Correcting Misclassified Account Types
In the event you have an account with a misclassified account type that results in an erroneous Retained Earnings calculation, you can correct your account balances and the misclassified account type.
For example, after running a trial balance for the first period of your new fiscal year, you notice that your Cash account balance is zero. You discover that your Cash account was originally created with an account type of Expense rather than Asset. Therefore, when you opened the first period of your new fiscal year, General Ledger automatically closed out your Cash account balance to Retained Earnings.
To correct balances for a misclassified account:
1. Reopen the last period of your prior fiscal year, if it is closed.
2. Create a journal entry that brings the misclassified account balance to zero for the last day of the last period of your prior fiscal year. Use a temporary account such as Suspense for the offsetting amount.
3. Post the journal entry on the last day of the last period of your prior fiscal year.
4. Verify that the misclassified account balance is zero by reviewing account balances online or in reports.
5. Correct the account type of the misclassified account by changing the segment value qualifiers. General Ledger prevents you from changing the account type unless you first unfreeze all account structures that reference your account segment using the Key Flexfield Segments window.
6. Ask your System Administrator to correct the account type of all accounts referencing the misclassified account by updating the ACCOUNT_TYPE column in the GL_CODE_COMBINATIONS table using SQL*Plus.
7. Restore the misclassified account balance by reversing the journal entry you posted in Step 3 above. Reverse the journal entry into the last day of the same period that it was originally posted.
8. Post the reversing journal entry.
Using the previous example, the Cash account type is now Asset so when you post the reversing journal entry, General Ledger rolls forward your Cash and Retained Earnings balances into the first period of the new fiscal year.
9. Review the corrected account balances online or in reports.
See Also
Designing Your Accounting Flexfield
Opening and Closing Periods
Entering Journals
Posting Journals
Reversing Journals
Performing an Account Inquiry
