Key Flexfields in Oracle Assets

Key Flexfields in Oracle Assets

The three Key Flexfields in Oracle Assets are as follows:

1.     Asset Category Flexfield

2.     Asset Key Flexfield

3.     Location Flexfield

Asset Category Flexfield:  This flexfield is used to group assets based on financial information such as depreciation method, depreciation life, prorate conventions, and retirement conventions. It consists up to seven (10) segments, and it must have a total length (including segment separator) of 30 or fewer characters. The Asset Category flexfield is made up of a major category and a minor category, although only major category is required.

There is a qualifier tied to the Asset Category flexfiled to identify which segments are the major categories. Capital budgeting uses this qualifier to identify the major category segment.

Asset Key Flexfield: This flexfield is used to group assets based on non-financial information, such as the project number to which the asset is assigned. The Asset Key Flexfield allows capturing important information that is otherwise not stored in asset attributes or categories. It consists up to ten (10) segments, with total combined length (including segment separator) of up to 30 characters. Even if the Asset Key Flexfield is not currently needed, it needs to setup at least one segment. If necessary, it can be a dummy segment with a default value of NONE or N/A.

When setting up Asset Key Flexfield, enable the Allow Dynamic Inserts checkbox if not required to create asset key combinations explicitly before using them.

Location Flexfiled: This flexfield groups assets by physical location. It consists up to seven (7) segments in the Location Flexfield, and the usual 30-character length limit applies. To accommodate property tax reporting, the Location flexfield must include a state segment that is marked by the state segment qualifier.

When setting up Location Flexfield, enable the Allow Dynamic Inserts checkbox if not required to create asset key combinations explicitly before using them.

Reconciling Payables Activity

Reconciling Payables Activity

The following reports are used to reconcile your posted invoices and payments to your Accounts Payable Trial Balance to ensure that your Trial Balance accurately reflects your accounts payable liability:

• Posted Invoice Register

• Posted Payment Register

• Accounts Payable Trial Balance (last period and current period)

Note: Before you run your reports, transfer the journal entries to General Ledger for all transactions in the period that you are reconciling.

Note: When reviewing your Accounts Payable Trial Balance report, you may notice that the remaining amount for a given invoice is less than you expect or even negative. This may be caused by recording invoice payments in a GL period that precedes the GL period used to record some or all of your invoice distributions.

For example: You enter an invoice with one distribution of Rs.2000 that uses a GL date of 04-JAN-2013. You pay the full invoice, and the payment date is 20-DEC-2012. If you submit the Accounts Payable Trial Balance report as of 31-DEC-2012, then the invoice will correctly show an amount remaining of <-Rs.2000>. In the reports parameter, if you do not enter an as of date, then the report shows all paid and unpaid invoices from the start date.

Payable allows the payment date to precede the invoice GL date to support certain accounting methods (e.g. recording prepaid items).

To reconcile your Accounts Payable Trial Balance for a given period:

• Add the current period's posted invoices (total invoice amount from the Posted Invoice Register) and subtract the current period's posted payments (total cash plus discounts taken from the Posted Payments Register) from the prior period's Accounts Payable Trial Balance. This amount should equal the balance for the current period's Accounts Payable Trial Balance.

For example, you are closing your accounting period for April and you have just posted your final invoice and payment batches to your general ledger system. To reconcile your accounts payable activity for April, make the following calculation:

March Accounts Payable Trial Balance

+ April Posted Invoice Register

- April Posted Payment Register

= April Accounts Payable Trial Balance

Reconciling Payables Activity to General Ledger:

Use the Accounts Payable Trial Balance report to reconcile your accounts payable liability in your general ledger. Compare the Accounts Payable Trial Balance to the accounts payable balance in your general ledger system for a given period. Because the Trial Balance presents the outstanding accounts payable liability information, it is only valid for an accrual ledger.

Petty Cash in Oracle Applications

Petty Cash Funds

Setting up a Petty Cash Fund:

Prerequisites:-

• Set up a general ledger account for petty cash.

• Set up an accounts receivable clearing account.

To set up a petty cash fund:

1. Set up administrative and control procedures:

Create a petty cash agreement that specifies all the policies regarding petty cash reimbursements. Petty cash administrator should sign the agreement, or agree online if you use an electronic template.

Create a standard petty cash reimbursement form or electronic template for employees to complete and submit to the administrator with their receipts.

Create a standard petty cash reimbursement log to be submitted by the administrator when requesting cash to replenish the fund. The reimbursement log breaks down expenses by account, lists total disbursements for each account, and shows the balance of the fund.

2. Set up supplier records:

Decide how you want to establish supplier records for your petty cash administrators. Consider the following two approaches and set up supplier records with the approach that best meets your business needs:

Enter a supplier record for the employee acting as a petty cash administrator. See: Entering employees as suppliers.

Advantages:

• Simple to process initial payment and reimbursements for the fund under the employee's supplier record.

Disadvantages:

• Reconciliation of your GL account may be difficult. For example, if an employee expense report is erroneously charged to the GL petty cash account, the error will not be noticed easily because all entries into the account are done under employee supplier records.

• If the employee who serves as the petty cash administrator has a supplier record with payment method of Electronic (for direct deposit of expense reimbursements), more manual work may have to be done processing a petty cash request. Typically, the petty cash administrator prefers petty cash payment by check to keep petty cash funds separate from personal funds. In this case you need to change the payment method on each petty cash reimbursement request, or set up a separate supplier site with a payment method of Check to use for petty cash reimbursements.

Enter one supplier record named "PETTY CASH" and create a site under this supplier in the name of the employee acting as a petty cash administrator. For example:

• Supplier Name: PETTY CASH

• Site Name: c/o CLINT EASTWOOD

You may want to create this supplier record with a unique Pay Group or Payment Priority. This can facilitate any special handling you may need to do with petty cash payments.

Advantages:

• Reconciliation of your GL account may be easier. For example, if an employee expense report or supplier invoice is coded in error to the GL petty cash account the error will be noticed easily because all entries into the account are done under one supplier record, PETTY CASH.

• There is no need to change any information in an employee supplier record to accommodate petty cash reimbursements.

• Online query of activity for a petty cash account is simple because all activity for an account is contained under one supplier site name.

3. The petty cash administrator submits a petty cash request to the accounts payable department for the amount of the new fund. The request includes all necessary approvals. The petty cash administrator signs the petty cash agreement or agrees online if you use an electronic template. The accounts payable department provides the administrator with the petty cash reimbursement form and the petty cash reimbursement log.

4. Enter the petty cash request as a standard invoice. Charge the amount to the petty cash GL account. You may want to use a standard invoice naming convention for the initiation of a new petty cash fund. The use of a standard invoice name can assist in research and reconciliation. For example, you may want to use "IPC" for "Initiate Petty Cash" and the date of the request.

5. Pay the petty cash administrator for the fund amount.

Petty Cash Funds

You can use a petty cash fund to reimburse employees for small, infrequent expenses. A petty cash fund may save you administrative costs of processing and paying expense reports.

You can use Payables to pay out to the petty cash fund and to record the expenses paid by the fund.

Using a Petty Cash Fund

1. The petty cash administrator maintains the cash.

2. Employees submit to the petty cash administrator completed petty cash reimbursement forms and receipts for expenses. The administrator reimburses the employees and maintains a petty cash reimbursement log containing details of the expenses and the accounts that should be charged.

3. When the petty cash administrator needs more cash, the administrator submits to the accounts payable department a petty cash request, a reimbursement log, and the receipts.

4. Enter the petty cash request as a standard invoice. Create invoice distributions for the expense items to the appropriate expense accounts. You may want to use a standard invoice naming convention for the replenishment of a petty cash fund.

The use of a standard invoice name can assist in research and reconciliation. For example, you may want to use "RPC" for "Replenish Petty Cash" and the date of the request.

5. Pay the petty cash administrator a check to replenish the fund.

Closing a Petty Cash Fund

When you close a petty cash fund, the credits to the petty cash account should equal the amount of the petty cash fund you are closing.

Prerequisites

• Establish a formal notification procedure for the administrator to follow if the petty cash fund is to be closed or transferred to another administrator.

• If there is cash remaining in the fund, the administrator returns the cash or writes a check to your company in the amount of the remaining balance.

To close a petty cash account:

1. The administrator submits a final petty cash reimbursement log.

2. Enter the petty cash log as a standard invoice with an amount of zero since you do not want to issue a payment. Create the following invoice distributions:

• Positive distributions for the expense items to the appropriate expense accounts

• A negative distribution for the amount of the petty cash fund and credit this to the petty cash account

The distribution lines must sum to zero.

Record the amount of any returned cash by creating two invoice distributions in the amount of the returned cash:

• A positive distribution to the Accounts Receivable clearing account

• A negative distribution to the petty cash account

The distribution lines must sum to zero.

You may want to use a standard invoice naming convention for the closure of a petty cash fund. The use of a standard invoice name can assist in research and reconciliation. For example, you may want to use "CPC" for "Close Petty Cash" and the date of the request.

Reconciling Your Petty Cash Account

You can run the Account Analysis report in Oracle Subledger Accounting for your petty cash account to identify all charges to the account in your accounts payable ledger.

Comparing this report to your general ledger account analysis identifies any discrepancies that need to be researched and reconciled.

Steps To Close Period in Oracle Payables

Controlling the Status of Payables Periods

Enter and account for transactions in open accounting periods. The period statuses available in Payables are Never Opened, Future, Open, Closed, and Permanently Closed. When you first define a period, Payables assigns a status of Never Opened to the period. Payable does not allow transaction processing in a period that has never been opened. After you change the status to Future or Open you cannot change it back to Never Opened.

Accounts payable periods are separate from your general ledger periods. For example, you can close your Q1 period in Payables before you close your Q1 period in General Ledger. For details on setting up general ledger periods.

To change the status of an accounting period

1. In the Control Payables Periods window update the Period Status to one of the following:

• Future: Payables allows invoice entry and accounting in a Future period. Payable does not allow payment entry or payment voiding in a Future period. Payables allows you to limit the number of Future periods based on the number you enter in the Future Periods field in the Financials Options window. After you change the status of a Future period to “Open”, you cannot change it back to Future.

• Open: You can record transactions and account for them in an Open period. You cannot open a period if it is an adjusting period. You define adjusting periods using the Define Calendar window. Adjusting periods can have overlapping dates.

• Closed: Payables does not allow transaction processing in a “Closed” period. You can reopen a “Closed” period if the corresponding general ledger and purchasing periods are also “Open”. You cannot close a period in which any of the following conditions exist:

• Outstanding payment batches.

• Future dated payments for which the Maturity Date is within the period but that still have a status of Issued.

• Unaccounted transactions.

• Accounted transactions that have not been transferred to general ledger.

• Permanently Closed: Payables does not allow transaction processing in a permanently closed period. You cannot reopen a Permanently Closed period.

2. Save your work.

Closing an Accounting Period

Close a Payables period after you have completed accounting for transactions for the period and you have transferred the accounting entries to general ledger.

You cannot close a period in Payables if any of the following conditions exist:

• Outstanding payment batches: Confirm or cancel all incomplete payment batches.

• Future dated payments for which the Maturity Date is within the period but that still have a status of Issued. Submit the Update Matured Future Payment Status Program.

• Unaccounted transactions: Submit the Create Accounting program to account for, or submit the Unaccounted Transaction Sweep to move any remaining unaccounted transactions from one period to another.

• Accounted transactions that have not been transferred to general ledger. Transfer accounting entries to General Ledger.

To complete the close process in Payables:

1. Validate all invoices.
2. Confirm or cancel all incomplete payment batches.
3. If you use future dated payments, submit the Update Matured Future Dated Payment Status Program. This will update the status of matured future dated to Negotiable so you can account for them.
4. Resolve all unaccounted transactions.

Submit the Create Accounting program to account for all unaccounted transactions.

Review the Unaccounted Transactions Report. Review any unaccounted transactions and correct data as necessary.

Then resubmit the Create Accounting program to account for transactions you corrected. Or move any unresolved accounting transaction exceptions to another period (optional).

5. Transfer invoices and payments to the General Ledger and resolve any problems you see on the output report.
6. In the Control Payables Periods window, close the period in Payables.
7. Reconcile Payables activity for the period.

• Accounts Payable Trial Balance Report (Current Period & Previous Period).

• Posted Invoice Register.

• Posted Payment Register.

8.  If you use Oracle Purchasing, accrue un-invoiced receipts.
9.  If you use Oracle Assets, run the Mass Additions Create Program transfer capital invoice line distributions from Oracle Payables to Oracle Assets.
10. Post journal entries to the general ledger and reconcile the trial balance to the General Ledger.

 CLOSE RESTRICTIONS:

COMBINED BASIS ACCOUNTING: If you use the combined basis accounting method, you must transfer invoices and payments to your accrual ledger and payments to your cash ledger before you can close an accounting period.

Accounting Entries in Oracle Receivables

Accounting for Transactions in Receivables

The accounting entries created when you enter transactions in Receivables using the Accrual method of accounting.

Receivables creates default accounts for revenue, receivable, freight, tax, unearned revenue, unbilled receivable, finance charges, and Auto Invoice clearing (suspense) accounts using the information specified in your Auto Accounting structure.

Note: This section does not include examples of accounting for tax on discounts, adjustments, miscellaneous receipts, and cash applications.

Invoices: When you enter a regular invoice through the Transactions window, Receivables creates the following journal entry:

DR Receivables

CR Revenue

CR Tax (if you charge tax)

CR Freight (if you charge freight)

If you enter an invoice with a Bill in Arrears invoicing rule with a three month fixed duration accounting rule, Receivables creates the following journal entries:

In the first period of the rule:

DR Unbilled Receivables

CR Revenue

In the second period of the rule:

DR Unbilled Receivables

CR Revenue

In the third and final period of the rule:

DR Unbilled Receivables

CR Revenue

DR Receivables

CR Unbilled Receivables

CR Tax (if you charge tax)

CR Freight (if you charge freight)

If you enter an invoice with a Bill in Advance invoicing rule, Receivables creates the following journal entries:

In the first period of the rule:

DR Receivables

CR Unearned Revenue

CR Tax (if you charge tax)

CR Freight (if you charge freight)

DR Unearned Revenue

CR Revenue

In all periods of the rule for the portion that is recognized.

DR Unearned Revenue

CR Revenue

Credit Memos: When you credit an invoice, debit memo, or chargeback through the Credit Transactions window, Receivables creates the following journal entry:

DR Revenue

DR Tax (if you credit tax)

DR Freight (if you credit freight)

CR Receivables (Credit Memo)

DR Receivables (Credit Memo)

CR Receivables (Invoice)

When you credit a commitment, Receivables creates the following journal entries:

DR Revenue

CR Receivables

When you enter a credit memo against an installment, Receivables lets you choose between the following methods: LIFO, FIFO, and Prorate. When you enter a credit memo against an invoice with invoicing and accounting rules, Receivables lets you choose between the following methods: LIFO, Prorate, and Unit.

If the profile option AR: Use Invoice Accounting for Credit Memos is set to Yes, Receivables credits the accounts of the original transaction. If this profile option is set to No, Receivables uses Auto Accounting to determine the Freight, Receivables, Revenue, and Tax accounts. Receivables use the account information for on-account credits that you specified in your Auto Accounting structure to create your journal entries.

Receivable lets you update accounting information for your credit memo after it has posted to your general ledger. Receivable keeps the original accounting information as an audit trail while it creates an offsetting entry and the new entry.

Commitments:

Deposits: When you enter a deposit, Receivables creates the following journal entry:

DR Receivables (Deposit)

CR Offset Account

Use the AR: Deposit Offset Account Source profile option to determine how Receivables derives the Offset Account to credit for this deposit.

When you enter an invoice against this deposit, Receivables creates the following journal entries:

DR Receivables (Invoice)

CR Revenue

CR Tax (if you charge tax)

CR Freight (if you charge freight)

DR Offset Account (such as Unearned Revenue)

CR Receivables (Invoice)

When you apply an invoice to a deposit, Receivables creates a receivable adjustment against the invoice. Receivable uses the account information that you specified in your Auto Accounting structure to create these entries.

When cash is received against this deposit, Receivables creates the following journal entry:

DR Cash

CR Receivables (Deposit)

Guarantees: When you enter a guarantee, Receivables creates the following journal entry:

DR Receivables

CR Revenue

Receivable uses the Receivable Account and Revenue Account fields on this guarantee’s transaction type to obtain the accounting flexfields for the Unbilled Receivables and Unearned Revenue accounts, respectively.

When you enter an invoice against this guarantee, Receivables creates the following journal entry:

DR Receivables (Invoice)

CR Revenue

CR Tax (if you charge tax)

CR Freight (if you charge freight)

DR Revenue

CR Receivables

When you apply an invoice to a guarantee, Receivables creates a receivable adjustment against the guarantee. Receivable uses the account information you specified in your Auto Accounting structure to create these entries.

When cash is received against this guarantee, Receivables creates the following journal entry:

DR Cash

CR Receivables (Invoice)

Receipts: When you enter a receipt, Receivables creates the following journal entries:

DR Cash

CR Receivables

When you fully apply a receipt to an invoice, Receivables creates the following journal entry:

DR Cash

DR Unapplied Cash

CR Unapplied Cash

CR Receivables

Note: These examples assume that the receipt has a Remittance Method of No Remittance and a Clearance Method of Directly.

When you enter an unidentified receipt, Receivables creates the following journal entry:

DR Cash

CR Unidentified

When you enter an on-account receipt, Receivables creates the following journal entry:

DR Cash

CR Unapplied

DR Unapplied

CR On-Account

When your receipt includes a discount, Receivables creates the following journal entry:

DR Receivables

CR Revenue

DR Cash

CR Receivables

DR Earned/Unearned Discount

CR Receivables

Receivables uses the default Cash, Unapplied, Unidentified, On-Account, Unearned, and Earned accounts that you specified in the Remittance Banks window for this receipt class.

When you enter a receipt and combine it with an on-account credit (which increases the balance of the receipt), Receivables creates the following journal entry:

DR Cash

CR Unapplied Cash

To close the receivable on the credit memo and increase the unapplied cash balance, Receivables creates the following journal entry:

DR Receivables

CR Unapplied Cash

When you enter a receipt and combine it with a negative adjustment, Receivables creates the following journal entries:

DR Cash

CR Receivables (Invoice)

DR Write-Off

CR Receivables (Invoice)

You set up a Write-Off account when defining your Receivables Activity.

When you enter a receipt and combine it with a positive adjustment, Receivables creates the following journal entries:

DR Cash

CR Receivables (Invoice)

DR Receivables (Invoice)

CR Write-Off

When you write off the unapplied amount on a receipt, Receivables creates the following journal entries:

DR Unapplied Cash

CR Write-off

When you enter a receipt and combine it with a Chargeback, Receivables creates the following journal entries:

DR Cash

CR Receivables (Invoice)

DR Receivables (Chargeback)

CR Chargeback (Activity)

DR Chargeback (Activity)

CR Receivables (Invoice)

You set up a Chargeback account when defining your Receivables Activity.

To move funds between receipts, you can apply one receipt to another open receipt (also called netting receipts). For example, you can move funds from Receipt 1 to Receipt 2 by opening Receipt 2 in the Applications window, and selecting Receipt 1 in the ApplyTo field.

.

Following the example above, Receivables creates these journal entries:

DR Unapplied Cash (Receipt 1)

CR Netting (Receipt 1)

DR Netting (Receipt 2)

CR Unapplied Cash (Receipt 2)

After this receipt-to-receipt application completes, Receipt 2 gains additional funds that you can then apply to a debit item.

You set up a Netting account when defining your Receivables Activity.

Important: When netting receipts, both receipts must be in the same currency.

If both receipts are in a foreign currency, however, then you could have an exchange gain or loss when you net the receipts. The exchange gain or loss is realized on the main receipt (Receipt 2) at the time of receipt application (netting).

If you later adjust the exchange rate on Receipt 1 or 2, then Receivables:

• Rolls back all accounting for both receipts.

• Re-creates the accounting, including the netting application, using the adjusted exchange rate.

• Recalculates the exchange gain or loss on whichever receipt is open in the Applications window.

Remittances:

When you create a receipt that requires remittance to your bank, Receivables debits the Confirmation account instead of Cash. An example of a receipt requiring remittance would be a check before it was cashed. Receivables create the following journal entry when you enter such a receipt:

DR Confirmation

CR Receivables

You can then remit the receipt to your remittance bank using one of the two remittance methods: Standard or Factoring. If you remit your receipt using the standard method of remittance, Receivables creates the following journal entry:

DR Remittance

CR Confirmation

When you clear the receipt, Receivables creates the following journal entry:

DR Cash

DR Bank Charges

CR Remittance

If you remit your receipt using the factoring remittance method, Receivables creates the following journal entry:

DR Factor

CR Confirmation

When you clear the receipt, Receivables creates a short-term liability for receipts that mature at a future date. The factoring process let you receive cash before the maturity date, and assumes that you are liable for the receipt amount until the customer pays the balance on the maturity date. When you receive payment, Receivables creates the following journal entry:

DR Cash

DR Bank Charges

CR Short-Term Debt

On the maturity date, Receivables reverses the short term liability and creates the following journal entry:

DR Short-Term Debt

CR Factor

Adjustments:

When you enter a negative adjustment against an invoice, Receivables creates the following journal entry:

DR Write-Off

CR Receivables (Invoice)

When you enter a positive adjustment against an invoice, Receivables creates the following journal entry:

DR Receivables (Invoice)

CR Write-Off

Debit Memos:

When you enter a debit memo in the Transactions window, Receivables creates the following journal entries:

DR Receivables

CR Revenue (if you enter line amounts)

CR Tax (if you charge tax)

CR Freight (if you charge freight)

DR Receivables

CR Finance Charges

On-Account Credits:

When you enter an on-account credit in the Applications window, Receivables creates the following journal entry:

DR Revenue (if you credit line amounts)

DR Tax (if you credit tax)

DR Freight (if you credit freight)

CR Receivables (On-account Credit)

Receivables use the Freight, Receivable, Revenue, and Tax accounts that you specified in your Auto Accounting structure to create these entries.

Once the on-account credit is applied to an invoice, the following journal entry is created:

DR Receivables (On-account Credit)

CR Receivables (Invoice)

Credit Card Refunds:

Creating a credit card refund

When you unapply a receipt and reapply the receipt to a credit card refund, Receivables creates these journal entries:

DR Receivables

CR Unapplied

DR Unapplied

CR Receivable Activity (Clearing Account)

After you apply the receipt to a credit card refund, Receivables automatically creates a negative miscellaneous receipt in the amount of the refund and creates this journal entry:

DR Receivable Activity (Clearing Account)

CR Cash

Reversing a credit card refund:

When you reverse a credit card refund, either by reversing the negative miscellaneous receipt or by unapplying the credit card refund activity, Receivables creates this journal entry for the negative miscellaneous receipt:

DR Cash

CR Receivable Activity (Clearing Account)

And Receivables creates this journal entry for the original payment receipt:

DR Receivables Activity (Clearing Account)

CR Unapplied

Claims:

Creating an invoice related claim

When you record an invoice related short payment as a claim in the Applications window, Receivables creates the standard accounting entries for the invoice and for the receipt application. There are no additional accounting entries for the invoice related claim.

Creating a non-invoice related claim

When you record a non-invoice related short payment or over payment as a claim investigation application in the Applications window, Receivables creates these journal entries:

DR Claim Investigation

CR Unapplied Cash

Receivables derive the accounting flexfield for the claim investigation application from the receivable activity that you assigned in the Applications window.