9Receipt Accounting

This chapter contains the following:

Oracle Fusion Receipt Accounting is used to create, manage, review, and audit purchase accruals. It includes the following features:

  • Create Receipt Accounting Distributions. Create accounting distributions for receipts of accrue at receipt purchase orders.

  • Review Receipt Accounting Distributions. Review the accrual accounting distributions created by receipt accounting for purchase order transactions, such as receipts, returns, corrections, and matches of uninvoiced receipts to purchase orders. You can also review the accounting distributions created by receipt accounting for deliveries that are expensed rather than stored as inventory.

  • Manage Accrual Clearing Rules. Define business rules for the automatic clearing of balances in the purchase order accrual accounts, set the conditions for each rule, and set the order in which rules must be applied.

  • Clear Receipt Accrual Balances. Automatic clearing of accrual balances based on predefined rules.

  • Review Receipt Accrual Clearing Balances. Review the General Ledger accounted accrual balances on a periodic basis.

  • Adjust Accrual Clearing Balances. Review uncleared accrual balances and perform adjustments. Manually adjust or clear accrual balances to inventory valuation for accounts not covered by automatic clearing rules, or reverse such clearing adjustments.

  • Run reports and analytics for Receipt Accounting. The reports available include the following:

    • Accrual Clearing

    • Accrual Reconciliation

    • Uninvoiced Receipt Accrual

    • Receipt Accounting Period Close

    • Landed Costs

Set Up Receipt Accounting

To set up Receipt Accounting, complete the setup tasks displayed in the Setup and Maintenance work area.

  1. In the Setup and Maintenance work area, perform the tasks from the Receipt Accounting functional area.

    • Offering: Manufacturing and Supply Chain Materials Management

    • Functional Area: Receipt Accounting

  2. Perform the tasks in the same sequence that the list displays them.

    The following table describes the setup tasks for Receipt Accounting.

    Setup Task Required or Optional Description

    Manage Accounting Methods

    Required

    Create and maintain method used to record the financial impact of subledger transactions, such as accrual basis, cash basis, or combined basis accounting.

    Manage Subledger Journal Entry Rule Sets

    Required

    Define lookup codes for extensible lookup types.

    Manage Account Rules

    Required

    Create and maintain the rules that are used to determine the accounts for subledger journal entries.

    Manage Mapping Sets

    Required

    Create and maintain the rule that determines the segment or entire account value based on certain transaction attribute values. Mapping sets are used in account rules.

Configure Tax Calculation and Accounting

Configure the following to automatically calculate and account taxes. You must have the Application Implementation Consultant role to do these tasks.

  • In the Offerings work area, enable the Tax Calculation on Receipt Accounting Distributions feature at the Financials offering level.

  • Enable delivery-based tax calculation for invoices:

    1. In the Setup and Maintenance work area, use the Manage Configuration Owner Tax task:

      • Offering: Financials

      • Functional Area: Transaction Tax

      • Task: Manage Configuration Owner Tax

    2. From the Configuration Owner drop-down list, select the relevant business unit.

    3. From the Application Name drop-down list, select Payables.

    4. From the Event Class drop-down list, select Standard Invoices.

    5. From the Tax Point Basis drop-down list, select Invoice.

    6. From the Tax Point Date drop-down list, select Receipt Date.

      For more information about configuring and calculating taxes, see the Oracle Financials Cloud Using Tax guide available on the Oracle Help Center.

  • Configure the application to automatically calculate taxes for trade receipt accrual:

    1. In the Setup and Maintenance work area, go to the following:

      • Offering: Manufacturing and Supply Chain Materials Management

      • Functional Area: Supply Chain Financial Flows

      • Task: Manage Supply Chain Financial Orchestration System Options

    2. Select Calculate tax for trade receipt accrual.

  • Configure the application to automatically calculate and account nonrecoverable taxes on intercompany invoices:

    1. Navigate to the Financial Orchestration work area.

    2. In the Tasks pane, click Manage Documentation and Accounting Rules.

    3. Click the required documentation and accounting rule.

    4. Under Required Tasks, select Intercompany Invoices.

Set Up Legal Entity Time Zones

The accounted date of Inventory and Manufacturing transactions determines the accounting period in which the transactions are booked. You can configure whether cost transactions and accounting entries use the time zone of the server, or the time zone of the legal entity.

To enable legal entity time zone, perform the following steps.

  1. In the Setup and Maintenance work area, go to the following:

    • Offering: Manufacturing and Supply Chain Materials Management

    • Task: Manage Legal Entity Configurator Profile Options

  2. In the Profile Option Code field, query for the option XLE_ENABLE_LEGAL_ENTITY_TIMEZONE.

  3. In the Profile Values record, add a new row, and complete the required fields. The fields are described in the following table.

    Field Description

    Profile Level

    Set the profile level to Site. Don't use any other level because it would result in inconsistent data in Cost Management.

    Profile Value

    This field is configured using the following options.

    • Set the profile value to Yes to enable the legal entity time zone for transaction and accounting dates in Cost Management.

    • Set the profile value to No to disable the legal entity time zone and to use the server time zone for transaction and accounting dates in Cost Management.

  4. On the Setup: Manufacturing and Supply Chain Materials Management page, select the Manage Legal Addresses task.

  5. Locate the legal entity by querying on the address field.

  6. Set the legal entity time zone in the Time Zone field, and save your changes.

Considerations for Accrual Settings

The key policy decision that you need to make for receipt accounting is whether or not you want to accrue at receipt. The following table outlines the points to consider for each accrual option.

Accrual Setting Points to Consider

Accrue at Receipt

  • Purchases are accrued at receipt. An accrued liability account is credited when the goods are received.

  • Optional for expense destination purchases, and mandatory for inventory purchases.

  • More accounting and more reconciliation than when accruing at period end. The receipt accounting application provides tools to help reconcile the accrued liability clearing account.

  • Accounting is more timely than when accruing at period end.

Accrue at Period End

  • The accounts payable account is credited when the supplier invoice is processed in accounts payable. Receipt accounting has a function to accrue uninvoiced receipts at period end.

  • Less accounting and less reconciliation than when accruing at receipt.

  • Accounting may be less timely than when accrued at receipt, but will be accrued by period end.

The accrual options are configured in the Procurement offering. For more information on configuring the accrual options, see the related topics section.

Implement Subledger Accounting

Subledger Accounting provides rules that you can configure and then automatically transform subledger transactions into detailed subledger journal entries. Flexible rules are available to define accounting policies and generate accounting for legal and corporate reporting. Reconciling accounting to transaction data enables drill down from general ledger to the underlying subledgers and standard reports.

Based on your requirement, implement subledger accounting for Cost Accounting and Receipt Accounting using any of these methods.

Use Predefined Mapping Sets

For using predefined mapping sets, specify transaction attributes and account combinations.

Use Standard Implementation

Do the following to use the standard implementation:

  • Create an accounting method.

  • Set up user defined journal entry rule sets.

  • Assign user defined journal entry rule sets to accounting method.

  • Activate journal entry rule sets assignments.

  • Preview accounting results.

When you use predefined mapping sets, the commonly used transactional attributes are available to you to define the accounting rules. Whereas, if you opt for the standard implementation, then you can leverage the full feature set of transaction attributes for accounting purposes.

Set up tasks are available for implementing subledger accounting for Cost Accounting and Receipt Accounting.

Along with the information provided here, see Oracle Fusion Financials, Implementing Subledger Accounting documentation for more information on the core features of Subledger Accounting.

Accounting methods group subledger journal entry rule sets. This facilitates the definition of consistent accounting treatment for each accounting event class, and accounting event type, for all subledger applications. This grouping enables a set of subledger journal entry rule sets to be assigned collectively to a ledger.

For example:

  • A subledger accounting method can be defined to group subledger journal entry rule sets that adhere to and comply with US Generally Accepted Accounting Principles (GAAP) criteria.

  • By assigning a different subledger accounting method to each related ledger, you can create multiple accounting representations of transactions.

Accounting rules can be defined with either a top-down, or a bottom-up approach.

  • Top-Down: Define the accounting method, followed by components of each rule that must be assigned to it.

  • Bottom-Up: Define components for each rule and then assign them as required.

The Create Accounting process uses the accounting method definition with active journal entry rule set assignments to create subledger journal entries.

When an accounting method is initially defined its status changes to Incomplete. The status will also be Incomplete after modifying a component of any accounting rule associated with the assigned journal entry rule set.

Caution: The accounting method must be completed, by activating its journal entry rule set assignments, so that it can be used to create accounting.

The following definitions are used to define the journal entries, and are applied as updates to the accounting method:

  • Updates to the predefined accounting method

  • Assignment of journal entry rule sets for an accounting event class and accounting event type from the accounting methods page

  • Assignment of accounting methods to ledgers

  • Activation of subledger journal entry rule set assignments

Updates to the Predefined Accounting Method

You may update a predefined accounting method by end dating the existing assignment and creating an assignment with an effective start date.

Assignment of Journal Entry Rule Set for Accounting Event Class and Accounting Event Type

You create the assignment of a journal entry rule set for an accounting event class and accounting event type using the accounting method page.

The following should be considered for assigning rule sets:

  • If the accounting method has an assigned chart of accounts you can use journal entry rule sets that:

    • Use the same chart of accounts

    • Are not associated with any chart of accounts

  • You can assign to existing journal entry rule sets or create a new one.

Assignment of Accounting Methods to Ledgers

If the accounting method has an assigned chart of accounts, it may only be used by ledgers that use the same chart of accounts.

If the accounting method doesn't have an assigned chart of accounts, the accounting method can be assigned to any ledger.

Activation of Subledger Journal Entry Rule Set Assignments

You can activate the subledger journal entry rule set assignments from the Accounting Method page. You can also submit the Activate Subledger Journal Entry Rule Set Assignments process to validate and activate your accounting set ups.

Accounting Method and Accounting Rules

This figure illustrates the relationship of the components used in an accounting method.

The figure visually defines the flow of subledger components.
The subledger application may be set up top-down, or bottom-up, using
the components of the accounting method. These include the journal
entry rule set which is assigned journal line rules, account rules
and description rules. The journal entry rule set is assigned to the
accounting method, which is assigned to the ledger.

Subledger journal entry rule sets provide the definition for generating a complete journal entry for an accounting event.

Select the option to define the subledger journal entry rule set for a particular accounting event class or accounting event type.

If you're using multiple ledgers to meet divergent and mutually exclusive accounting requirements, you can vary journal entry rule sets by ledger. Each of the subledger journal entry rule sets can meet a specific type of accounting requirements.

For example, use US Generally Accepted Accounting Principles (GAAP) oriented subledger journal entry rule sets for a ledger dedicated to US GAAP reporting. Use French statutory accounting conventions for a ledger dedicated to French statutory reporting. These two sets of definitions have differences based on the setup of the various components that make up their subledger journal entry rule sets.

Predefined subledger journal entry rule sets are provided for all Oracle subledgers. If specific requirements aren't met by predefined subledger journal entry rule sets, create a copy of the predefined definitions, rename, and modify the copied definitions and their assignments.

Subledger journal entry rule set assignments can be made at two levels, header and line. The following are the subcomponents of a subledger journal entry rule set:

Assignment at Header Level

Header assignments define subledger journal header information and line assignments define journal line accounting treatment.

A header assignment includes the following:

  • Accounting date (required)

  • Accrual reversal accounting date (optional)

  • Description rule (optional)

Assignment at Line Level

You can define multiple subledger journal entry rule sets for an accounting event class or accounting event type. Using the line assignment of the journal entry rule set assigned to the accounting event class or type, a single journal entry is generated per accounting event per ledger.

The following can be assigned to a journal entry line:

  • Journal line description rule

  • Journal line rule

  • Account rule

  • Supporting references

Assignment of Description Rules

If a description rule is defined with sources, the sources must also be assigned to the accounting event class that's assigned to the journal entry rule set. The description rule may be assigned at either the header or line level of the journal entry or to both levels.

Assignment of Journal Line Rules

When assigning the journal line rule, you must identify the line type: Gain, Loss, Gain or Loss, Credit, or Debit. The journal line rule must be assigned to the same accounting event class as the one assigned to the subledger journal entry rule set.

When assigning a journal line rule that's enabled for accounting for a business flow, the account combination and certain accounting attribute values are copied from its related journal line having the same business flow class as the current line. Optionally, copy the description rule into the current line instead of assigning a separate description rule.

When assigning a journal line rule that's enabled to copy from the corresponding line within the same journal entry, you have the option to copy the account combination, the segment value, or the line description from the corresponding line into the current line.

Assignment of Account Rules

The account rule assignment defines which accounts are used for the subledger journal line. If the account rule is set up with a chart of accounts, it must have the same chart of accounts as the one assigned to the journal entry rule set. When account rules are defined with sources, the sources must also be assigned to the accounting event class that's assigned the journal entry rule set.

There are two types of account rules:

  • Account Combination Rule: Assign an account combination rule to derive the account combination.

  • Segment Rule: Assign a segment rule to derive a specific segment of an account. For example, a cost center or a natural account segment.

Assignment of Supporting References

Supporting references may be used to capture transaction values on journal entry lines. A supporting reference can be used on a journal entry rule set only if it's assigned a source from the event class of the journal entry rule set.

Create an Accounting Method

To create an accounting method, do the following:

  1. Click Navigator > Setup and Maintenance.

  2. On the Setup and Maintenance page, click the Manufacturing and Supply Chain Materials Management offering, and then click Setup.

  3. On the Setup: Manufacturing and Supply Chain Materials Management page, based on your requirement, click the Cost Accounting or the Receipt Accounting functional area.

    The subledger accounting related setup tasks are in the respective functional areas.

  4. Click the Manage Accounting Methods task.

  5. In the Manage Accounting Methods page, click Actions and then click Create.

  6. In the Create Accounting Method page, provide the required information and then click Save and Close.

Note: You can also duplicate the standard accrual accounting method instead of creating a new method.

Viewing Predefined Journal Line Types

In Journal Line Rules, there are various event classes and journal line types for each event class.

To view predefined journal line types:

  1. Click Navigator > Setup and Maintenance.

  2. On the Setup and Maintenance page, click the Manufacturing and Supply Chain Materials Management offering, and then click Setup.

  3. On the Setup: Manufacturing and Supply Chain Materials Management page, based on your requirement, click the Cost Accounting or Receipt Accounting functional area.

    The subledger accounting related setup tasks are in the respective functional areas.

  4. Click the Manage Journal Line Rules task.

  5. In the Manage Journal Line Rules page, set the Created By Application to Yes, select the event class and search.

    The Search result lists the predefined journal line types for the selected event class.

Set Up User-Defined Account Rules

Use account rules to create simple or complex rules to assign general ledger accounts to accounting events.

There are several predefined accounting rules that are available and are easily identifiable by looking at the Created By Application column. The predefined account rules aren't ready-to-use as they aren't created in the context of the chart of accounts. The predefined account rules are provided to help you create your own rules by using them as templates.

For example, create an account rule for identifying the general ledger account rules for the Cost of Goods Sold event class.

  1. Click Navigator > Setup and Maintenance.

  2. On the Setup and Maintenance page, click the Manufacturing and Supply Chain Materials Management offering, and then click Setup.

  3. On the Setup: Manufacturing and Supply Chain Materials Management page, based on your requirement, click the Cost Accounting or the Receipt Accounting functional area.

    The subledger accounting related setup tasks are in the respective functional areas.

  4. Click the Manage Account Rules task.

  5. In the Manage Account Rules page, search for the predefined account rule for Cost of Goods Sold.

    The Cost of Goods Sold event class is discussed here as an example.

    To identify the predefined rules, set the Created by Application search parameter to Yes.

  6. Click the Duplicate icon to create a duplicate of the predefined account rule for Cost of Goods Sold. Enter a rule name, a short name (in capital letters) and then select the chart of accounts.

    Once chart of accounts is assigned to an account rule and this task is saved, you cannot modify the assignment.

  7. Click Save and Close.

    The Edit Account Rule page is displayed.

  8. Specify the account selection criteria in the Rules region; however, don't change any values in the Conditions region.

  9. In the Rules region, the Value Type column has four options.

    • Source

    • Constant

    • Accounting Rule

    • Mapping Set

    Source Value Type

    Source is only applicable to the Accrual Account Rule in Receipt Accounting and the Offset Account Rule in Cost Accounting when the account is retrieved from the purchase order for the Accrual account and from the Miscellaneous Transaction for the Offset account.

    If you select Source as Value Type, then set the value as Code Combination Identifier.

    Constant Value Type

    If the Value Type is set to Constant, you can select the specific account from the chart of accounts as the default general ledger account type of the Journal line type.

    Accounting Rule Value Type

    Use this value type to retrieve values from the accounting rule.

    Mapping Set Value Type

    A mapping set is useful when you have a matrix of input values that produce distinct output values. For each input value, specify a corresponding account combination. One or more related pairs of these input values with the account combination output values form a mapping set. Ensure that a Chart of Accounts is associated with the mapping set.

    Once a mapping set is defined, you can associate the mapping set to an account rule. Copy each predefined account rule and create a rule.

    For more information on these four options, see documentation on Oracle Fusion Financials, Implementing Subledger Accounting Account Rules.

Set Up User-Defined Journal Entry Rule Sets

To set up journal entry rule sets:

  1. Create a journal entry rule set.

  2. Copy the predefined journal entry rule sets to associate the user-defined account rules.

  3. Set the Created by Application option to Yes and then click Search.

    The predefined journal entry rules sets are displayed.

To create a journal entry rule for associating the user-defined account rules:

  1. Create a copy of the predefined journal entry rule set by highlighting the row and clicking the Duplicate icon.

  2. Provide information for name, short name, description, and chart of accounts.

  3. Click Save and Close.

  4. In the Edit Journal Entry Rule Sets user interface, replace the predefined account rules with the account rules that you have created.

  5. After you have replaced all the account combination rules within the journal entry rule set, click Save and Close.

    The original search results are displayed.

    Repeat the previous steps to create all the necessary journal entry rule sets.

Assign User-Defined Journal Entry Rule Sets to Accounting Method

To associate the recently created journal entry rule sets to the newly created accounting method:

  1. Select the accounting method that you created while performing the activity, Creating an Accounting Method.

  2. In the Edit Accounting Method user interface, add the journal entry rule sets that you created.

  3. Identify the account class and the event type in the predefined journal entry rule sets that you want to replace with the new value after you have replaced all the account combination rules within the journal entry rule set you created earlier. Delete the row that you identified for replacement and add a new row with the same event class and event type and enter the new value once you have replaced all the account combination rules within the journal entry rule set. (Optional) Enter the effective start date and save the row.

    For example, to replace the Sales Order Issue predefined journal entry rule set after you have replaced all the account combination rules within the journal entry rule set with the newly created Sales Order Issue 2 journal entry rule set.

    1. Select the predefined journal entry rule set assigned to this subledger accounting method and delete it.

    2. Once this is deleted, add the new rule set Sales Order Issue 2 to this accounting method.

    3. Click Save and Create Another to replace all the predefined journal entry rule sets with the journal entry rule sets that you have newly created.

Activate Assigned Journal Entry Rule Sets

After the setup is complete, you must activate the journal entry rule sets that are newly assigned to the subledger accounting method. You can do this directly from the Edit Accounting Method user interface or from the separate task provided.

To run the accounting method activation as a separate process:

  1. In the Navigator, click Setup and Maintenance.

  2. On the Setup and Maintenance page, click the Manufacturing and Supply Chain Materials Management offering, and then click Setup.

  3. On the Setup: Manufacturing and Supply Chain Materials Management page, based on your requirement, click the Cost Accounting or the Receipt Accounting functional area.

    The subledger accounting related setup tasks are in the respective functional areas.

  4. Click the Manage Accounting Methods task, and then activate the subledger journal entry rule set assignments.

  5. Run this process for the accounting method and subledger application with Incomplete Status Only set to No.

    This step is recommended for activating an accounting method especially if many changes were made to the journal entry rule sets.

  6. You can review the status of the process from the Scheduled Processes task.

  7. (Recommended) Archive the current accounting rule setup configuration by initiating the Accounting Setups Report.

Preview Accounting Results

To ensure that the correct general ledger accounts are selected:

  1. Run Create Accounting.

    Once complete, check the results.

Mapping sets provide an efficient way to define a segment or account combination value for one or more transaction or reference attribute values. Using such input and output mappings is simpler than using complex conditions on account rules.

Based on the value of the source input, a single segment or a full account is derived.

Examples of source input value types:

  • Transaction attributes

  • Reference attributes

With mapping sets you can:

  • Use up to 10 transaction or reference attributes as inputs into a mapping.

  • Define default output value to use when actual input values don't match the mappings.

  • Use wildcards for multiple input mapping sets to indicate that the value of a particular input should be ignored for certain mappings.

  • Enter the mappings directly on the user interface or use the spreadsheet available in the Export option, and then import.

    Export allows:

    • Exporting a template to create mappings.

    • Exporting all mappings created for the mapping set to add or edit the current mappings.

Example

Assume a business operates in several regions, including:

  • East

  • South

  • West

The business has a Region segment in their chart of accounts.

The region name can be the input for the mappings to derive the value of the region segment. You can create a mapping set that maps region names to the corresponding region code.

This table contains region names and segment values used in this example.

Input Value (Region Name) Segment Value

East

01

South

02

West

03

Additional transaction information, such as transaction type and salesperson name, could also be used as inputs to help derive a different segment value for each combination of the input values.

Overview of Predefined Mapping Sets

There are predefined mapping sets for all the journal line rules with commonly used sources. For each journal line rule, there are three to five sources such as Inventory Organization, Sub-Inventory, Item Category, and Item.

The benefits of using predefined mapping sets for implementation include:

  • Enabling quick implementation of subledger accounting.

  • Providing commonly used transaction source attributes.

  • Enabling easy maintenance when compared with defining and maintaining the user-defined account rules.

Unique mapping sets are predefined for each journal line rule. Some of the predefined mapping sets for Cost Accounting are, Consigned Clearing, Consigned In-Transit, Consigned Inspection, and so on. View Cost Accounting user interface for the complete list of mapping sets. Predefined Mapping Sets for Receipt Accounting are, Consigned Accrual, Consigned Clearing, Consigned Inspection, and so on. View the Receipt Accounting user interface for the complete list of mapping sets.

The mapping set created for each journal line type is added to a predefined account rule.

Use Predefined Mapping Sets

Use predefined mapping sets for Receipt Accounting.

The steps to use predefined mapping sets are:

  1. Select chart of accounts.

  2. Specify the transaction attributes as input and account combinations as output for every chart of accounts.

    Set up input parameters for every chart of accounts. While specifying inputs, you must provide the transaction attributes.

    For example, if you're using the mapping set Consigned Accrual, then you have to provide one or more of the following input sources.

    • Inventory Organization Code

    • Inventory Category Identifier

    • Item Number

  3. For the mapping set Consigned Accrual, provide an account combination as the output type.

  4. Automatically enable or disable the account derivations using Effective Dates.

  5. (Optional) Set account combinations as default to support subledger accounting activities for which specific rules aren't set up.

  6. Use spreadsheet based import and export functionality.

FAQs for Receipt Accounting

Create your subledger account rules on the Manage Account Rules page. It is recommended that you highlight the account rules predefined by Oracle, copy, and modify them as needed.

Create your subledger journal entry rule sets on the Manage Subledger Journal Entry Rule Sets page. It is recommended that you highlight the journal entry rule sets predefined by Oracle, copy, and modify them as needed. For each journal line rule specify the copied account combination rule.

In the Setup and Maintenance work area, you can access both the Manage Account Rules task and the Manage Subledger Journal Entry Rule Sets task in the Manufacturing and Supply Chain Materials Management offering.

Note: You must configure the account rules and journal entry rule sets before proceeding with the setup of subledger accounting rules for receipt accounting.

How can I resolve errors in the accounting results?

If the Create Accounting process ends with errors or warnings, you can resolve these errors or warnings using any of the following methods.

  1. Review errors in the Create Accounting Execution report.

  2. If you have selected viewing errors for a specific transaction, query the transaction from the Review Cost Accounting Distributions user interface.

  3. Navigate to the Journal Entries tab. If errors are present, then they are listed against each line.

  4. Use Advanced Diagnostic. For activating this feature, refer to the Accounting Event Diagnostic Report.

How can I modify predefined mapping sets?

You can modify existing predefined mapping sets by:

  • Adding input and output conditions.

  • Adding new chart of accounts.

Adding a new source to an existing predefined mapping set is not supported. Use standard implementation for creating mapping sets with new sources.