10/05/2021 Document 1067139.

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Copyright (c) 2021, Oracle. All rights reserved. Oracle Confidential.

How Does The Account Generator Default The Accounts In Oracle Purchasing? (Doc ID
1067139.1)

In this Document

Goal
Solution
Account Build Timing and Logistics
References

APPLIES TO:

Oracle Purchasing - Version 11.5.10 to 12.2.4 [Release 11.5 to 12.2]

Information in this document applies to any platform.

GOAL

How does the Account Generator default the accounts in the Purchase Order Distribution?

SOLUTION

The default Account Generator processes in Oracle Purchasing build a charge, budget, accrual, and variance account for
each purchase order, release, and requisition distribution based on the distribution's Expense, Inventory, or Shop Floor
destination type. Oracle Purchasing always builds these accounts using the Account Generator; you cannot disable this
feature.

If you utilize the centralized procurement functionality, the Account Generator will also create two new accounts to record
accounting transactions between the procuring organization and the destination organization: the destination charge
account and the destination variance account. These accounts will be created and used only when the destination
organization is in a different operating unit than the Procuring organization, and there is a transaction flow defined
between the two organizations. (Note that if the two operating units are in different sets of books, there must be a
transaction flow defined.) For example: In the centralized procurement scenario a user may create a purchase order in
one operating unit, but require shipment to a different operating unit. In this case, there will be an accounting transaction
(created at the time of receipt of goods) to record the transfer of ownership between the two organizations (operating
units). If these accounts are not required they will be not be built.

For Inventory charge account construction, the Account Generator further distinguishes between asset and expense
purchases based on the item and subinventory that you provide for the distribution. If you select an expense item, the
Account Generator disregards the subinventory and builds an expense charge account. If you select an asset item, the
Account Generator evaluates the subinventory to decide whether to build an expense or asset charge account.

Additional Information: You classify a subinventory as expense or asset by selecting the Asset Subinventory check box
in the Oracle Inventory Subinventories window. You classify an item as expense or asset by selecting the Inventory Asset
Value check box in the Costing section of the Master Item window. (This window is accessible through Inventory or
Purchasing.)

When the Account Generator locates a source account based on the distribution destination type, it copies complete code
combinations (full Accounting Flexfields) from designated fields to destination Accounting Flexfields. The default Oracle
Purchasing processes do not build individual flexfield segments.

For example, to populate the Accrual account for distributions with an Expense destination type, the Account Generator
locates the Expense AP Accrual Account that you specify in the Purchasing Options window as part of your application
setup, and copies it into the Accrual Account Flexfield in your document.

An exception is when the account generator is unable to derive a charge account in the first two steps. Then an account is
retrieved from the HR employee record and individual segments are replaced based on the item category. This is a typical
scenario when using one-time items in Oracle Purchasing.

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The following matrix describes the source fields that the Account Generator references to build the charge, budget,
accrual, and variance account based on the distribution destination type.

The horizontal axis lists the windows you use to specify the source accounts that the Account Generator references in
Oracle Purchasing. The vertical axis lists the possible destination types for each account type the Account Generator
constructs. In addition, the Additional Conditions are applied as part of the vertical access. The body of the matrix lists the
fields you use to enter the reference accounts.

When more than one option is indicated for a particular account/destination type combination, the Account Generator
attempts to locate the primary source account identified in the matrix (Seq) with a 1 as long as any Additional Conditions
listed are met. This means that there may be several source accounts with a 1, since there may be multiple Additional
Conditions. The first additional condition met will be the source attempted. If this reference account is unavailable or not
appropriate for the distribution information you provide, the Account Generator tries the source indicated as 2 and so on
until it either successfully locates a reference account, or fails. When an account has been located, or the Account
Generator has failed to find an account, the matrix may indicate that an Override condition may apply. These entries are
indicated by an O instead of a numeric value. In the case of an Override, a built account may be superceeded.

Default Charge Account Sources

WIP Organizat- Items

Destination Additional Sub- Purchasing
Seq Accounting ion (INV Other
Types Consider- ations inventories Options
Classes Parameters or PO)
All Cross OU case and 1 Cost of Sales
Destination One-Time Item or Account for
Types a Shop Floor Transaction
enabled Item Flow default
org
All Cross OU case and 1 Expense
Destination Expense item
Types
All Cross OU case and 2 Expense
Destination Expense item
Types
All Cross OU case and 1 Material
Destination Asset item
Types
All PO auto-created 1 Copied from
Destination from requisition requisition
Types
Expense Not a PO 1 Preferences
autocreated from
req and not
prevented by PA
override profile
Expense Project related 2 Customized
Project rules
Expense Project Related O User
and not prevented entered
by PA override
profile
Expense Not a PO 1 Preferences
autocreated from
a req. Not Project.
Expense Non-Project 2 Expense
Expense Non-Project 3 Employee
Profile for
Assignment
in
Purchasing
OU's SOB
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Expense Non-Project 3O Item

Account not built Category
before HR Segment
Employee Profile substitutions
step
Expense Non-Project O User
entered
Inventory Expense item 1 Expense
Inventory Expense item 2 Expense
Inventory Expense item 3 Expense
Inventory Asset item 1 Material
Inventory Asset item 2 Material
Shop Floor 1 Enterprise
Asset Mgmt
(EAM) rules
Shop Floor 2a Material
Shop Floor 2b Mat.
Overhead
Shop Floor 2c Resource
Shop Floor 2d Outside
Processing
Shop Floor 2e Overhead

Default Accrual Account Sources

WIP Organiz- Items

Destination Additional Sub- Purchasing
Seq Accounting ation (INV Other
Types Consider- ations inventories Options
Classes Parameters or PO)
All Cross OU case (No 1 Expense AP
Destination additional sources Accrual
Types are used) Account for
PO OU
All OPM is installed. 1 OPM API
Destination Not Project
Types related.
Expense Project related 1 Customized
Project
rules
Expense OPM is not 1 Expense AP
installed. Not Accrual
Project related. Account
Inventory, OPM is not 1 Expense AP
Shop Floor installed. One-time Accrual
item. Account for
PO OU
Inventory, OPM is not 1 Inventory AP
Shop Floor installed. Not one- Accrual for
time item. Ship-to org

Default Budget Account Sources

Additional WIP Organiz-

Destination Sub- Items (INV Purchasing
Consider- Seq Accounting ation Other
Types inventories or PO) Options
ations Classes Parameters

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Expense or PO auto- 1 Copied

Inventory created from from
requisition requisition
Expense 1 Charge
Account
Expense O User
entered
Inventory 1 Encumbrance
Inventory 2 Encumbrance
Inventory 3 Encumbrance
for ship-to
org
Shop Floor No 1 n/a n/a n/a n/a n/a n/a
encumbrance
is done for
Shop Floor

Default Variance Account Sources

Additional WIP Items

Destination Sub- Organization Purchasing
Consider- Seq Accounting (INV Other
Types inventories Parameters Options
ations Classes or PO)
All Cross OU case 1 Charge
Destination (No additional Account
Types sources are
used)
All PO auto-created 1 Copied
Destination from requisition from
Types requisition
Expense Project-related 1 Customized
Project
rules
Expense Project-related 2 Customized
Project
rules
Expense Non-Project 1 Charge
Account
Inventory 1 Invoice Price
Variance for Ship-
to org(org
parameters)
Shop Floor One-time Item 1 Charge
Account
Shop Floor 1 Invoice Price
Variance for Ship-
to org (org
parameters)

Default Destination Charge Account Sources

WIP Organizat- Items

Destination Additional Sub- Purchasing
Seq Accounting ion (INV Other
Types Consider- ations inventories Options
Classes Parameters or PO)
All PO auto-created 1 Copied from
Destination from requisition requisition
Types charge
account
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Expense Project related 2 Customized

Project rules
Expense Project Related O User
and not prevented entered
by PA override
profile
Expense Not a PO 1 Preferences
autocreated from a
req. Not Project.
Expense Non-Project 2 Expense
Expense Non-Project 3 Employee
profile for
deliver-to-
person's HR
assignment
in
destination
OU SOB
Expense Non-Project 3O Item
Account not built Category
before HR Segment
Employee Profile substitutions
step
Expense Non-Project O User
entered
Inventory Expense item 2 Expense
Inventory Expense item 3 Expense
Inventory Expense item 4 Expense
Inventory Asset item 2 Material
Inventory Asset item 3 Material
Shop Floor 2 Enterprise
Asset Mgmt
(EAM) rules
Shop Floor 3a Material
Shop Floor 3b Mat.
Overhead
Shop Floor 3c Resource
Shop Floor 3d Outside
Processing
Shop Floor 3e Overhead

Default Destination Variance Account Sources

Additional WIP Items

Destination Sub- Organization Purchasing
Consider- Seq Accounting (INV Other
Types inventories Parameters Options
ations Classes or PO)
Expense PO auto- 1 Copied from
created from requisition
requisition Variance
Account
Expense Project related 1 Customized
Project rules
Expense Project related 2 Destination
Charge

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Account
Expense Non-Project 1 Destination
Charge
Account
Inventory 1 Inventory Price
Variance for
Ship-to org
Shop Floor One-time Item 1 Destination
Charge
Account
Shop Floor 1 Inventory Price
Variance for
Ship-to org

Suggestion: Minimize your setup by specifying source accounts at the appropriate level of detail for your business. For
example, you can specify the charge account source for Inventory (expense) destination types at the subinventory, item,
or organization level. If an organization level account is sufficient for your business needs, it is not necessary to specify
item or subinventory accounts.

For Shop Floor destination types, the Account Generator first applies the Oracle Enterprise Asset Management (EAM) rules.
If no account is found, it then constructs the charge account based on the resource cost element associated with the
Outside Processing job or schedule. In this case, the Account Generator selects one of the five possible source accounts; it
does not step through a hierarchy of choices as it does for other destination types. Finally, the Account Generator does not
construct a budget account for Shop Floor distributions, even if you are using encumbrance. Oracle Purchasing never
encumbers outside processing purchases.

Attention: If the Account Generator is unable to build a charge account you can either manually specify a charge account
in your document or you can design a custom Account Generator function to build Expense destination charge accounts
based on your own business rules.

While you cannot edit the accrual, budget, or variance accounts that the Account Generator constructs, you can override
or specify the charge account for uncommitted Expense distributions. In this case, you can either edit the charge account
that the Account Generator constructs for you, or you can specify a default charge account in the Defaults region of your
document. When you specify a default charge account, it always overrides any expense charge account that the Account
Generator tries to provide.

Account Build Timing and Logistics

For Expense and Inventory destinations in the Requisitions, Purchase Orders, and Releases windows, the Account
Generator constructs the account when you navigate into the distribution Charge Account field, or when an explicit or
implicit commit anywhere in the window provides enough information for Oracle Purchasing to create a distribution. For
Shop Floor destinations, the code is constructed when you enter all required data in the Outside Processing region and
either return to the document distributions region or commit.

Question: What are the standard features that cannot be used in encumbered environment?

PR/PO created with shop floor destination cannot be reserved.

Note: From R12.1.3 onwards, this feature is available for PR/PO created with shop floor destination with
EAM enabled ship to organization can be reserved

Additional Resources:
Note 2319562.1 - How Are the Purchasing Accounts Derived on the Requisitions and Purchase Orders?

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