ORACLE APPLICATIONS WHITE PAPER
ACCOUNTING IN R12 ORACLE
RECEIVABLES
OCT 2011
Author:
Mohamed Nazih
CPA, PMP, Oracle Financials Consultant
[email protected]
Version
1.0
Accounting in Oracle EBS Payables 2011
Contents
About the Author ................................................................................................... 4
Introduction ........................................................................................................... 4
Purpose.................................................................................................................. 4
Scope ..................................................................................................................... 4
Audience ................................................................................................................ 5
Accounting in R12 Oracle Receivables ................................................................... 6
Determinants - Accounts .............................................................................................................. 6
System Options Accounts ......................................................................................................................................... 7
Transaction Type....................................................................................................................................................... 8
Customer Bill-To Site ................................................................................................................................................ 9
Remittance Bank ..................................................................................................................................................... 10
Receivables Activities.............................................................................................................................................. 11
Salesperson ............................................................................................................................................................. 11
Standard Line Inventory Item .............................................................................................................................. 12
Standard Line Memo Lin ...................................................................................................................................... 12
Determinants - Options .............................................................................................................. 13
AutoAccounting ...................................................................................................................................................... 13
Receivables Journal Entries ........................................................................................................ 14
AR-1 Regular Invoice ............................................................................................................................................... 14
AR-2 Bill in Arrears Invoice...................................................................................................................................... 14
AR-3 Bill in Advance Invoice .................................................................................................................................... 15
AR-4 Debit Memo ................................................................................................................................................... 15
AR-5 Credit Memo .................................................................................................................................................. 16
AR-6 Apply credit memo to invoice, debit memo, or chargeback .......................................................................... 16
AR-7 Apply credit memo to commitment ............................................................................................................... 16
AR-8 On-account credit .......................................................................................................................................... 17
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AR-9 Apply On-account credit to invoice ................................................................................................................ 17
AR-10 Adjustment to invoice .................................................................................................................................. 17
AR-11 Deposit ......................................................................................................................................................... 17
AR-12 Invoice applied to Deposit............................................................................................................................ 18
AR-13 Guarantee .................................................................................................................................................... 18
AR-14 Invoice applied to Guarantee ....................................................................................................................... 19
AR-15 Unidentified Receipt .................................................................................................................................... 19
AR-16 Unapplied Receipt ........................................................................................................................................ 20
AR-17 Applied Receipt ............................................................................................................................................ 20
AR-18 On Account Receipt ...................................................................................................................................... 20
AR-19 Receipt with Discount .................................................................................................................................. 21
AR-20 Miscellaneous Receipt ................................................................................................................................. 21
AR-21 Receipt Write-Off ......................................................................................................................................... 21
AR-22 Receipt requiring Remittance ...................................................................................................................... 21
AR-23 Standard Remittance.................................................................................................................................... 22
AR-24 Clearing of Remitted Receipts ...................................................................................................................... 22
AR-25 Factoring Remittance ................................................................................................................................... 22
AR-26 Maturity of Factored Receipts or Eliminating Risk ....................................................................................... 22
AR-27 Clearing Factored Receipts ........................................................................................................................... 22
AR-28 Non-Invoice related Claim ............................................................................................................................ 23
Notes Receivable ........................................................................................................................ 24
NR-01 Note Receivable requiring Remittance ........................................................................................................ 24
NR-02 Standard Remittance ................................................................................................................................... 24
NR-03 Clearing of Remitted Notes Receivable ....................................................................................................... 24
NR-04 Factoring Remittance ................................................................................................................................... 24
NR-05 Maturity of Factored Receipts or Eliminating Risk ....................................................................................... 24
NR-06 Clearing Factored Receipts .......................................................................................................................... 25
Special Accounts ......................................................................................................................... 26
Cross Currency Rounding ........................................................................................................................................ 26
Header Rounding .................................................................................................................................................... 26
AutoInvoice Clearing Account................................................................................................................................. 27
Information Sources ................................................................................................................... 28
Accounting in R12 Oracle Receivables
About the Author
Mohamed Nazih is a proficient functional consultant in Oracle e-Business Suite with more
than seven years of experience of solutions design, configuration, testing and documentation
and three full life cycle implementations.
Prior to Oracle, he worked as a certified accountant and auditor for six years. This experience
gave him an advantage to team up with financial staff in many companies in delivering high
quality professional services, such as consulting, support, and training.
While not working, Mohamed Nazih takes care of his family. Furthermore, he is a self-learner
and avid reader in project management, change management, business intelligence, science,
and environment issues.
Mohamed Nazih values an atmosphere of ethics, punctuality, and team-working.
Introduction
Accounting Journal Entries are embedded in every aspect of Oracle Financials Applications.
Since they are Financials, you must have a good understanding of how these journals are
generated and integrated. This understanding affects how you design and implement solution
and it is the ground of discussion with customers representatives in this sector. They may
have little knowledge of Oracle but, mostly, are good accountants.
Purpose
This whitepaper will provide a detailed overview of accounting events, entries, and source.
This overview may help designing better chart of accounts and justifying decisions taken to
setup system parameters and options
Scope
This whitepaper will cover Oracle R12 Receivables accounting except those of:
Bills Receivable
Credit Cards
Trade Management and Claim Investigation
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Accounting in R12 Oracle Receivables
Audience
This whitepaper is aimed to super users and functional consultants and implementers as well
as applications auditors.
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Accounting in R12 Oracle Receivables
Accounting in R12 Oracle Receivables
Determinants - Accounts
Receivables Journal Entries are controlled by the definition of:
1. System options
2. Transaction Type
3. Customer Bill-to Site
4. Remittance Bank
5. Receivable Activity
6. Sales Person
7. Standard Line
Account
Qualifier
Receivable
Asset
Revenue
System Transaction Customer Remittance Receivable
options
Type
Bill-to Site
Bank
Activity
Sales
Person
Standard
Line
Revenue
Freight
Revenue
Clearing
Asset
Unbilled receivable
Asset
Unearned revenue
Liability
Tax
Liability
Realized Gain
Revenue
Realized Losses
Expense
Unallocated Revenue
Revenue
Cross Currency Rounding
Expense
Header Rounding
Expense
Offset
Asset
Cash
Asset
Bank charges
Expense
Receipts Confirmation
Asset
Remittance
Asset
Factoring
Asset
Short Term Debt
Liability
Unapplied Receipts
Asset
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Accounting in R12 Oracle Receivables
Account
Qualifier
System Transaction Customer Remittance Receivable
options
Type
Bill-to Site
Bank
Activity
Unidentified Receipts
Asset
On Account Receipts
Liability
Unearned discount
Expense
Earned discount
Expense
Adjustment (write-off)
Revenue
Bank Error
Expense
Finance Charges
Revenue
Refund
Liability
Misc. Cash
Revenue
System Options Accounts
Figure 1
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Sales
Person
Standard
Line
Accounting in R12 Oracle Receivables
Transaction Type
Figure 2
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Accounting in R12 Oracle Receivables
Customer Bill-To Site
Figure 3
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Accounting in R12 Oracle Receivables
Remittance Bank
Figure 4
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Accounting in R12 Oracle Receivables
Receivables Activities
Figure 5
Salesperson
Figure 6
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Accounting in R12 Oracle Receivables
Standard Line Inventory Item
Figure 7
Standard Line Memo Lin
Figure 8
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Accounting in R12 Oracle Receivables
Determinants - Options
AutoAccounting
If an account can be defined in more than one window, AutoAccounting Setup determines
which account segment will be picked from which source. That does apply only to
transactions accounting since receipts accounting has one source (i.e., Receipt Class Remittance Bank). AutoAccounting applies to the following accounts:
AutoInvoice Clearing Account
Freight
Receivable
Revenue
Tax
Unbilled Receivable
Unearned Revenue
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Accounting in R12 Oracle Receivables
Receivables Journal Entries
Oracle Receivables has the following accounting events:
AR-1 Regular Invoice
Accounts
Receivables
Debit
Credit
Revenue
Tax
Freight
AR-2 Bill in Arrears Invoice
(Every Period within the Accounting Rule)
Accounts
Unbilled Receivables
Debit
Credit
Revenue
(Last Period)
Accounts
Receivables
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Debit
Credit
Unbilled Receivables
Tax
Freight
Accounting in R12 Oracle Receivables
AR-3 Bill in Advance Invoice
(First Period)
Accounts
Receivables
Debit
Credit
Unearned Revenue
Tax
Freight
(Every Period within the Accounting Rule)
Accounts
Unearned Revenue
Debit
Credit
Revenue
AR-4 Debit Memo
Accounts
Receivables
Credit
Revenue
Tax
Freight
Accounts
Receivables
Late Charges
(1)
Debit
Debit
Credit
X
(1)
Late Charges account is defined in a Receivable Activity of type Finance Charges. This
activity assigned to System options and can be overridden on customer Bill-To site.
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Accounting in R12 Oracle Receivables
AR-5 Credit Memo
Accounts
Debit
Revenue
Tax
Freight
Receivables
(2)
Credit
(2)
The profile option AR: Use Invoice Accounting for Credit Memos determines how JE for
credit memos are generated. If Yes, Receivables credits original transaction. If No,
Receivables uses AutoAccounting to determine accounts.
AR-6 Apply credit memo to invoice, debit memo, or chargeback
Accounts
Receivables
(3)
Debit
Credit
Receivables
(4)
(3)
Credit Memo account
(4)
Invoice account
AR-7 Apply credit memo to commitment
Accounts
Revenue (5)
Receivables
Credit
X
(6)
(5)
Credit Memo account
(6)
Invoice account
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Debit
Accounting in R12 Oracle Receivables
AR-8 On-account credit
Accounts
Debit
Revenue
Tax
Freight
Receivables
(7)
(7)
Credit
JE is the same as this of Credit Memo
AR-9 Apply On-account credit to invoice
Accounts
Receivables
(8)
Debit
Credit
Receivables
(9)
(8)
On-account credit account
(9)
Invoice account
AR-10 Adjustment to invoice
Accounts
Adjustment
Debit
Credit
Receivables
(10)
(10) This is a negative adjustment
AR-11 Deposit
Accounts
Receivables
Offset
(11)
(12)
(11) Deposit account
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Debit
Credit
X
X
Accounting in R12 Oracle Receivables
(12) Offset account can be an account such as unearned revenue and is controlled by profile
option = AR: Deposit Offset Account Source (AutoAccounting or deposit's transaction type)
(Cash is received against Deposit)
Accounts
Cash
Debit
Credit
X
Receivables
(13)
(13) Deposit account
AR-12 Invoice applied to Deposit
Accounts
Receivables
(14)
Debit
Credit
Revenue
Tax
Freight
Offset
Receivables
(15)
(14) This is the invoice part of the transaction
(15) Invoice account
AR-13 Guarantee
Accounts
Receivables
(16)
Revenue (17)
(16) Unbilled Receivables account can be used
(17) Unearned Revenue account can be used
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Debit
Credit
X
X
Accounting in R12 Oracle Receivables
AR-14 Invoice applied to Guarantee
Accounts
Receivables
(18)
Debit
Credit
Revenue
Tax
Freight
Revenue
Receivables
(19)
(18) This is the invoice part of the transaction
(19) Invoice account
(Cash is received against Guarantee)
Accounts
Cash
Debit
Credit
X
Receivables
(20)
(20) Guarantee account
AR-15 Unidentified Receipt
Accounts
Cash
Credit
Bank Charges
(21)
Unidentified Receipt
(21)
Debit
X
X
Bank Charges can be entered if profile option "AR: Create Bank Charges" = Yes and
receipt's creation status is 'Cleared' (clearance method of receipt class is set to 'Directly').
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Accounting in R12 Oracle Receivables
Change from unidentified to unapplied
Accounts
Unidentified Receipt
Debit
Credit
Unapplied Receipt
AR-16 Unapplied Receipt
Accounts
Debit
Cash
Bank Charges
Unapplied Receipt
Credit
Change from unapplied to applied
Accounts
Unapplied Receipt
Debit
Credit
Receivables
AR-17 Applied Receipt
Accounts
Debit
Cash
Bank Charges
Receivables
Credit
AR-18 On Account Receipt
Accounts
Debit
Cash
Bank Charges
On Account
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Credit
Accounting in R12 Oracle Receivables
AR-19 Receipt with Discount
Accounts
Debit
Cash
Earned / Unearned Discount
Receivables
Credit
AR-20 Miscellaneous Receipt
Accounts
Debit
Cash
Bank Charges
Misc. Cash (22)
(22)
Credit
This usually a revenue account
AR-21 Receipt Write-Off
Accounts
Unapplied Cash
Write-Off
(23)
Debit
Credit
X
(23)
This usually a revenue account
AR-22 Receipt requiring Remittance
Accounts
Receipt Confirmation
Receivables
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Debit
Credit
X
X
Accounting in R12 Oracle Receivables
AR-23 Standard Remittance
Accounts
Remitted Receipt
Debit
Credit
Receipt Confirmation
AR-24 Clearing of Remitted Receipts
Accounts
Debit
Cash
Bank Charges
Remitted Receipt
Credit
AR-25 Factoring Remittance
Accounts
Factored Receipt
Debit
Credit
Receipt Confirmation
AR-26 Maturity of Factored Receipts or Eliminating Risk
Accounts
Short-Term Debt
Debit
Credit
Factored Receipt
AR-27 Clearing Factored Receipts
Accounts
Debit
Cash
Bank Charges
Short-Term Debt
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Credit
Accounting in R12 Oracle Receivables
AR-28 Non-Invoice related Claim
Accounts
Claim Investigation
Unapplied Cash
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Debit
Credit
X
X
Accounting in R12 Oracle Receivables
Notes Receivable
NR-01 Note Receivable requiring Remittance
Accounts
Notes Receivable
Debit
Credit
Receivables
NR-02 Standard Remittance
Accounts
Notes Receivable
Debit
Credit
Notes Receivable
NR-03 Clearing of Remitted Notes Receivable
Accounts
Debit
Cash
Bank Charges
Remitted Notes Receivable
Credit
NR-04 Factoring Remittance
Accounts
Factored Notes Receivable
Debit
Credit
Notes Receivable Confirmation
NR-05 Maturity of Factored Receipts or Eliminating Risk
Accounts
Short-Term Debt
Factored Notes Receivable
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Debit
Credit
X
X
Accounting in R12 Oracle Receivables
NR-06 Clearing Factored Receipts
Accounts
Debit
Cash
Bank Charges
Short-Term Debt
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Credit
Accounting in R12 Oracle Receivables
Special Accounts
Cross Currency Rounding
Is used to record rounding error amounts created during a cross currency receipt application
for currencies that have a fixed rate relationship. These errors:
May occur because there are usually more decimal places defined for an exchange rate
than for the standard precision of functional currency. When a receipt amount is
multiplied by an exchange rate and then rounded to match standard precision, the
result can be slightly different from the transaction amount specified in the
transmission file.
May be expected if receipt in foreign currency (USD) is to be applied to invoices in
different foreign currency (EUR) while functional currency is EGP.
Header Rounding
Is used to record any rounding differences occur upon converting foreign currency
transactions to functional currency.
Upon creating a transaction with several line items, total amount in the two currencies may
vary slightly (usually by the minimum accountable unit defined for functional currency). These
differences occur due to rounding.
Example:
Item
A
B
C
Amount in EUR
15
12
23
Exchange Rate
8.639
8.639
8.639
Total
Rounding Difference
50
8.639
Amount in EGP
129.59
103.67
198.70
431.96
431.95
0.01
Total amount of lines after conversion is EGP 431.96 while header amount is 431.95. This
results in a rounding difference of 0.01. The journal entry would be:
Accounts
Receivables
Header Rounding
Revenue
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Debit
Credit
431.95
0.01
431.96
Accounting in R12 Oracle Receivables
Unless its a legal requirement, Header Level Rounding is not recommended. If so, Receivables
rounds amounts at line level (EUR 50), multiply by exchange rate (EGP 8.693), and posts any
rounding difference to the Receivables account. When more than one receivable account is
used according to AutoAccounting setup the account with largest amount is affected by
the rounding difference.
Accounts
Debit
Receivables A
129.59
Receivables B
103.67
Receivables C
198.96
Revenue
Credit
431.95
AutoInvoice Clearing Account
If Create Clearing option is enabled for imported transactions batch source, this account will
be used to hold any difference between the specified revenue amount and the selling price
times the quantity for imported invoice lines. In other words, (quantity * unit price)
extended price.
Finance charge
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Accounting in R12 Oracle Receivables
Information Sources
o AutoAccounting Setup White Paper [ID 215376.1]
o Oracle Recivables User's Guide Release 12.1 Part No. E13522-04
o Oracle Payables Implementation Guide Release 12.1 Part No. E13510-04
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