General Ledger.
Oracle General Ledger is the collection point for all financial transactions. Its tool to integrate the sub ledger activities [AP, AR, and FA] and consolidating accounts. General ledger will be used for financial reporting. It is the central repository of all subledger activity, maintaining the highest summary level of financial information from the transaction details supplied by its sub ledgers. If a company does business in many regions across the world. Oracle General Ledger provides financial management solution like currency conversion rates, tracks and reports the balances in multiple currencies.
Oracle General Ledger provides the rich set of reporting tools like: –
1. FSG [Financial Statement Generator]
2. Application Desktop Integrator – Web ADI Report Manager
3. Oracle Financial Analyzer
4. Business Intelligence system with OBIEE
– Oracle Business Intelligence Enterprise Edition tool.
5. Oracle Enterprise Planning and Budgeting.
The balance sheet summarizes accounts and financial activities in three broad categories:
Assets
|
Which represent everything the company owns?
|
Liabilities
|
Which show how much money the company owes to others
|
Capital and Retained earnings
|
Which show the total cash invested in the business by the owners or
Shareholders.
|
Profit and loss (P&L) statement:
|
Income statement, represents the performance of a
Company over time.
|
In addition, accounts are kept for all the revenues and expenses of the company.
The chart of accounts determines how accounting information is collected, categorized, and stored for reporting purposes. Across the entire EBusiness Suite, all accounts are identified by a unique Accounting Flexfield (AFF) combination.
The Accounting Flexfield consists of multiple segments, such as those for company, cost center, and account. One full Accounting Flexfield is called a combination. Each journal entry line is tagged with an Accounting Flexfield combination. For expense transactions, the AFF usually identifies who incurred the cost (for example, which company or department) and what the cost was for (for example, travel expense). If you want more detailed information, such as which region, cost
center, and product incurred the cost, you can design your AFF structure to include that information as well. Because total debits must always equal total credits in every transaction, Oracle General Ledger requires that all journals balance.
Multiple Charts of Accounts:
- Company operating in global environment, requires the multiple COAs.
- A company with subsidiaries in different geographical regions might have to adapt to different account structures based upon various laws for that region or base currency requirements.
Accounts and Periods:
- Transactions only entered in Open periods.
- Two or three periods are open at once to allow for prior period transactions and future period transactions.
- The accounting periods in Oracle Financials can start and finish on any day of the year, and the start and end days can differ from year to year; but the number of periods each year must remain constant. This limitation is required in order to produce yeartoyear comparisons.
Common Accounting Calendars and their Usage.
Account Closing Balance = Opening Balance + Total (debits) − Total (credits)
Account Opening Balance for One Period = Closing Balance for the Previous Period
Trail Balance Report: It ensures that total debits equal the total credits. This is a basis of double-entry bookkeeping system. Total grand total does not have any significance for the company or managers.
Balance Sheet: It’s a snapshot of company’s financial position. This report is extensively used by external purposes by investors, customer and creditors. The balance sheet is prepared by following accounting principle.
Asset = Capital + Liabilities
The Profit n Loss report [Income statement] : Used by accountants, prepared by following formula.
Profit = Total Revenues − Total Expenses
Accounting Methods:
There are 2 main accounting methods:
Accrual method: In this type the transactions records, the revenue and expenses when they occurred, not when the payment is received.
For example: A sale on account would be recorded as revenue even though the customer has not paid the bill.
Cash Method: In this type the transactions records, when payment occurs, regardless of when the
Transaction takes place.
For example:
when the company receives the customer's check, revenue is recorded even though the goods were shipped two months earlier.
