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Oracle Payables User's Guide
Release 12.1
Part Number E12797-04
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Accounting

This chapter covers the following topics:

Accounting in Payables

You can create accounting entries for invoice and payment transactions in Oracle Payables using the Oracle Subledger Accounting architecture.

Subledger Accounting is a rule-based accounting engine, toolset, and repository that centralizes accounting across the E-Business Suite. Acting as an intermediate step between each of the subledger applications and Oracle General Ledger, Subledger Accounting creates the final accounting for subledger journal entries and transfers the accounting to General Ledger.

Payables includes a set of predefined accounting rules that Subledger Accounting uses to create accounting, but you can define your own detailed accounting rules using a centralized accounting setup in a common user interface. In Subledger Accounting, you use the Accounting Methods Builder (AMB) to define the way subledger transactions are accounted. To do this, you create and modify subledger journal line setups and application accounting definitions. These definitions define the journal entries that enable an organization to meet specific fiscal, regulatory, and analytical requirements. These definitions are then grouped into subledger accounting methods and assigned collectively to a ledger. See: Accounting Methods Builder (AMB) Overview, Oracle Subledger Accounting Implementation Guide.

For more information about Subledger Accounting, see: Oracle Subledger Accounting Implementation Guide.

Each transaction that has accounting impact is called an accounting event. For a complete description of the accounting events in Payables, see: Payables Accounting Events.

You can create accounting entries by submitting the Create Accounting program. Or you can create online accounting entries for a specific invoice, invoice batch, payment, or payment batch. See: Creating Accounting Entries in Payables.

After Payables creates accounting entries, you can view the accounting entries in the following windows in Payables:

After you create accounting entries, you can transfer them to General Ledger for posting. See: Transferring Accounting Entries to General Ledger.

If you post entries in General Ledger, you can drill down from a journal entry line to the accounting entry or transaction in Payables.

If you use budgetary control, then when you account for an invoice, Payables also creates any necessary encumbrances or encumbrance adjustments for the invoice. For more information, see: Encumbrance Accounting, Oracle General Ledger User Guide.

Payables Accounting Events

An accounting event is a Payables transaction that has accounting impact. Not all accounting events have accounting impact, you can modify the accounting setup to create accounting for some events and not for others.

See: Introduction to Events and Sources, Oracle Financial Services Accounting Hub Implementation Guide

In Oracle Subledger Accounting, accounting events are categorized into event types. Event types are grouped into event classes that in turn are grouped into event entities. The overall grouping of these components is called an event model. The Oracle Payables accounting event model is predefined for you, and includes each Payables transaction type (event class) and its lifecycle. You should understand the Payables accounting event model because the model classifies Payables accounting events, which are the basis for creating subledger accounting.

At the foundation of the event model, Payables predefines event entities. An event entity enables Oracle Subledger Accounting to handle the accounting for similar business events in a consistent manner. The event entities in Payables are invoices and payments.

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. For example, some event classes that Payables predefines for the event entity AP Invoices include Credit Memo, Debit Memo, Expense Reports, and Invoices.

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 types that affect how the Create Accounting program determines the subledger accounting for it. Event types provide the lowest level of details for storing accounting definitions. For example, the Payables event class Invoices is subject to three types of business operations that are represented by the following event types: Invoice Adjusted, Invoice Cancelled, Invoice Validated.

The invoice adjustment is displayed as Invoice Validated event but the adjustment functionality is the same. The invoice adjustment event creates two new events, Payment Adjusted and Payment Clearing adjusted.

Payables provides a predefined set of event classes and event types for each accounting event entity.

AP Invoices Event Entity

This table describes the event classes and types that Payables predefines for the AP Invoices event entity.

Event Class Event Types
Credit Memos Credit Memo Adjusted
Credit Memo Cancelled
Credit Memo Validated
Debit Memos Debit Memo Adjusted
Debit Memo Cancelled
Debit Memo Validated
Expense Reports Expense Report Cancelled
Expense Report Created
Expense Report Distributed
Expense Report Frozen
Expense Report Holds Released
Expense Report Override Dist
Expense Report Override Tax
Expense Report Redistributed
Expense Report Unfrozen
Expense Report Updated
Expense Report Validated Tax
Invoices Invoice Adjusted
Invoice Cancelled
Invoice Validated
Invoice_Burden Invoice Burden Adjusted
Invoice Burden Cancelled
Invoice Burden Validated
Prepayment Application Prepayment Application Adjusted
Prepayment Applied
Prepayment Unapplied
Prepayment Invoices Prepayment Cancelled
Prepayment Created
Prepayment Distributed
Prepayment Frozen
Prepayment Holds Released
Prepayment Override Dist
Prepayment Override Tax
Prepayment Redistribute
Prepayment Unfrozen
Prepayment Updated
Prepayment Validated
Prepayments Prepayment Adjusted
Prepayment Cancelled
Prepayment Validated
Prepayment_Burden Prepayment Adjusted
Prepayment Cancelled
Prepayment Validated
Prepay_Application_Burden Prepayment Applied Burden
Prepayment Unapplied Burden
Prepayment Application Adjusted Burden
Standard Invoices Standard Invoice Cancelled
Standard Invoice Created
Standard Invoice Distributed
Standard Invoice Frozen
Standard Invoice Reversed
Standard Invoice Tax Holds Released
Standard Invoice Tax Distributions Overridden
Standard Invoice Tax Overridden
Standard Invoice Redistributed
Standard Invoice Unfrozen
Standard Invoice Updated
Standard Invoice Validated

AP Payments Event Entity

This table describes the event classes and types that Payables predefines for the AP Payments event entity.

Event Class Event Types
Future Dated Payments Payment Method
Payment Maturity Adjusted
Payment Maturity Reversed
Payments Manual Payment Adjusted
Payment Adjusted
Payment Cancelled
Payment Created
Reconciled Payments Payment Cleared
Payment Clearing Adjusted
Payment Uncleared
Refunds Refund Adjusted
Refund Cancelled
Refund Recorded

Creating Accounting Entries in Payables

You can create accounting entries for Payables accounting events in two ways:

In both cases, you can view the generated accounting entries in the following locations:

Prerequisites

Submitting the Create Accounting Program

Use the Create Accounting program to create accounting entries for multiple transactions. You can also use this program to generate detailed error reports if you could not successfully create accounting entries from the transaction windows.

Submit the Create Accounting program in Draft mode, if you want to view the accounting results before you create the final accounting, or Final mode.

See: Create Accounting Program, Oracle Subledger Accounting Implementation Guide.

This program generates the Subledger Accounting Program Report, Oracle Subledger Accounting Implementation Guide.

Creating Accounting Entries from Transaction Windows.

From a transaction window, you can create accounting entries for a selected invoice, payment, invoice batch, or payment batch. For a single invoice or payment, the accounting completes online. For batches, the accounting process is submitted as a request, and you can view its completion status in the Requests window.

To create accounting entries for an invoice, payment, or payment batch:

  1. Query and select the invoice, payment, or payment batch in the Invoices, Payments, or Payment Batches window. Choose the Actions button.

  2. The actions window for the transaction opens. Choose the Create Accounting check box.

    Choose one of the following options:

  3. Choose OK.

To create accounting entries for an invoice batch:

  1. In the Invoice Batches window, query the invoice batch.

  2. Choose the Create Accounting button.

Adjusting Accounting Entries

Accounting entries are automatically generated for transactions based on your accounting setup in Oracle Subledger Accounting and Oracle General Ledger.

You can only adjust accounting entries in Payables if you ran the Create Accounting program in Draft mode. To adjust accounting entries, adjust the transaction details and rerun the Create Accounting program.

For information on how Payables accounting entries are generated, see: Oracle Subledger Accounting Implementation Guide.

For information on accounting, see: Oracle General Ledger Implementation Guide and Oracle General Ledger User Guide.

Viewing Accounting Entries

You can use Oracle Subledger Accounting to view information on accounting events, journal entries, and journal entry lines.

You can perform the following subledger accounting inquiries:

See: Subledger Accounting Inquiries Overview, Oracle Subledger Accounting Implementation Guide

You can use the following reports to review accounting information:

See: Subledger Accounting Reports Overview, Oracle Subledger Accounting Implementation Guide

Transferring Accounting Entries to Your General Ledger

After you create accounting entries, transfer those entries to General Ledger. You can transfer accounting entries in the following ways:

You can then post these journal entry batches, headers, and lines within General Ledger to update your General Ledger account balances. See: Journal Import, Oracle General Ledger User Guide.

If you do not use General Ledger, you can use the data in the GL_INTERFACE to create and post journal entries in your general ledger.

You can view the accounting entries in Payables. Also, after you post journal entries in Oracle General Ledger, you can drill down to the related accounting entries or transactions in Payables.

Related Topics

Budgetary Control In Payables

Automatic Offsets

Encumbrance Entries in Payables

Accounting Methods, Oracle Payables Implementation Guide

Intercompany Accounting

Reconciling Payables Activity

Unaccounted Transactions Sweep Program

Defining Journal Sources, Oracle General Ledger User Guide

Posting Journal Batches, Oracle General Ledger User Guide

Encumbrance Entries in Payables

Posting in Oracle General Ledger

After you submit Journal Import, you can post journal entries in Oracle General Ledger. You can post journal entries in Summary or Detail. See Posting Journal Batches, Oracle General Ledger User Guide.

Intercompany Accounting When You Use Oracle General Ledger

When you use Oracle General Ledger, you can perform accounting for multiple companies within one ledger. When you post journal entries, if a journal entry is out of balance for a balancing segment/company, Oracle General Ledger automatically posts any difference against the intercompany account you defined for the combination of source and category. The following example explains the process further:

Example

An organization owns three companies: A, B, and C. Company A receives a $150 invoice for supplies which all three companies use. Company A enters the invoice in Payables and splits the expense three ways, creating three distributions, one for each company.

At this point, the journal entries for this transaction are out of balance, because company A has a liability of $150, and an expense of $50. Companies B and C are also out of balance, with expenses of $50 and no liability. The following T-accounts illustrate this situation:

the picture is described in the document text

During the posting process, General Ledger identifies unbalanced entries such as the one shown above and automatically creates additional intercompany balancing entries. The Intercompany Receivables account for Company A is debited 100, and the Intercompany Receivables account for Companies B and C are each credited 50. Then it posts both the invoice and balancing entries.

The following T-accounts illustrate the intercompany balancing entries that General Ledger creates to resolve the imbalance presented in the preceding example:

the picture is described in the document text

Drilling Down to Payables from Oracle General Ledger

From Oracle General Ledger, when you are viewing a journal that has the Oracle Payables journal source assigned to it you can drill down to subledger details.

See: Drilling Down to Subledger Detail, Oracle General Ledger User Guide

The following information is displayed:

Column Name Invoice Payment Reconciled Payment
Applied to Invoice Num X X  
Bank Account   X X
Cleared Date     X
Credit X X X
Curr Conversion Rate X X X
Debit X X X
Document Num   X X
Entered Credit X X X
Entered Curr X X X
Entered Debit X X X
Event Num X X X
Invoice Date X    
Invoice Distribution Line Num X    
Invoice Distribution Line Type X    
Invoice Type X    
Line Num X X X
Line Type X X X
Payment Date   X  
Payment Method   X X
Supplier X X X

When you select a detailed accounting line, additional information is displayed:

For Invoices: PO Number, Event Type, PO Release Num, Accounting Date, Document Seq, Receipt Num., Comments

For Payments: Payment Curr, Document Name, Invoice Curr, Event Type, Invoice Num, Accounting Date, Document Seq

For Reconciled Payment: Statement Currency, Payment Currency, Statement Number, Event Type, Statement Line, Accounting Date, Statement Document Seq

You can drill down from the subledger entries to view the original subledger transaction.

Reconciling Payables Activity

Use the following reports to reconcile your posted invoices and payments to your Accounts Payable Trial Balance to ensure that your Trial Balance accurately reflects your accounts payable liability:

To reconcile your Accounts Payable Trial Balance for a given period:

March Accounts Payable Trial Balance

+ April Posted Invoice Register

- April Posted Payment Register

= April Accounts Payable Trial Balance

Related Topics

Posted Invoice Register

Posted Payment Register

Accounts Payable Trial Balance Report

Reconciling Payables Activity to General Ledger

Use the Accounts Payable Trial Balance report to reconcile your accounts payable liability in your general ledger. Compare the Accounts Payable Trial Balance to the accounts payable balance in your general ledger system for a given period.

Because the Trial Balance presents the outstanding accounts payable liability information, it is only valid for an accrual ledger.

Related Topics

Accounts Payable Trial Balance Report

How Payables Populates the GL Interface Table

Transfer to General Ledger in Detail

This section describes how the Transfer Journal Entries to General Ledger program populates the GL Interface columns REFERENCE21-REFERENCE30 when you transfer in detail.

Purchase Invoices

Records for the Purchase Invoices journal category debit the Expense account (including exchange rate variance and invoice price variance accounting entries), and credit the Liability account. The Transfer Journal Entries to General Ledger program populates GL_INTERFACE reference columns with purchase invoice information as follows:

Payments

Records for the Payments journal category debit the Liability account, credit the Cash account, and are charged to the Discount, Realized Gain/Loss, Future Payment, and Rounding accounts. The Transfer Journal Entries to General Ledger program populates GL Interface reference columns with payment information as follows:

Reconciled Payments

Records for the Reconciled Payments journal category are charged to the Cash Clearing and Reconciliation Accounting accounts. The Transfer Journal Entries to General Ledger program populates GL Interface reference columns with reconciled payment information as follows:

Transfer to General Ledger in Summary

When you transfer in summary (either summarized by accounting date or summarized by accounting period), the REFERENCE21 column is the only reference column that the Transfer Journal Entries to General Ledger program populates. This column is populated with AP_AE_HEADERS_ALL.GL_TRANSFER_RUN_ID, which is an internal identifier that is unique for the combination of transfer batch and ledger.

For example, if you transfer a batch that contains four ledgers, then the Transfer Journal Entries to General Ledger program creates four sets of records in the GL Interface, each set with a unique value for this column.

Note: Encumbrance entries are always transferred in detail.

Examples of Transfer to General Ledger and Journal Import

This section shows you examples of the level of detail that's transferred during the Transfer Journal Entries to General Ledger Program and the Journal Import program. When you submit the Transfer Journal Entries to General Ledger Program, you transfer accounting information in either summary or detail. You then submit Journal Import. If you transferred in summary then Journal Import creates summary journals. If you transferred in detail, and if you submit Journal Import from General Ledger, then you can choose to submit Journal Import in either summary or detail.

The Transfer Journal Entries to General Ledger Program transfers data from Payables Accounting Entry Lines table (AP_AE_LINES_ALL) to:

Journal Import then transfers data from the GL Interface to GL tables including:

This document provides examples for three scenarios.

Transfer to General Ledger in Summary and Journal Import in Summary

In this example, Payables accounting entries are summarized during the transfer to the GL Interface. All entries with the same account are summarized in a single record in the GL Interface and assigned a unique Link ID in column GL_SL_LINK_ID. The corresponding accounting entries in the Accounting Entry Lines table are assigned the same Link ID, so that there will eventually be a link between the journal entries and the original accounting entries.

The following table shows sample accounting entries in the Payables Accounting Entry Lines table.

Payables Accounting Entry Lines (After Transfer in Summary)

Invoice ID Supplier Entry Line Account Debit Credit Link ID
12301 Acme Inc 1 1 01-4000 $100.00 N/A 5001
12301 Acme Inc 1 2 01-4100 $200.00 N/A 5002
12301 Acme Inc 1 3 01-6000 N/A $300.00 5004
12302 Ball Inc 2 1 01-4000 $500.00 N/A 5001
12302 Ball Inc 2 2 01-6000 N/A $500.00 5004
12303 Cary Co 3 1 01-4000 $250.00 N/A 5001
12303 Cary Co 3 2 01-4200 $150.00 N/A 5003
12303 Cary Co 3 3 01-6100 N/A $400.00 5005

The following table shows the records that the Transfer Journal Entries to General Ledger Program creates in the GL Interface table when the transfer program is submitted in summary.

GL Interface (After Transfer in Summary)

Account Debit Credit Link ID
01-4000 $850.00 N/A 5001
01-4100 $200.00 N/A 5002
01-4200 $150.00 N/A 5003
01-6000 N/A $800.00 5004
01-6100 N/A $400.00 5005

If you submit Journal Import from General Ledger, then you can then choose to submit Journal Import in either summary or detail. However, because the accounting entries are already summarized, there is a one to one correspondence between the lines in the GL Interface and in the GL Journal Lines, so Journal Import creates summary journal entries, even if you choose to submit it in detail.

Each GL journal line links back to one or more Payables accounting entry lines. In the following example, JE Line 1 to account 01-4000 for $850 links back to the following Payables accounting entries:

Import References 1-10 are not transferred to the GL Interface or GL Import References, except for encumbrance records.

The following table shows the records that Journal Import creates in the GL Journal Lines table.

GL Journal Lines

JE Header JE Line Account Debit Credit
1000 1 01-4000 $850.00 N/A
1000 2 01-4100 $200.00 N/A
1000 3 01-4200 $150.00 N/A
1000 4 01-6000 N/A $800.00
1000 5 01-6100 N/A $400.00

The following table shows the records that Journal Import creates in the GL Import References table.

GL Import References

JE Header JE Line Link ID
1000 1 5001
1000 2 5002
1000 3 5003
1000 4 5004
1000 5 5005

Transfer to General Ledger in Detail

When you submit the Transfer Journal Entries to General Ledger Program in detail, it transfers the accounting lines in detail to the GL Interface.

The following table shows sample data in the Payables Accounting Entry Lines table. This is the same data used in the previous example. However, note the Transfer Journal Entries to General Ledger Program provides a unique Link ID for each record.

Payables Accounting Entry Lines (After Transfer in Detail)

Invoice ID Supplier Entry Line Account Debit Credit Link ID
12301 Acme Inc 1 1 01-4000 $100.00 N/A 5001
12301 Acme Inc 1 2 01-4100 $200.00 N/A 5002
12301 Acme Inc 1 3 01-6000 N/A $300.00 5003
12302 Ball Inc 2 1 01-4000 $500.00 N/A 5004
12302 Ball Inc 2 2 01-6000 N/A $500.00 5005
12303 Cary Co 3 1 01-4000 $250.00 N/A 5006
12303 Cary Co 3 2 01-4200 $150.00 N/A 5007
12303 Cary Co 3 3 01-6100 N/A $400.00 5008

The following table shows that when you submit Transfer Journal Entries to General Ledger Program in detail, there is a one to one correspondence between the records in the Payables Accounting Entry Lines table and the GL Interface table.

GL Interface (After Transfer in Detail)

Account Debit Credit Link ID
01-4000 $100.00 N/A 5001
01-4100 $200.00 N/A 5002
01-6000 N/A $300.00 5003
01-4000 $500.00 N/A 5004
01-6000 N/A $500.00 5005
01-4000 $250.00 N/A 5006
01-4200 $150.00 N/A 5007
01-6100 N/A $400.00 5008

You can now review the following two sections to compare submitting Journal Import in detail and in summary after you've transferred to GL Interface in detail:

Journal Import in Detail, After Transfer in Detail

This example continues from the previous example, and assumes that you start with the GL Interface after transferring in detail. See: GL Interface (After Transfer in Detail)

When you submit Journal Import in detail it creates detail journal entries, as shown in the following table. There is a one to one correspondence between the lines in the GL Interface Table and the GL Journal Lines table. Each journal line links back to one Payables accounting entry in the Payables Accounting Entry Lines table.

GL Journal Lines

JE Header JE Line Account Debit Credit
1000 1 01-4000 $100.00 N/A
1000 2 01-4000 $500.00 N/A
1000 3 01-4000 $250.00 N/A
1000 4 01-4100 $200.00 N/A
1000 5 01-4200 $150.00 N/A
1000 6 01-6000 N/A $300.00
1000 7 01-6000 N/A $500.00
1000 8 01-6100 N/A $400.00

The following table shows some of the columns in the GL Import References table. All Import References 1-10 are transferred to the GL Interface and then to the GL Import References tables. Only References 1, 2, and 10 are shown in this example.

GL Import References

JE Header JE Line Link ID Reference 1 Reference 2 Reference 10
1000 1 5001 Acme Inc 12301 EXPENSE
1000 2 5004 Ball Inc 12302 EXPENSE
1000 3 5006 Cary Co 12303 EXPENSE
1000 4 5002 Acme Inc 12301 EXPENSE
1000 5 5007 Cary Co 12303 EXPENSE
1000 6 5003 Acme Inc 12301 LIABILITY
1000 7 5005 Ball Inc 12302 LIABILITY
1000 8 5008 Cary Co 12003 LIABILITY

Journal Import in Summary, After Transfer in Detail

This example continues from the previous Transfer to General Ledger example, and assumes that you start with the GL Interface after transferring in detail. See: GL Interface After Transfer in Detail

When you submit Journal Import in summary, it summarizes accounting entries from the GL Interface by account when it populates the GL Journal Lines table.

Each GL journal line links back to one or more Payables accounting entry lines. For example, in the following table, JE Line 1 to account 01-4000 for $805 links back to the following Payables accounting entries: Entry 1 Line 1 for $100, Entry 2 Line 1 for $500, and Entry 3 Line 1 for $250.

GL Journal Lines

JE Header JE Line Account Debit Credit
1000 1 01-4000 $850.00 N/A
1000 2 01-4100 $200.00 N/A
1000 3 01-4200 $150.00 N/A
1000 4 01-6000 N/A $800.00
1000 5 01-6100 N/A $400.00

The following table shows some of the columns in the GL Import References table. All Import References 1-10 are transferred to the GL Interface and then to the GL Import References tables. Only References 1, 2, and 10 are shown in this example.

GL Import References

JE Header JE Line Link ID Reference 1 Reference 2 Reference 10
1000 1 5001 Acme Inc 12301 EXPENSE
1000 1 5004 Ball Inc 12302 EXPENSE
1000 1 5006 Cary Co 12303 EXPENSE
1000 2 5002 Acme Inc 12301 EXPENSE
1000 3 5007 Cary Co 12303 EXPENSE
1000 4 5003 Acme Inc 12301 LIABILITY
1000 4 5005 Ball Inc 12302 LIABILITY
1000 5 5008 Cary Co 12003 LIABILITY