Closing a Period
To close a period:
1. Enter all transactions.
Be sure you enter all transactions for the period. Perform all issues, receipts, and adjustments. Verify that no hard copy records exist or are waiting for data entry, such as packing slips in receiving.
2. Check Inventory and Work in Process transaction interfaces.
You can set up the material and move transaction managers to execute transactions immediately, submit an immediate concurrent request to execute, or submit a concurrent request periodically at a time interval you specify. If you do not use immediate processing, or interface external transactions, check the Inventory material transaction manager and the Work in Process move transaction manager before closing the period. See: Processing Pending Move Transactions and Viewing Pending Transactions.
3. Check Cost Management cost interfaces.
Cost Management processes your inventory and work in process accounting transactions as a concurrent request, using a specified time interval. Before you close the period, you should check the material cost transaction manager. If you use Work in Process you should check the resource cost transaction manager.
4. Check Order Entry transaction processes.
If you use Order Entry, ensure that all sales order transaction processes complete and transfer successfully to Inventory.
5. Review Inventory transactions.
Before you close a period, review all of the transactions using the Material Account Distribution Report for the period with a high dollar value and/or a high transaction quantity. Check that you charged the proper accounts. Correcting improper account charges before you close a period is easier than writing manual journal entries.
6. Balance perpetual inventory.
Check that your perpetual inventory value up to the end of the period you intend to close matches the value you report in the general ledger. Perpetual inventory value normally balances automatically with the general ledger. However, one of the following sources can create a discrepancy:
Other inventory journal entries. Journal entries from products other than Inventory that affect the inventory accounts.
Charges to improper accounts: For example, you issued material from a subinventory to a miscellaneous account, but used one of the subinventory accounts as that miscellaneous account.
Issue to miscellaneous account: For example, the following miscellaneous transaction issue would cause an out of balance situation: debit account 123, credit subinventory valuation account 123. The debit and credit net to zero with no financial charge, but since the inventory quantity decreased, the month-end inventory valuation reports will not equal the general ledger account balance.
Transactions after period end reports. This occurs when you run the end of month inventory valuation reports before you complete all transactions for the period. Use the Historical Inventory Balance Report to obtain period valuation information before the extra transactions.
If you do not run the inventory reports at period end, you can also run the Transaction Historical Reports:
- Transaction Historical Summary Report
- Period Close Summary Report
- Material Account Distribution Detail Report
- Material Account Distribution Summary Report
7. Validate Work in Process inventory.
If you use Work in Process, check work in process inventory balances against transactions with the WIP Account Distribution Report, by summary or detail.
8. Transfer summary or detail transactions.
If time permits, run the general ledger transfer process up to the period end date before closing the period.
Closing a period executes the general ledger transfer automatically. However, you can also run this process without closing a period using Transfer Transactions to General Ledger. Since you cannot reopen a closed period, running this process before period close allows you to proof the interfaced transactions and make adjustments to the period via new inventory transactions as necessary.
9. Close Oracle Payables and Oracle Purchasing.
If you use Payables and Purchasing, you need to close the accounting periods in the following order:
If you only use Purchasing and Inventory, you need to close Purchasing first. Close Payables before Purchasing in preparation for accruing expenses on uninvoiced receipts. Doing so ensures that all new payables activity is for the new month and you do not inadvertently match a prior month invoice in payables to a new month receipt. When you close Purchasing or Inventory, you cannot enter a receipt for that period. However, as a manual procedure, close Purchasing before Inventory This still allows miscellaneous transaction corrections in Inventory.
10. Close the accounting period and automatically transfer transactions to the general ledger.
See Also
Viewing Pending Demand Interface Activity
Integrating Order Entry and Inventory, Oracle Manufacturing Open Interfaces Manual, Release 11
Inventory Value Report
