Every
Responsibility in Oracle Applications are tagged to an Operating Unit (“MO:Operating
Unit” profile value). By this concerned and specific transactions only can be
accessed from those responsibilities, like Customer Sites, Supplier Sites, Bank
Accounts, AR & AP Invoices, Inventory Material Transactions (Transactions
of all the Subinventories of that Operating Unit), Purchase Orders, Sales
Orders etc. But Period Statuses are at Set of Books Level, whereas Inventory
Period Statuses are at Inventory Warehouse Level.
Only GL
Responsibilities are at Legal Entity level not at OU level (“GL:Sets of Books
Name” profile value). That means, from a GL Responsibility we can to drill-down
to sub-ledger transactions of different OU’s under the same legal entity.
Example:
Value Sets,
Independent Value Set Values, Customer Header, Supplier Header, Banks (not Bank
Accounts) can be accessed from all operating units (means from every
Responsibility).
Important Accounts:
·
Customer Balance (Receivables Account): Receivables
Account signifies the Customer Account Balance, i.e. at any point of time
Customer Balance can be known by summing the total amount against receivables
Account.
§ Customer Balance =
Invoices+DM+Adj–CM-Receipts–Adj. (will be in Dr)
§ Query for all the
Invoices, DM, CM & Receipts, against that Customer in the AR Invoices
Screen & AR Receipts sum the amount against Receivables Account gives you
the Customer Balance as on that date.
§
Note: Customers Name (customer Header) can be
accessed across all the Operating Units. Where as Customer Site are OU specific
can be accessed from any Responsibilities tagged to that Operating Unit only.
(“MO:Operating Unit” profile value)
·
Supplier Balance (Liability Account): Liability Account signifies the Supplier Account
Balance, i.e. at any point of time Supplier Balance can be known by summing the
total amount against Liability Account.
§ Supplier Balance =
Invoices-DM-CM-Payments (will be in Cr)
§ Query for all the
Invoices, DM, CM & Payments, against that Supplier in the AP Invoices
Screen & AP Payments sum the amount against Liability Account gives you the
Supplier Balance as on that date.
§ Note: Suppliers Name
(Supplier Header) can be accessed across all the Operating Units. Where as
Supplier Site are OU specific can be accessed from any Responsibilities tagged
to that Operating Unit only. (“MO:Operating Unit” profile value)
·
Bank Account Balance (Cash or Bank Account): Cash or Bank
Account signifies the Bank Account, i.e. at any point of time Bank Account
balance can be known by summing the total amount against Cash or Bank Account.
§ Bank A/C Balance =
Opening Balance + Receipts – Payments. (Will be in Dr)
§ Query for all the
Payments & Receipts against that Bank Account in the AP Payments Screen
& AR Receipts Screen gives you the Bank Account Balance as on that date.
§ Note: Bank Name
(Bank Header) can be accessed across all the Operating Units. Whereas Bank
Accounts are OU specific can be accessed from any Responsibilities tagged to
that Operating Unit only. (“MO:Operating Unit” profile value)
·
On-Hand Quantity: Query for all the Material
Transactions for an item against that Ware House in Inventory -> Material
Transactions Screen. Sum the ±Transaction Quantity gives you the On-Hand
Quantity as on that date of that Item in that Ware House.
§ On-Hand Qty = Opening
Balance+Material In (Receipts)–Material Out (Issues)
§ On-Hand Value =
(ON-Hand Qty * Item Price)
·
Inventory Value (Material Account): Whenever we are
defining Inventory (Inventory->Setup->Subinventories), we will give the
sub-Inventory Material Account this signifies that Sub-Inventory Valuation.
When a Material Transaction has been done against a warehouse 1. It increases
or decreases the Inventory On-Hand Qty. 2. Financial Transactions will be done
against that Warehouse i.e. ±Amount (Qty*price) value against Material Account
of that warehouse.
Important Transactions:
·
Revenue Account: Whenever an Item or Service provided to
external customer or Internal Customer (i.e. An Organization within Legal
Entity or outside Legal Entity of a same company) Revenue will be recognized.
(Source -> AR Invoices Screen)
§ Revenue Recognized
due to a Customer for a particular period can be found out by Querying for
Invoices and Credit Memo’s against that Customer in AR Invoices Screen. And the
Revenue Recognized will be sum of amount against Revenue Account.
§ Revenue Recognized
due a specific Item in a particular period can be found by totaling amount of
all the transactions against a Sales Account defined for that Item. (Items
Definition Screen -> Invoicing Tab -> Sales Account).
·
Expenditure Account: Whenever an Item or Service has
been received from External or Internal Supplier then the Expenditure will be
recognized. (Source -> AP Invoices Screen (for Service Invoice), PO Receipts
Screen (for Expense PO) etc).
§ In the Item
Definition Screen we will give the Expense Account, will be useful in
determining the Expense incurred due that Item for a particular period.
§ For Expense Item like Stationery
Items (Where Inventory valuation and Stock maintenance is not required) the
expenditure will be incurred at the PO Receipts Screen (A/C will be Expense
Account defined in the Item Definition).
§ For Inventory Item the expenditure
will be recognized while shipping of the Item from the Inventory.
§ For Asset Item the Expenditure
will be recognized as per the Depreciation defined.
·
Customer Balance: Customer Balance has been affected whenever
a transaction has been against that Customer. Sources -> Service or item
given to Customer (AR Invoice), Discount given to Customer (AR CM), Interest
has been charged (AR Invoice and the effect will be seen in Earned Discount
A/C), Material returned by the Customer (AR CM), Payment received from the
Customer (AR Receipt), Advance given by the customer (AR Deposit). Adjustments
have been done to the Customer Transactions (AR Adjustment), Customer Advance
Refund (AR Debit Memo). Check reversed or bounced (Reversing AR Receipt) etc.
·
Supplier Balance: Supplier Balance has been affected whenever
a transaction has been against that supplier. Sources -> Service or items
given by the Supplier (AP Invoice), Discount given by the Supplier (AP credit
memo), Supplier Balance has to be reduced for charging more (AP Debit memo as
we intimate the Supplier), Payment to the Supplier (AP Payment), Advance given
to the Supplier (AP Prepayment), check bounced (Voiding AP Payment) etc.
·
Bank Account Balance: Bank Account Balance will be
affected whenever a transaction has been done against Bank Account. Sources
-> Money Deposited into Bank A/C (Inter Bank Transfer from Cash to Bank
A/C), Money withdrawn from the Bank A/C (Inter Bank Transfer from Bank to Cash
A/C), Customer Payment (AR Receipt), Supplier Payment (AP Payment), Reversing
AR Receipt, and Voiding AP Payment etc.
§
Note:
When Cash Management has been installed, Bank A/C Account will be affected at
Cash Management module only, for all the above transactions Cash Clearing A/C
will be affected first. (Cash Clearing A/C to Bank or Cash A/C will be done in
Cash Management Module with the Clearing Transactions against that Bank
account)
§ Inventory On-Hand
Qty: Material Transactions In (Receipts) or Out (Issues) done against that
Sub-Inventory. Source-> INV:Material Transactions Screen.
Customizations
(Scenarios):
- Inter
Bank Transfer:
Sources-> Money withdrawn from a Bank,
Money Deposited in the Bank, Funds transferred between Banks.
Being Money is also a Bank. In this
scenario there is an impact both Bank Account Balances.
·
Solution1: Using GL Journal Entry.
Dr Cr
Bank A A/C (Receiving Bank) 1000
Bank B A/C (Giver) 1000
Disadvantages: If Cash Management also has
been used, the Journal entries made in GL won’t reflect in Cash Management
Module. Before loading e-statement from the Bank these transactions must be
avoided from loading (as these transactions in APPS directly hits Bank A/C not
Cash Clearing A/C). Or as is loading of the Bank Statement into Cash Management
needs GL Journal entries for Cash Clearing A/C and manual clearing of
transactions is required in CM module. There won’t be check number trace in the
transaction, as physically Check has been used from the Check Book.
·
Solution2: Using AR Miscellaneous Receipt (Best
solution for Cash Deposit scenario)
AR Miscellaneous Receipt: Distribution
Entry (Bank A will be chosen in the AR Payment Method LOV)
Dr Cr
Bank A A/C (Receiving Bank) 1000
Bank B A/C (Giver) 1000
Disadvantages: If Cash Management also has
been used, the other Bank (not Payment Method Bank i.e. Bank B) in the Distribution
won’t reflect in Cash Management Module. Before loading e-statement from the
Bank these transactions must be avoided from loading (as these transactions in
APPS directly hits Bank A/C not Cash Clearing A/C). Or as is loading of the
Bank Statement into Cash Management needs AR Distribution entries for Cash
Clearing A/C and manual clearing of transactions is required in CM module.
There won’t be check number trace in the transaction, as physically Check has
been used from the Check Book.
·
Solution 3: using AP Invoice, AP Payment and AR
Miscellaneous Receipt – Best Solution lengthy one.
As this transaction, impacts both the Bank
Accounts only. So, while creating AP Invoice there should be Dummy Supplier
(whose balance should be nullified immediately).
AP Invoice: Dummy Supplier
name will be Receiver’s Bank Name for proper convention
Dr Cr
Dummy Reconciliation Account 1000
Liability A/C 1000
AP Payment: Advantage is that
issued check number trace also will be there.
Dr Cr
Liability A/C 1000
Bank B A/C (giver) 1000
Note: As both the AP Invoice and AP Payment
occur at the same time and also created by the same person generally, always
makes dummy supplier account balance to zero. Dummy Reconciliation account
signifies the not matched inter-bank transactions i.e. the other entry has not
been made yet.
AR Miscellaneous Receipt: Bank A will be
chosen in the Payment Methods LOV
Dr Cr
Bank A A/C (Receiver) 1000
Dummy Reconciliation A/C 1000
(Distribution entry)
Advantages: The Cash Management module can
trace these Bank Account Entries, so clearing of the transactions is not a
problem (replace all bank accounts by Cash clearing account). Even Check number
tracing will be available from AP & CM modules.
Disadvantages: Manual communication is
required for the receiver’s entry, i.e. AR Miscellaneous Receipt. Lengthy
Solution, involves creation of 3 entries.
- Customer
Balance and Supplier Balance Netting
Sources-> If physically same person
doing business with the Organization as Supplier as well as Customer.
Requirements: This transaction must impact
Customer Account Balance (decreasing by the Supplier balance amount), Supplier
Account balance (decreasing by the amount owed to the Supplier).
Supplier A Balance - 600 Cr (comprises of Invoice 1, Invoice2,
Invoice 3)
Customer A Balance – 1000 Dr (comprises of
2 sale Invoices - Inv1, Inv2)
Physically supplier A is same as Customer
A.
Transactions:
§ AP Debit or Credit
Memo: Supplier A Balance will be reduced by Creating AP Credit or AP Debit
memo. (Not by AP Payment, this impacts Bank account Balance also with
unnecessary transactions.)
§ AR Credit Memo:
Customer A Balance will be reduced by creating AR Credit Memo.
AP Credit Memo: While making any
further payments to Supplier A after Netting the Balance we need to consider
Invoices & CM, DM’s together.
Dr Cr
Dummy Reconciliation A/C -600
Liability A/C -600
AR Credit Memo: This Created
Credit Memo must be applied against open invoices of that customer (to avoid
from aging)
Dr Cr
Receivables A/C -600
Dummy Reconciliation A/C -600
In Case of Supplier A Balance is more (i.e.
the organization needs to pay that Supplier), the transaction amount of Credit
Memo’s will be Customer A Balance (Which will be nullified after netting).
Note: Standard facility AP-AR Netting can
be used for this scenario. (The System creates both AR Credit Memo & AP
Credit Memo automatically).
3. Customer
Payments or refunding money to Customer:
Sources -> Customer paid more by mistake
(i.e. Invoice Amount 1000, Receipt Amount 1500).
Transactions:
Here Customer Balance is in Negative (i.e.
Net Receivables A/C is in -ve)
§ AR Debit Memo (Here
Revenue should not be realized in this scenario), to nullify the Customer
Balance.
§ AP Invoice created
against Supplier, who represents physically the same person i.e. customer. (By
this the nullified Customer Balance is carried to AP Invoice i.e. Supplier
Balance which will be nullified by the AP Payment that means refunding money to
the Customer)
§ AP Payment: Making
payment for the above AP Invoice (Advantage is that Check number tracing, and
the payment info will be reflected in the Cash Management)
Note: Similar to the reverse of AP-AR
Netting process.
§ AR Debit Memo:
Against Customer A. Create a separate Transaction type for this process for
better tracking.
Dr Cr
Receivables A/C 500
Dummy Reconciliation A/C 500
§ AP Invoice: Against
Supplier A.
Dr Cr
Dummy Reconciliation A/C 500
Liability A/C 500
§ AP Payment: Against
Supplier A
Dr Cr
Liability A/C 500
Cash or Bank A/C 500
Disadvantages: There is no standard process
available in the Oracle. Manual intervention is more (i.e. requires human
presence) between Receivables and Payables Department. Process is lengthy.
- Holding
Security Deposit amount from supplier Payments: (Heritage Customization)
In Heritage, before making payments to the
Suppliers for the supply of Milk the company does Partial Payments only by
holding some amount of money for Security Deposit. The amount, which has been
hold, must be in the separate Liability Amount.
- Transactions: (The Expense incurred must not be
effected with this customization)
§ AP Invoice: The
total original amount which to be paid to the Supplier.
§ AP Credit Memo: To
reduce total amount to be paid.
§ AP Invoice: The
Invoice Which holds the remaining amount for Security Deposit.
AP
Invoice:
Total Amount to be paid to Supplier A is 1500. In that 300 will be hold for
Security Deposit.
Dr Cr
Expense A/C 1500
Liability A/C 1500
AP Credit Memo: While making
Payment to the above invoice we need to consider this Credit memo also. This
reduces the total amount to be paid. Thus holding Security Deposit amount.
Dr Cr
Dummy reconciliation A/C -300
Liability A/C -300
AP Invoice: Represents the
invoice for Security Deposit. The Organization will pay for this invoice when
they want to refund the Security Deposit amount to Suppliers.
Dr Cr
Dummy reconciliation A/C 300
Sec-Deposit Liability A/C 300
With the last transaction holding
Sec-Deposit amount into another Liability A/C can be achieved.
Disadvantages: There is no Standard Process
available from Oracle. Customized Process is required for creating AP Credit
Memo & AP Invoice (Security Deposit Invoice).
