all accountin$
in"ormation.
%econdar# Led$er
1hen =lient wants -ultiple Accountin$ Representations
1hen =lient wants to represent the in"ormation in a
di""erent calendar.
1hen =lient wants to represent the in"ormation in a
di""erent chart o" Accounts.
Reportin$ =urrencies
1hen the =lient wants to report their in"ormation in
di""erent currenc#
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HOW TO DECIDE ON A PERFECT
LEDGER STRUCTURE
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Dow that we know the t#pes and purposes o" the led$ers availa'le we should know how
where and when to use it. ! would e)plain the usa$e o" the led$ers with a &usiness
scenario.
&usiness %cenario is<
=ompan# *%ELE%% is implementin$ Oracle .inancials "or their 'usiness. (he summar#
o" their 'usiness operations is as "ollows<
*%ELE%% which is 'ased in !ndia is havin$ their 'usiness operation in three countries<
1/ Division ! ? !ndia
2/ Division !! ? Eapan
4/ Division !!! ? =hina
And the accountin$ and reportin$ re2uirements are<
D#-#s#on Account#n$ Mtho! Chart of Accounts Account#n$ Pr#o!
Division ! Accrual As per !ndian %tatute April to -arch
Division !! =ash As per Eapan %tatute Eanuar# to Decem'er
Division !!! Accrual As per =hina %tatute Octo'er to %eptem'er
7lease advice on the ideal Led$er structure to 'e desi$ned "or the compan# *%ELE%%F
Dow "rom the a'ove lets us see how man# primar# led$ers can 'e createdF
One cannot use the same primar# led$er i" one o" its components are di""erent.
D#-#s#on Chart Of
Accounts
Currnc" Caln!ar Account#n$
Mtho!
Division ! !ndian %tatute !DR Apr -ar Accrual
Division !! Eapan %tatute E7G Ean Dec =ash
Division !!! =hina %tatute =DG Oct ? %ep Accrual
.rom the a'ove ta'le it is clear that none o" the Divisions have all 5 components as
similar> there"ore we need to have 4 7rimar# led$ers de"ined "or it.
Dow apart "rom that we need to think o" the "ollowin$ practical scenario as well
Even thou$h Division !! is located in Eapan it has to "inall# consolidate all its operations
to !DD!A at a later sta$e there"ore it must also "ollow the rules o" accountin$ and
statutor# re$ulations in !ndia so as Division !!!.
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(here"ore
Division !! %hould have a secondar# led$er which will represent the transactions as per
the !ndian %tatute.
Division !!! %hould have a secondar# led$er which will represent the transactions as
per the !ndian %tatute.
However it is not necessar# "or Division ! to have secondar# led$ers since the compan#
is 'ased in !DD!A there"ore it need not have multiple accountin$ representations.
!" the client insists on it we can have 2 secondar# led$ers "or Division ! to compl# with
Eapanese and =hinese statute.
Dow the Divisions situated in =hina and Eapan must 'e reportin$ to the compan# in
!DD!A on a dail# 'asis "or which the# need to convert their 'usiness transactions values
in to !ndian currencies and then report it to the mana$ement.
.or per"ormin$ this operation we re2uire two Reportin$ currencies as well.
As discussed earlier reportin$ currencies are part o" primar# led$er setup. (here"ore
Eapan and =hina primar# led$er should have de"ined !DR as its Reportin$ currencies.
(o sum up the ideal led$er structure would 'e as "ollows<
D#-#s#on Pr#)ar" L!$r Scon!ar" L!$r R*ort#n$ Currnc#s
Division ! 1 Dot Decessar# Dot Decessar#
Division !! 1 1 1
Division !!! 1 1 1
TOTAL 3 2 2
Also there can 'e one more primar# led$er created to consolidate the data 'etween
Division ! !! and !!!
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.UESTION AND ANSWER
SECTION
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Is #t )an!ator" that -r" l!$r )ust ha- a l$al nt#t" attach! to #t?
One can have a ledger with no legal entity as per their business requirement. It is not
mandatory that every ledger must have a legal entity attached to it. There could be
ledgers, which have been created for consolidation purposes alone.
Can thr / a Scon!ar" l!$r 0#thout a Pr#)ar" l!$r?
No, it cannot be.
Can 0 ha- on scon!ar" l!$r assoc#at! 0#th )or than on *r#)ar" l!$r?
No, it is not possible.
Can 0 ha- )or than on scon!ar" l!$r for a *r#)ar" l!$r?
Yes, you can, user guide states you can have one or more secondary ledgers also there is
no restriction imposed any where on number of primary ledgers one can create.
Is #t *oss#/l to con-rt a Pr#)ar" L!$r to Scon!ar" L!$r or &#c -rsa?
No, not possible.
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SOURCES OF INFORMATION
1B
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Oracl Usr Gu#!
Oracle releases documentation ,(echnical and .unctional/ as manuals user $uides etc
the# are availa'le in the oracle site downloada'le at "ree o" cost. *ser $uides tells #ou
a'out the intended "unctionalit# and architecture on which it is 'uilt. Depends on the
comple)it# o" the product some ma# have implementation $uide user $uide and
re"erence $uide as well.
.ollow the 'elow instructions as to how to download0 Hiew the user $uides "rom the site<
St* 1 ? Hisit http<00www.oracle.com0technolo$#0inde).html
St* 2 ? Davi$ate to Oracle (echnolo$# Detwork ,O(D/ II Documentation II
Applications II click o" E&% Documentation R12J
St* 3 4 (he Oracle R12 Documentation Li'rar# pa$e is displa#ed.
St* 5 4 %elect the Documentation ta'
St* 6 ? %earch "or the documentation "or #our product.
.or (echnical related in"ormation
that is in"ormation related to ta'les packa$es etc can 'e o'tained "rom (echnical
Re"erence -anuals. However "or re"errin$ this details one needs to hold an -etalink
lo$in. .ollow the 'elow steps on how to view the e(R-9s<
%tep 1 Lo$in to https<00metalink.oracle.com
%tep 2 =lick on KLnowled$eM (a'
%tep 4 !n the le"t side that is under Lnowled$e &rowser %croll down to the 8Online
Documentation9 section
%tep 5 =lick Applications Electronic (echnical Re"erence -anuals ,e(R-/
2C
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!" #ou have success"ull# made to the LA%( 7AGE
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