Period Closing Process 315814388.doc Effective Mm/dd/yy Page 1 of 22 Rev 1

Period Closing Process
Overview
Copyright Oracle, 2007. All rights reserved.

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document is necessary and that it reflects actual practice.

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Objectives

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Overview of Accounting and Receivables
Overview of Accounting and Receivables

You automatically create accounting entries for all Receivables accounting events using Oracle
Subledger Accounting (SLA).
Oracle Subledger Accounting is a rule-based accounting engine that centralizes journal entry
creation for E-Business Suite products. SLA creates journal entries for subledgers and transfers
them to Oracle General Ledger.
Receivables provides predefined rules that SLA uses to create journal entries for each
accounting event. You can also define your own accounting rules.
SLA allows multiple accounting representations for a single business event, resolving
differences between corporate and local fiscal accounting requirements. The most granular
level of journal entry detail is retained in the subledgers and summarized in General Ledger.
You can view all accounting lines produced by Receivables accounting events in the View
Accounting windows.

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Oracle Subledger Accounting
Oracle Subledger Accounting

Oracle Subledger Accounting (SLA) is primarily a rule-based accounting engine that
centralizes accounting for Oracle E-Business Suite products as well as providing an accounting
toolset and repository. It is not a separate product in itself, but it is Oracles engine catering to
the accounting needs of both Oracle and external modules.
Together with ledger support, it enables support of multiple accounting requirements
concurrently in a single instance. Different accounting regulations can be satisfied by
maintaining and applying different sets of rules to different sets of transactions. SLA can also
provide accounting for the same transaction with multiple methods.
By maintaining a full link between the transaction and accounting data, SLA allows powerful
reconciliation and auditing capabilities.
SLA provides the setup user interface (UI), inquiry UI, and data model for accounting across
Oracle E-Business Suite modules. This common UI provides consistency in reporting, analysis,
and user experience, in turn allowing it to replace various product-specific accounting setups
from earlier Oracle E-Business Suite releases.

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Oracle Subledger Accounting Integration
Oracle Subledger Accounting Integration

Oracle Subledger Accounting integrates with the following E-Business Suite applications:
Payables
Receivables
Projects
Assets
Costing
OPM
Public Sector/Federal
Payroll
Property Manager
Loans

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Lease Management
Intercompany
Cash Management
Globalizations
For complete details regarding Subledger Accounting, see: Oracle Subledger Accounting
Implementation Guide.

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Subledger Accounting Key Concepts
Subledger Accounting Key Concepts

The event model defined in SLA for each subledger represents the transaction or document
types and the lifecycle of each transaction:
Event entity groups together related event classes
Event class classifies transaction types
Event type defines possible actions on each event class with possible accounting
significance
The journal creation rules are defined per event class and event type.
Transaction object and sources are the data model for each subledger that contains the
transaction attributes and information made available to be used during journal rule setup and
journal entry generation.

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Subledger Accounting Receivables Accounting Event Model
Subledger Accounting Receivables Accounting Event Model

An event entity enables Oracle Subledger Accounting to handle the accounting for similar
business events in a consistent manner. The four predefined subledger accounting event entities
in Receivables are:
Transactions
Receipts
Adjustments
Bills Receivable
Each event entity is associated with one or more event classes. An event class represents a
category of business events for a particular transaction type or document.
Event classes group similar event types and enable the sharing of accounting definitions. An
event type represents a business operation that you can perform for an event class. An
accounting event has both an event class and an event type that affect how the Create
Accounting program determines the subledger accounting for it.
Event types provide the lowest level of detail for storing accounting definitions. For example,
the Receivables event class Miscellaneous Receipt is subject to three types of business

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operations that are represented by the event types Miscellaneous Receipt Created,
Miscellaneous Receipt Reverse, and Miscellaneous Receipt Updated.

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Subledger Accounting Setup and Process
Subledger Accounting Setup and Process

You can define your own accounting rules in addition to the accounting rules seeded for
Receivables. The setup for subledger accounting is common to all subledger applications and
involves setting up journal entries, defining a subledger accounting method, and assigning the
subledger accounting method to the ledger.
See: Oracle Subledger Accounting Implementation Guide for complete information about
setting up for subledger accounting.

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Receivables Period Closing Process
Receivables Period Closing Process

Create subledger accounting entries in Receivables using the subledger accounting engine.
After reconciliation and review, Receivables accounting information is transferred to General
Ledger. These entries are reviewed and then posted to General Ledger.

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Overview of Ordering to Period Closing
Overview of Ordering to Period Closing

This is an example of the flow of sales orders to the General Ledger. Some orders may not
follow the complete cycle or may come from other applications.
In this example, the orders are shipped, inventory is decremented, the orders are invoiced,
Receivables subledger accounting entries are created, and the receipts are posted.
To finish the process and close the period, the Receivables subledger transactions are reviewed
and transferred to General Ledger via Subledger Accounting.

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Standard Reports
Standard Reports
Receivables, Vision Operations (USA)
(N) Reports
Reports can be run as a concurrent process from the Submit Requests window.
Use these reports when needed to review activity at any time during the month.

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Reconciling Receivables
Reconciling Receivables
Internal Reconciliation
Internal reconciliation reconciles the Receivables opening to closing balance:
(Opening Balance + Transactions) (Payments) = Closing Balance
Reconciling Subledger Accounting Details
Reconcile the period operational activity with Receivables subledger accounting data before
posting to General Ledger. Use these reports to research transactions and receipts, and the
different accounts that they affect, for a given period.
AR Reconciliation Compares transactional data against accounting data. Use this report
during the internal reconciliation process to see if the balances on the various registers
match those on the journal reports. You can also see which items affect aging, and which
items affect GL account balances. This helps you to more easily reconcile your accounts
receivable activities, before you post to General Ledger.
Potential Reconciling Items Review suggested journal items that might potentially post
to incorrect GL account types.
Journal Entries Review the details that make up the General Ledger journal entries.

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Aging - Review beginning and ending customer balances.

Sales Journal by Account Ensures that the Transaction Register matches the Sales
Journal.
Transaction Register Verifies that all items that can be posted are reflected on the Sales
Journal. The Sales Journal balance should match the total of the transactions here after
adding the credit memo total twice (because it is a negative on the Transaction Register
and a positive on the Sales Journal).
Adjustments Register Identifies any adjustments that affect the transactions for the
month.
Unapplied Receipts Register Determines customer balance after taking into account all
on-account and unapplied amounts.
Applied Receipts Register Identifies receipts that reduce the outstanding opening
balance.
Reconciling Receipts
Use register and journal reports to reconcile receipts according to the receipt life cycle
(confirmed, remitted, cleared) from a cash perspective:
Receipt Journal View receipts that appear in the Journal Entries report.
Receipt Register Review a list of receipts for a specified date range.
Other Receipt Applications View details about receipt activity that do not impact
customer open receivables.
External Reconciliation
External reconciliation reconciles the Receivables trial balance (i.e., Aging Report) to the
Receivables control account (or accounts) in General Ledger.
After you internally reconcile Oracle Receivables data and post to General Ledger, complete
the external reconciliation process with the help of these reports:
Subledger Accounting Program View the subledger journal entries created for successful
events.
Journal Entries Review the details that make up the General Ledger journal entries.
Journal Import Execution Displays the total debits and credits for the journal created.
Posting Execution Displays the total debits and credits that are posted.
Unposted Journal Displays the total debits and credits that are not posted.
AR to GL Reconciliation Verifies that all Receivables journal entries were posted to the
correct General Ledger accounts.

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Running Revenue Recognition
Running Revenue Recognition

Receivables, Vision Operations (USA)
(N) Control > Accounting > Revenue Recognition
The Revenue Recognition program will automatically run as a part of the General Ledger
transfer process. You can also run the Revenue Recognition program manually at any time.
The program generates the revenue distribution records for invoices and credit memos that use
invoicing and accounting rules. Accounting rules determine the number of periods and
percentage of total revenue to record in each accounting period. Invoicing rules determine
when to recognize the receivable for invoices that span more than one accounting period.
Distributions are created in the Receivables subledger and will pass to General Ledger during
the appropriate accounting period. This is an essential process in accrual-based accounting.

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Transferring to General Ledger
Transferring to General Ledger

The Create Accounting program creates subledger accounting entries in Receivables and
transfers these entries to General Ledger. The program populates the GL Interface tables with
Receivables transaction data. The data can be transferred in detail or summary format.
For the transactions that are out of balance, use the Unposted Items report to identify all the
items that are not posted for the specified GL date range.
For the transactions in balance, use the Posting Execution report to verify that all journal
entries exported from Receivables match those posted to General Ledger.
Note: The subledger journal entries can also be directly posted to the General Ledger by
enabling the Post in General Ledger option in the Create Accounting Program.

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Running the Journal Import Program
Running the Journal Import Program

The Create Accounting program can be submitted in either draft mode, if you want to review
the results before you create the final accounting, or final mode. During program submission, if
you create final accounting, then those entries are automatically transferred to the General
Ledger interface table, imported by the Journal Import program, and posted.
You can also choose not to post the entries automatically while submitting the Create
Accounting program. In this case, run the Journal Import Program manually in GL to transfer
accounting information from the GL Interface to the General Ledger.
The journal import program takes the information from the GL Interface table and populates
the GL_JE_BATCHES, GL_JE_HEADER and GL_JE_LINES tables. The journal entries that
were created by the import program must be posted to update the account balances.

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Mapping Receivables Transactions to General Ledger Categories
Mapping Receivables Transactions to General Ledger Categories

If you experience reconciliation issues between transactions and categories, use the map in this
slide to check your setup information.

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Summary

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Period Closing Process

Copyright Oracle, 2007. All rights reserved.