How to define Chart of Accounts in Oracle APPS R12

Chart of Accounts is the first of what apps consultants popularly call the 3 C’s of Oracle Applications. FYI – the second C is for currency and the third is for Calendar.

In this post we will talk about, what is perhaps the most important aspect of an oracle apps implementation and the first thing that you will invariably end up doing.

Implementing the Chart of Accounts for Oracle General Ledger.

I preparing this guide I have used points from the Oracle GL user’s guide and followed it up with my screenshots and explanations where I felt necessary. Portions in quote are from Oracle general ledger user guide.

Pre-setup: The whole point of chart of accounts is getting the final structure of your company’s accounts. For example, your company’s inventory account may look like

01.110.50001.10002.000

Each segment value before the dot has a particular meaning. 01 may be your company and 110 it’s branch and so on. So what we set out to do while defining a chart of accounts is getting the structure of the accounting flexfield and setting up the related parameters. So the most important point is to analyze the organizational structure as your accounting structure will mirror that for all your accounting and reporting needs.

Suggestion: Read about planning and setting up summary accounts before you set up your chart of accounts.

Setup:

To setup value sets, go to

General Ledger Super User->setup->Financials->Flexfields->Validation->Sets

1. Defining value sets.

Value sets determine the attributes of your account segments such as the segment length, whether to require a segment value, value alignment, and value security. See: Defining Value Sets, (Oracle Applications Flexfields Guide)

Refer the screenshot below for an example.

2. Defining the Account structure

This is the most important part. Here you define your account structure into segments. Go to General Ledger Super User->setup->Financials->Flexfields->key->Segments and query for General Ledger as application and Accounting flexfield as the Flexfield title. Unfreeze (if it is frozen) and enter a code name for your accounting structure, title and Description and click on segments.

You will have had to create all the value sets in the previous step which you will need to associate with each segment as shown above.

Warning: Plan your account segment order carefully. Once you freeze your account structure in the Key Flexfield Segments window and begin using account numbers in data entry, you should not modify the flexfield definition. Changing the existing flexfield structure after flexfield data has been created can cause serious data inconsistencies. Modifying your existing structures may

Also adversely affect the behavior of cross–validation rules and shorthand aliases.

Once you are done entering the segment information, click on flexfield qualifier and designate one of your segments as the natural account segment and another as the balancing segment. You can optionally designate a cost center segment and/or intercompany segment. This step is very important and easy to miss. When in my first implementation, I missed clicking on flexfield qualifiers and spent an hour figuring why nothing would work!

If you are using Oracle Assets, Oracle Projects, or want to run revaluations by cost center, it is highly recommended that you specify a cost center segment.

Note: If you plan to use General Ledger for basic project tracking, define a project segment

3. Define Rollup groups:

You have the option of defining rollup groups to create summary accounts whose summary balances you can review.

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Part 2

4. Define your account segment values.

Go to

General Ledger Super user->Setup->Financials->Key->Values and find Accounting Flexfield in Key Flexfield filter and enter values for all the newly created segments.

If you plan on defining summary accounts or reporting hierarchies, you must define parent values as well as child or detail values.

You can set up hierarchy structures for your segment values. Define parent values that include child values. You can view a segment value’s hierarchy structure as well as move the child ranges from one parent value to another.

5. Define Security 

If you want to restrict your users or control access to certain segment values, go to

General Ledger Super user->Setup->Financials->Security->Define and enter the accounting flexfield title and your account structure name and enter whatever security rule you want on your segments.

6. Define cross–validation rules 

The following quote explains it all.

Cross-validation rules control the account combinations that can be created during data entry. For example, you may decide that your sales cost centers, 600 to 699, should only enter amounts to product sales accounts, 4000 to 4999. If you have dynamic insertion enabled, it is recommended that you also define cross–validation rules to provide additional security to prevent invalid combinations from being created during data entry.

The navigation path is

General Ledger Super User->Setup->Financials->Flexfields->Key->Rules

Select your accounting flexfield structure and enter an include/exclude rule

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Part 3

7. Defining or enabling descriptive flexfields.

General Ledger has 81 DFF in 11i. The definition details of these DFF’s are outside the scope of this article. However for your benefit an excel file is in the attachments which lists all the 81 DFF’s

The navigation path for defining the DFF is

Oracle General Ledger Super User->Setup->Financials->Descriptive->segments

Query for General Ledger as the application and query your desired DFF.

8. Defining account shorthand aliases

Account aliases let you use a short word for your accounts, which makes them easy to remember and use in all fields where you need to enter an account.

To define Aliases
Oracle General Ledger Super User->Setup->Financials->Key->Aliase

Query your accounting flexfield structure and enter shorthand aliases for your accounts as shown in the screen shot below.

9. Defining summary accounts 

Summary accounts create and maintain summary balances for quick reporting and online inquiry of summarized balances.

Oracle General Ledger Super User->Setup->Accounts->Summary

10. Create account combinations. 

We are almost done by now. All that is now left is to actually enter all our accounts in General Ledger

Go to

Oracle General Ledger Super User->Setup->Accounts->Combinations and enter your account and type (Asset/Liability). Use effective To to disable an account. Note if you disable an account make sure you disable it’s aliase too.

If you allow dynamic insertion, you can create new account combinations automatically as you use them during journal entry. If you do not allow dynamic insertion, define new account combinations manually in the GL Accounts window. You can define new account combinations or disable existing account combinations at any time.

In the GL Accounts window, check the preserve check box to preserve account combinations against attribute updates when you run the Segment Value Inheritance program.

So That’s it, we are done!!! The Chart of accounts for your organization is setup. You can now proceed to define the calendar and currencies and rest of the General Ledger setup.