Oracle R12 Receivables Accounting

33,174
-1

Published on

a white paper that lists journal entries resulted from Oracle Receivables transactions and their sources

Published in: Business

Oracle R12 Receivables Accounting

  1. 1. ORACLE APPLICATIONS WHITE PAPERACCOUNTING IN R12 ORACLERECEIVABLESOCT 2011Author: Mohamed Nazih CPA, PMP, Oracle Financials Consultant m.nazih@gmail.comVersion 1.0
  2. 2. Accounting in Oracle EBS Payables © 2011ContentsAbout the Author ................................................................................................... 4Introduction ........................................................................................................... 4Purpose.................................................................................................................. 4Scope ..................................................................................................................... 4Audience ................................................................................................................ 5Accounting 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 Page 2 of 28
  3. 3. 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 ............................................................................................................................ 23Notes 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 .......................................................................................................................... 25Special Accounts ......................................................................................................................... 26 Cross Currency Rounding ........................................................................................................................................ 26 Header Rounding .................................................................................................................................................... 26 AutoInvoice Clearing Account................................................................................................................................. 27Information Sources ................................................................................................................... 28
  4. 4. Accounting in R12 Oracle ReceivablesAbout 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 customer’s 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 optionsScope This whitepaper will cover Oracle R12 Receivables accounting except those of: • Bills Receivable • Credit Cards • Trade Management and Claim Investigation Page 4 of 28
  5. 5. Accounting in R12 Oracle ReceivablesAudience This whitepaper is aimed to super users and functional consultants and implementers as well as applications’ auditors. Page 5 of 28
  6. 6. 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 System Transaction Customer Remittance Receivable Sales Standard options Type Bill-to Site Bank Activity Person LineReceivable Asset    Revenue 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 AssetCash Asset Bank charges Expense Receipts Confirmation Asset Remittance Asset Factoring Asset Short Term Debt Liability Unapplied Receipts Asset  Page 6 of 28
  7. 7. Accounting in R12 Oracle Receivables Account Qualifier System Transaction Customer Remittance Receivable Sales Standard options Type Bill-to Site Bank Activity Person LineUnidentified 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 Page 7 of 28
  8. 8. Accounting in R12 Oracle ReceivablesTransaction Type Figure 2 Page 8 of 28
  9. 9. Accounting in R12 Oracle ReceivablesCustomer Bill-To Site Figure 3 Page 9 of 28
  10. 10. Accounting in R12 Oracle ReceivablesRemittance Bank Figure 4 Page 10 of 28
  11. 11. Accounting in R12 Oracle ReceivablesReceivables Activities Figure 5Salesperson Figure 6 Page 11 of 28
  12. 12. Accounting in R12 Oracle ReceivablesStandard Line – Inventory Item Figure 7Standard Line – Memo Lin Figure 8 Page 12 of 28
  13. 13. Accounting in R12 Oracle ReceivablesDeterminants - OptionsAutoAccounting 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 Page 13 of 28
  14. 14. Accounting in R12 Oracle ReceivablesReceivables Journal Entries Oracle Receivables has the following accounting events:AR-1 Regular Invoice Accounts Debit Credit Receivables X Revenue X Tax X Freight XAR-2 Bill in Arrears Invoice(Every Period within the Accounting Rule) Accounts Debit Credit Unbilled Receivables X Revenue X(Last Period) Accounts Debit Credit Receivables X Unbilled Receivables X Tax X Freight X Page 14 of 28
  15. 15. Accounting in R12 Oracle ReceivablesAR-3 Bill in Advance Invoice(First Period) Accounts Debit Credit Receivables X Unearned Revenue X Tax X Freight X(Every Period within the Accounting Rule) Accounts Debit Credit Unearned Revenue X Revenue XAR-4 Debit Memo Accounts Debit Credit Receivables X Revenue X Tax X Freight X Accounts Debit Credit Receivables X (1) Late Charges 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. Page 15 of 28
  16. 16. Accounting in R12 Oracle ReceivablesAR-5 Credit Memo Accounts Debit Credit Revenue X Tax X Freight X (2) Receivables X (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 Debit Credit (3) Receivables X (4) Receivables X (3) Credit Memo account (4) Invoice accountAR-7 Apply credit memo to commitment Accounts Debit Credit Revenue (5) X (6) Receivables X (5) Credit Memo account (6) Invoice account Page 16 of 28
  17. 17. Accounting in R12 Oracle ReceivablesAR-8 On-account credit Accounts Debit Credit Revenue X Tax X Freight X (7) Receivables X (7) JE is the same as this of Credit MemoAR-9 Apply On-account credit to invoice Accounts Debit Credit (8) Receivables X (9) Receivables X (8) On-account credit account (9) Invoice accountAR-10 Adjustment to invoice Accounts Debit Credit Adjustment X (10) Receivables X (10) This is a negative adjustmentAR-11 Deposit Accounts Debit Credit (11) Receivables X (12) Offset X (11) Deposit account Page 17 of 28
  18. 18. 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 deposits transaction type)(Cash is received against Deposit) Accounts Debit Credit Cash X (13) Receivables X (13) Deposit accountAR-12 Invoice applied to Deposit Accounts Debit Credit (14) Receivables X Revenue X Tax X Freight X Offset X (15) Receivables X (14) This is the invoice part of the transaction (15) Invoice accountAR-13 Guarantee Accounts Debit Credit (16) Receivables X Revenue (17) X (16) Unbilled Receivables account can be used (17) Unearned Revenue account can be used Page 18 of 28
  19. 19. Accounting in R12 Oracle ReceivablesAR-14 Invoice applied to Guarantee Accounts Debit Credit (18) Receivables X Revenue X Tax X Freight X Revenue X (19) Receivables X (18) This is the invoice part of the transaction (19) Invoice account(Cash is received against Guarantee) Accounts Debit Credit Cash X (20) Receivables X (20) Guarantee accountAR-15 Unidentified Receipt Accounts Debit Credit Cash X (21) Bank Charges X Unidentified Receipt X (21) Bank Charges can be entered if profile option "AR: Create Bank Charges" = Yes and receipts creation status is Cleared (clearance method of receipt class is set to Directly). Page 19 of 28
  20. 20. Accounting in R12 Oracle ReceivablesChange from unidentified to unapplied Accounts Debit Credit Unidentified Receipt X Unapplied Receipt XAR-16 Unapplied Receipt Accounts Debit Credit Cash X Bank Charges X Unapplied Receipt XChange from unapplied to applied Accounts Debit Credit Unapplied Receipt X Receivables XAR-17 Applied Receipt Accounts Debit Credit Cash X Bank Charges X Receivables XAR-18 On Account Receipt Accounts Debit Credit Cash X Bank Charges X On Account X Page 20 of 28
  21. 21. Accounting in R12 Oracle ReceivablesAR-19 Receipt with Discount Accounts Debit Credit Cash X Earned / Unearned Discount X Receivables XAR-20 Miscellaneous Receipt Accounts Debit Credit Cash X Bank Charges X Misc. Cash (22) X (22) This usually a revenue accountAR-21 Receipt Write-Off Accounts Debit Credit Unapplied Cash X (23) Write-Off X (23) This usually a revenue accountAR-22 Receipt requiring Remittance Accounts Debit Credit Receipt Confirmation X Receivables X Page 21 of 28
  22. 22. Accounting in R12 Oracle ReceivablesAR-23 Standard Remittance Accounts Debit Credit Remitted Receipt X Receipt Confirmation XAR-24 Clearing of Remitted Receipts Accounts Debit Credit Cash X Bank Charges X Remitted Receipt XAR-25 Factoring Remittance Accounts Debit Credit Factored Receipt X Receipt Confirmation XAR-26 Maturity of Factored Receipts or Eliminating Risk Accounts Debit Credit Short-Term Debt X Factored Receipt XAR-27 Clearing Factored Receipts Accounts Debit Credit Cash X Bank Charges X Short-Term Debt X Page 22 of 28
  23. 23. Accounting in R12 Oracle ReceivablesAR-28 Non-Invoice related Claim Accounts Debit Credit Claim Investigation X Unapplied Cash X Page 23 of 28
  24. 24. Accounting in R12 Oracle ReceivablesNotes ReceivableNR-01 Note Receivable requiring Remittance Accounts Debit Credit Notes Receivable X Receivables XNR-02 Standard Remittance Accounts Debit Credit Notes Receivable X Notes Receivable XNR-03 Clearing of Remitted Notes Receivable Accounts Debit Credit Cash X Bank Charges X Remitted Notes Receivable XNR-04 Factoring Remittance Accounts Debit Credit Factored Notes Receivable X Notes Receivable Confirmation XNR-05 Maturity of Factored Receipts or Eliminating Risk Accounts Debit Credit Short-Term Debt X Factored Notes Receivable X Page 24 of 28
  25. 25. Accounting in R12 Oracle ReceivablesNR-06 Clearing Factored Receipts Accounts Debit Credit Cash X Bank Charges X Short-Term Debt X Page 25 of 28
  26. 26. Accounting in R12 Oracle ReceivablesSpecial AccountsCross 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 Amount in EUR Exchange Rate Amount in EGP A 15 8.639 129.59 B 12 8.639 103.67 C 23 8.639 198.70 431.96 Total 50 8.639 431.95 Rounding Difference 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 Debit Credit Receivables 431.95 Header Rounding 0.01 Revenue 431.96 Page 26 of 28
  27. 27. Accounting in R12 Oracle Receivables Unless it’s 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 Credit Receivables A 129.59 Receivables B 103.67 Receivables C 198.96 Revenue 431.95AutoInvoice 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 Page 27 of 28
  28. 28. Accounting in R12 Oracle ReceivablesInformation Sources o AutoAccounting Setup White Paper [ID 215376.1] o Oracle Recivables Users Guide Release 12.1 Part No. E13522-04 o Oracle Payables Implementation Guide Release 12.1 Part No. E13510-04 Page 28 of 28

×