1.7 Setting up Accounting Details for a Product

In Oracle Lending, accounting-simplistically, posting accounting entries to the appropriate ledgers maintained in your Chart of Accounts-is automated. This is achieved by defining an intricate accounting structure that includes the Chart of Accounts, Transaction Codes and Amount Tags, and by identifying accounting roles, heads, and amount tags for the products you create at your bank. As a result, the accounting entries that are generated at the various events in the life cycle of contracts are automatically posted to the ledgers specified for the product.

Before we proceed with setting up accounting details for a product, we shall discuss a few terms that are frequently used in this section.
  • Accounting Head - In Oracle Lending, the different General Ledgers (GLs) and Sub-Ledgers (SLs) maintained in your Chart of Accounts are referred to as accounting heads, or, account heads.
  • GL Types - The GL/SLs that you have maintained in your bank can be categorized into different GL Types: Asset, Liability, Income, Expense, Contingent Asset, Contingent Liability, Position GL, Position Equivalent GL, and so on. When maintaining a GL in the Chart of Accounts, you have to identify its type.
  • Amount Tag - A contract is typically consist of several components. For instance, a loan contract consists of the principal, interest, charges, tax, and so on. These amounts are referred to as the components of a loan contract. In Oracle Lending, a unique tag called the Amount Tag identifies each component.
  • Accounting Roles - Accounting Roles are tags that identify the type of accounting entry that is posted to an accounting head. For instance, in the Oracle Lending (OL) module, assume you have specified the following interest for an OL product, to be collected when issuing OLs processed under the product: INTERST1 and INTERST2. The following Accounting Roles are automatically generated in Oracle Lending to identify all possible types of accounting entries involving these interest components:

    Table 1-2 Interest Components

    INTEREST 1 INTEREST 2 Type of Accounting Entry
    INTERST1INC INTERST2INC Income
    INTERST1EXP INTERST2EXP Expense
    INTERST1PAY INTERST2PAY Payable
    INTERST1REC INTERST2REC Receivable
    INTERST1RIA INTERST2RIA Received in Advance
    INTERST1PIA INTERST2PIA Paid in Advance
    Similarly, based on your accounting set up in a module, accounting roles are automatically generated for the other components of a contract.
You can maintain the accounting details for a product in two screens:
  • The Product Accounting Roles to Head Mapping Definition screen.
  • The Product Events Accounting Entries and Advices Maintenance screen.
This topic contains following sub-topics:

Parent topic: Product Definition