Oracle General Ledger (GL)

Oracle General Ledger is part of the Oracle E-business Suite. All financial statements are driven from this module. Sub ledgers AP, AR and FA transfer transactions to GL using "Create Journals" and "Payables Transfer to GL" concurrent programs.

Oracle Payables transfers payment transactions (made to the suppliers) and Oracle Receivables transfers receipts (received from customers) to GL. Oracle Assets transfers Adjustments, Retirements and Depreciation transactions on assets. FA groups data by code combination id and transaction type for example Adjustment, Retirement etc.

Payables transfers data to General Ledger in Summary or Detail mode. Summary mode groups the code combinations per journal category for example Purchase Invoices or Payments. Detail mode transfers data at line level and maintains its relation to AP by populating the reference columns in the Journal line.

Set of Books (SOB)

Each organization maintains one or more sets of books and reporting is based on these sets of books.

A set of books contains a chart of accounts, a currency and a calendar. The calendar can be customized to have 13 periods, 12 periods or 26 periods etc, depending on the conventions in use by the business.

Each transaction recorded into a set of books follows an accounting notation – the chart of accounts. The chart of accounts determines how financial transactions are collected, categorized and stored. Each business determines by what it wishes to categorise its transactions, for example company, cost centre and product.

Reporting authorities require transactions to be notified in one currency, called the functional currency. This does not limit businesses to using only one currency in transactions. Businesses can still perform foreign currency transactions, but currency exchange rates are used to convert the transactional amounts into functional currency amounts.

Account Types

Oracle provides 5 types of accounts in commercial ledgers:- Revenue, Expense, Assets, Liability and Owner Equity.

Profit and Loss reports are generated from Revenue and Expense Accounts. Balance Sheet reports are generated from Assets and Liabilities Accounts. Owner's Equity is the difference between Assets and Liabilities.

Journals

A journal is a set of transactions which belong together. Each journal has a Journal Category (for example purchase invoice, payment, etc), Journal Source (such as Payables, Receivables, Manual, etc), Currency and is made in a specific accounting period.

Journal Import

The journal import process takes the data from the sub-ledger or external application, validates it and creates the journal. If validation fails, records are marked as in error and users must manually correct those errors before the journals can be imported.

Journal Posting

Once a journal is reviewed and approved, it can be posted to the General Ledger. When a journal is posted it is frozen so that it can no longer be changed. If a journal is not balanced (according to dual-entry accounting standards) suspense lines are created against a suspense account to balance it. Business users identify these suspense lines before they close the accounting period in which they appear and make any necessary adjustments.

Journal Reversal

Once the journal is posted, it cannot be modified. To modify the posted journal, one has to reverse the journal. Reversal nullifies the original entry as the Debits and Credits will be swapped.

Links - Oracle General Ledger