1. Using General Ledger
  2. Example of an Accounting Cycle

Example of an Accounting Cycle

This example demonstrates the steps in completing the accounting cycle to achieve successful financial reporting for your enterprise. These steps may vary based on your business processes and enterprise structure.

Scenario

Your company, InFusion Corporation, is a multinational conglomerate that operates in the United States (US) and the United Kingdom (UK). InFusion Corporation:

  • Uses Oracle General Ledger and the Oracle Payables and Oracle Receivables subledgers.

  • Includes all the components to build and maintain air quality monitoring systems for homes and businesses in your business line.

  • Provides funding to your customers for the start up costs of these systems through your financial services organization.

  • Purchases raw materials from other countries, which requires you to record foreign currency transactions.

  • Consists of three subsidiaries.

    • InFusion Financial Services

    • InFusion UK Services

    • InFusion America

  • Consolidates financials with all its subsidiaries monthly in the parent, InFusion Corporation ledger.

The following are the tasks that your staff performs to complete the accounting cycle and ensure accurate capturing of your accounting transactions.

  • Open the accounting period.

  • Enter manual journal entries: standard, statistical, and intercompany balancing journal entries between your parent company and your three subsidiaries.

  • Import journals from your subledgers. Correct or delete journal entries that failed the import process. If necessary, run the import process again.

  • Define journals that occur periodically and allocation journal formulas for transactions that have a common format, require allocation of amounts or accounts to other accounts, or that are entered frequently.

  • Generate recurring and allocation journal batches based on your defined formulas.

  • Review the details of the unposted journal batches.

  • Edit unposted journals to change or correct information, including the batch period and the journal currency.

  • Post journal batches manually or automatically.

  • Check for posting errors. Use the Posting Execution Report and the Automatic Posting Execution Report to check the results of your posting. These reports are created automatically when the posting programs are completed.

  • Reverse posted journals as needed. Assign a reversing period to the journal, generate the journal, and post the reversing batch.

    Note:

    Journals can be set to automatically reverse when you open the period. Subsequent adjustments to the accounts are then based on balances net of those reversals.

  • Revalue foreign currency denominated balances to reflect conversion rate fluctuations at the end of the accounting period.

  • Translate actual account balances in your UK subsidiary to US dollars to report to your US parent. You consolidate the ledgers for all your subsidiaries in US dollars.

  • Consolidate ledgers by defining and running a consolidation for all your subsidiaries.

  • Produce financial reports and perform online inquiries to review current account balances.

  • Close the current accounting period.

  • Open the next accounting period.