In 11i, there was a standard way for oracle to derive accounting. For example, in Payables liability account will always default from supplier site. If you want a special way of deriving the account combination for liability account, you need customization.
Each subledger had a separate way of storing accounting entries. In AP, accounting was created by running ‘Payables Accounting Process’ whereas in AR, no program was required to be run. Each module had separate tables for storing entries. Similarly there were separate programs to transfer entries to GL from each subledger. SLA overcomes these drawbacks of 11i. SLA gives you greater flexibility in deriving your account combinations. You can build rules for deriving your account combinations.
Just like there is an app for everything for "eye-fone", we can have an account rule for every accounting requirement. ;) For instance, if you want the costcenter segment of your Liability account or revenue to be the same as the costcenter segment of the charge account or sales account, you can build a rule for that.
SLA has standard set of tables which store accounting from each subledger. There aren't separate tables anymore for AP, AR, FA, PO, etc. We now have a standard program (‘Create accounting’) in R12 in each subledger which will create accounting entries.
Before we go into more detail, lets understand some R12 jargon.Per say, AP includes accounting for invoices, debit memo, credit memo, payment etc. These are called as Event Classeswhich are already pre-defined.
For an invoice we can perform various actions which can result in accounting entry. Eg Invoice creation, Invoice validation or Invoice cancellation. Similarly we can perform actions on payments; payment creation, payment cancellation, payment adjustment, etc. These are called as Event Types.
The accounts are debited or credited depending on the transaction which may involve accounts like Accrual Account, Expense Account, Liability Account. These are called Account Classes.
JLT= Journal Line TypeADR=Account Derivation RuleJLD= Journal Line DefinitionAAD= Application Accounting DefinitionEC= Event ClassET= Event TypeSLAM= Subledger Accounting MethodJLT+ADR = JLDJLD+EC+ET = AADAAD+Applications=SLAMHigh level flow of setup:Account Derivation Rule: Setup the accounting rule for each account class.
Journal Line Definition: Group all accounting rules either for an Invoice into one group and/or payments into another group and/or for a Credit Memo and/or Debit memo
Application Accounting Definition: All Journal Line Definitions defined in the above step may form one set of rules for Payables.
Subledger Accounting Method: Set of all the Application Accounting Definition for AP, AR, FA, etc to form the overall accounting rules for your Ledger i.e. Set of books.
This Accounting Method is attached to the Ledger definition.
Make sense? Not clear yet !No worries...
Elements of Subledger Journal Entry:
Journal Line Types: Control journal entry line options such as balance type, side, and summarization
Journal Entry Descriptions: Control the description for the journal entry headers and lines
Account Derivation Rules: Control the derivation of Accounting Flexfield combinations for the journal entry lines
The journal entry setup components are associated with journal lines definitions that are attached to application accounting definitions.
To use application accounting definitions, they must be included in a subledger accounting method and then assigned to a ledger.
Users can group accounting definitions from multiple products, such as Oracle Payables, Oracle Receivables, and Oracle Assets into a single accounting method.
You can assign a subledger accounting method to multiple ledgers.
Components of Accounting Methods Builder (AMB):
The AMB is a tool that enables you to create and modify subledger journal line setups and application accounting definitions.These definitions are then grouped into subledger accounting methods and assigned collectively to a ledger.AMB Includes the following features:Accounting options that determine different characteristics of the journalDescriptions that appear on the subledger journal header and linesAccount derivation rules to construct the accounts for a subledger journal entry lineConditions that determine when subledger journal entry accounts and lines are created
Oracle Applications development provides startup application accounting definitions and at least one subledger accounting method for all products using Oracle Subledger Accounting. If users do not have any special accounting requirements, these startup definitions may meet their needs and the only required setup step is to assign subledger accounting methods to the ledger.If users have specific accounting requirements that are not met by the startup definitions, they can copy and modify the seeded definitions or create new definitions.
Example: How Does Accounting in Receivables Work?
For each accounting event, Receivables uses AutoAccounting to derive the default accounting.
You then submit the Create Accounting program to create Subledger Accounting entries. (Receivables predefines setup in Oracle Subledger Accounting so that the Create Accounting program accepts the default accounts that AutoAccounting derives without change.)
Finally, Subledger Accounting transfers the final accounting to Oracle General Ledger. You can optionally define your own accounting rules in Subledger Accounting to create accounting that meets your business requirements.
If you customize the Subledger Accounting setup to create your own accounting, then Subledger Accounting overwrites the default accounts, or individual segments of accounts that AutoAccounting originally derived during transaction entry. However, you must still set up AutoAccounting.
Draft accounting
The Create Accounting program can be executed either in “draft mode”, if you want to review the results before you create the final accounting, or in the “final mode”.
If you use the “final mode”, then the accounting entries are automatically transferred to Oracle General Ledger's interface table, imported by the Journal Import program, and posted. Draft accounting cannot be transferred to General Ledger.
Posted by Feroz Mohammed
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