Multi-Period Posting Process
Definition
Multi-Period Posting enables expenses to be recognized over multiple periods when the supplier issues one invoice. With Multi-Period Posting, users register an invoice once to automatically prorate it over the required periods and accounting entries are generated accordingly.
Overview
Multi-Period Posting enables the user to define various accounting rules to spread expenses over multi-periods. For example, an accounting rule can be defined to evenly spread an expense, such as insurance or rent, evenly over 12 periods. Users can assign a predefined accounting rule to the relevant invoice distribution lines and the system automatically spreads the expense over the general ledger periods. Users can manually update the automatically prorated lines.
At month end, a process is run to select all non-posted multi-period posting distribution line postings for the specified period and interface them to General Ledger for posting. Before posting, users run a report to recognize and update all the non-posted multi-period posting entries for the current period. Alternatively, users can run this report to list all the multi-period posting entries for the month.
Note: Multi-Period Posting is only available for expense account distribution. The procedure excludes accruals, assets, and all other account types.
Multi-Period Posting Process Flow Diagram
The diagram below shows the Multi-Period Posting process, as described in the accompanying text.
Multi-Period Posting Process Flow Diagram
Setting Up Multi-Period Posting
Set Up Accounting Rules
To spread expenses across a defined period, an accounting rule is created for each method required by the user defining the period, type of rule, and duration. An example of an accounting rule is 12 equal monthly postings.
Each accounting rule is set up with the following information:
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rule name and description
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accounting period
The accounting period defines the period over which the postings are made. The accounting period relates to the periods defined in the accounting calendar. This is usually on a monthly or fiscal monthly basis.
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accounting rule types
Fixed duration type creates a rule with a predefined percentage for each period. For example, 12 months defaults to 8.333% per period and 8.334 in period 12. These periods can be amended during setup but must total 100%.
Variable duration type creates a rule where the first percentage only can be applied by the user, for example 20%. This allocates 20% in period 1, and the remaining 80% is divided in equal amounts across the remaining periods. The number of periods is not specified in the rule, but may be applied when the rule is applied to the expense distribution line. The default is one period.
Assign Multi-Period Posting Setup
The default accounting rules control account information that is used for Multi-Period Posting as follows:
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journal category
The journal category can be selected from a list of defined General Ledger journal categories. The choice of category is optional, for example, Other. The journal category enables the user to identify the batches within the General Ledger journal posting process.
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journal source
The journal source can be selected from a list of defined General Ledger journal sources. Payables is usually selected as this is the source subledger. Journal inquiry in General Ledger allows drill-down to the source documents.
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default account rule
An existing accounting rule can be selected.
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future postings account
The General Ledger account can be defined as a control account for the multi-period posting.
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description
The description defaults to the accounting flexfield description of the future posting account.
Assign Default Accounting Rules
When an invoice is selected for Multi-Period Posting, the set of books default accounting rule is applied to all distribution lines. No action is automatically taken against an invoice expense distribution, but if the invoice is selected for Multi-Period Posting, a different accounting rule can be defaulted to the distribution line.
The default accounting rules by account are defined as follows:
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account
The General Ledger account must be defined and requires a default accounting rule.
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default account rule
An existing accounting rule must be selected.
Note: If the General Ledger accounts defined previously were used, the associated rule is applied.
The default accounting rules defined for the set of books and for individual accounts can be changed when Multi-Period Posting is applied to the invoice.
Selecting Invoices
Enter Payables Invoices
The invoice is entered in Payables in the standard manner. At this stage in the process, users cannot spread payments over multiple periods as the table below illustrates:
| Account | Amount |
|---|---|
| Expense account 5050 | debit GBP1200.00 |
| AP Control account | credit GBP1200.00 |
For information on entering invoices, see Oracle Payables User’s Guide.
Transfer Invoices to Multi-Period Posting
The invoices are selected from a list and transferred to the Multi-Period Posting process. They must be approved, but there are no further restrictions on their status, whether posted or paid.
When selected, the invoice is assigned a default accounting rule, as defined in the setup process. When the selection is complete, Transfer Invoice is clicked to start the multi-period posting invoice collection concurrent process. When the process is complete, the invoices are available in Multi-Period Posting.
Enter Multi-Period Posting Distributions
The required accounting rule is assigned to each expense distribution line of the invoice.
The required invoices are found, the invoice is selected, and distribution lines are displayed. Only those lines relating to expenses that can have Multi-Period Posting accounting rules applied are displayed. The following entries can be made:
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accounting rule
A different rule from the list can be selected, if required.
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periods
If the rule is fixed, the periods cannot be altered. If the rule is variable, the number of periods over which the expense is to be applied are entered.
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first posting date
The first posting date is the date of the first posting to General Ledger for the expense.
When the amendments are saved, the postings to be made to General Ledger can be viewed on the MPP Distribution window. The MPP Distribution window also displays the status of the postings as they are made.
Subledger Entries
This is a one-time posting to General Ledger crediting the expense and debiting the future postings control account as shown in the table below:
| Account | Amount |
|---|---|
| Expense account (5050) | debit GBP100.00 |
| Future postings (1370) | credit GBP100.00 |
Detailed Distributions
Based on a 12 month rule, the detailed distributions for each of the 12 periods is as shown in the table below:
| Account | Amount |
|---|---|
| Expense account (5050) | debit GBP100.00 |
| Future postings (1370) | credit GBP100.00 |
Period End Processing
Payables Accounting Process
The first stage of the month-end process runs the standard Payables posting to General Ledger, which consists of the following procedures:
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recognize the accounting entry
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post to General Ledger
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import journal
These procedures move the standard Payables postings from invoices into General Ledger.
Multi-Period Posting Expense Recognition
The next stage of the month-end process recognizes the expense postings required to maintain the Multi-Period Posting invoices. This report can be run in the following modes:
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view
View mode lists the accounting entries to be made for the period.
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update
Update mode recognizes and updates the recognition indicator for the distribution postings related to Multi-Period Posting, ready for transfer to General Ledger.
In the first period for a Multi-Period Posting invoice, the recognition process identifies the subledger entries to credit the expense and debit the future postings account. The process recognizes the first of the 12 monthly postings crediting the future postings account and debiting the expense account. Subsequent monthly processes only post the remaining 11 monthly postings.
Multi-Period Posting Transfer to General Ledger
The final stage runs the Multi-Period Posting transfer to General Ledger that creates journal entries for General Ledger from the recognized multi-period postings and updates the posting status on the Multi-Period Posting distributions. Optionally, the process also runs the General Ledger journal import.