Accounting for transactions in oracle e_business sute r12
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When transactions are entered in Receivables using the accrual method of accounting, default accounts are created for revenue, receivables, taxes, freight charges, and other items. Journal entries are then made that debit or credit the appropriate accounts based on the type of transaction, such as an invoice, credit memo, receipt, or adjustment. The accounts used are determined by the accounts specified in the AutoAccounting structure.
Accounting for transactions in oracle e_business sute r12
- 1. Accounting for Transactions This essay describes the accounting entries created when you enter transactions in Receivables using the Accrual method of accounting. Receivables creates default accounts for revenue, receivable, freight, tax, unearned revenue, unbilled receivable, finance charges, and AutoInvoice clearing (suspense) accounts using the information specified in your AutoAccounting structure. Invoices When you enter a regular invoice through the Transactions window, Receivables creates the following journal entry: DR Receivables CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) If you enter an invoice with a Bill in Arrears invoicing rule, Receivables creates the following journal entry: In the first period of Rule: DR Unbilled Receivables CR Revenue In all periods of Rule, for the portion that is recognized: DR Receivables CR Unbilled Receivables CR Tax (if you charge tax) CR Freight (if you charge freight) If you enter an invoice with a Bill in Advance invoicing rule, Receivables creates the following journal entries. In the first period of the rule: DR Receivables CR Unearned Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) In all periods of the rule for the portion that is recognized. DR Unearned Revenue CR Revenue
- 2. Credit Memos When you credit an invoice, debit memo, or chargeback through the Credit Transactions window, Receivables creates the following journal entry: DR Revenue DR Tax (if you credit tax) DR Freight (if you credit freight) CR Receivables (Credit Memo) DR Receivables (Credit Memo) CR Receivables (Invoice) When you credit a commitment, Receivables creates the following journal entries: DR Revenue CR Receivables When you enter a credit memo against an installment, Receivables lets you choose between the following methods: LIFO, FIFO, and Prorate. When you enter a credit memo against an invoice with invoicing and accounting rules, Receivables lets you choose between the following methods: LIFO, Prorate, and Unit. See: Crediting Transactions. If the profile option AR: Use Invoice Accounting for Credit Memos is set to Yes, Receivables credits the accounts of the original transaction. If this profile option is set to No, Receivables uses AutoAccounting to determine the Freight, Receivables, Revenue, and Tax accounts. Receivables uses the account information for on-account credits that you specified in your AutoAccounting structure to create your journal entries. Receivables lets you update accounting information for your credit memo after it has posted to your general ledger. Receivables keeps the original accounting information as an audit trail while it creates an offsetting entry and the new entry. Commitments When you enter a deposit, Receivables creates the following journal entry: DR Receivables (Deposit) CR Unearned Revenue When you enter an invoice against this deposit, Receivables creates the following journal entries: DR Receivables (Invoice) CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Unearned Revenue CR Receivables (Invoice)
- 3. When you apply an invoice to a deposit, Receivables creates a receivable adjustment against the invoice. Receivables uses the account information you specified in your AutoAccounting structure to create these entries. When cash is received against this deposit, Receivables creates the following journal entry: DR Cash CR Receivables (Deposit) When you enter a guarantee, Receivables creates the following journal entry: DR Unbilled Receivables CR Unearned Revenue When you enter an invoice against this guarantee, Receivables creates the following journal entry: DR Receivables (Invoice) CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Unearned Revenue CR Unbilled Receivables When you apply an invoice to a guarantee, Receivables creates a receivable adjustment against the guarantee. Receivables uses the account information you specified in your AutoAccounting structure to create these entries. When cash is received against this guarantee, Receivables creates the following journal entry: DR Cash CR Receivables (Invoice) Receipts When you enter a receipt and fully apply this receipt to an invoice, Receivables creates the following journal entry: DR Cash CR Receivables When you enter an unapplied receipt, Receivables creates the following journal entry: DR Cash CR Unapplied When you enter an unidentified receipt, Receivables creates the following journal entry: DR Cash
- 4. CR Unidentified When you enter an on-account receipt, Receivables creates the following journal entry: DR Cash CR On-Account When your receipt includes a discount, Receivables creates the following journal entry: DR Receivables CR Revenue DR Cash CR Receivables DR Earned/Unearned Discount CR Receivables Receivables uses the default Cash, Unapplied, Unidentified, On-Account, Unearned, and Earned accounts that you specified in the Remittance Banks window for this receipt class. When you enter a receipt and combine it with an on-account credit (which increases the balance of the receipt), Receivables creates the following journal entry: DR Cash CR Unapplied Cash To close the receivable on the credit memo and increase the unapplied cash balance, Receivables creates the following journal entry: DR Receivables CR Unapplied Cash When you enter a receipt and combine it with a negative adjustment, Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Write-Off CR Receivables (Invoice) You set up a Write-Off account when defining your Receivables Activity. When you enter a receipt and combine it with a positive adjustment, Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Receivables (Invoice) CR Write-Off
- 5. When you enter a receipt and combine it with a Chargeback, Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Receivables (Chargeback) CR Receivables (Invoice) DR Chargeback CR Receivables (Chargeback) You set up a Chargeback account when defining your Receivables Activity. Remittances When you create a receipt that requires remittance to your bank, Receivables debits the Confirmation account instead of Cash. An example of a receipt requiring remittance would be a check before it was cashed. Receivables creates the following journal entry when you enter such a receipt: DR Confirmation CR Receivables You can then remit the receipt to your remittance bank using one of the two remittance methods: Standard or Factoring. If you remit your receipt using the standard method of remittance, Receivables creates the following journal entry: DR Remittance CR Confirmation When you clear the receipt, Receivables creates the following journal entry: DR Cash DR Bank Charges CR Remittance If you remit your receipt using the factoring remittance method, Receivables creates the following journal entry: DR Factor CR Confirmation When you clear the receipt, Receivables creates a short-term liability for receipts that mature at a future date. The factoring process let you receive cash before the maturity date, and assumes that you are liable for the receipt amount until the customer pays the balance on the maturity date. When you receive payment, Receivables creates the following journal entry: DR Cash DR Bank Charges CR Short-Term Debt
- 6. On the maturity date, Receivables reverses the short term liability and creates the following journal entry: DR Short-Term Debt CR Factor Adjustments When you enter a negative adjustment against an invoice, Receivables creates the following journal entry: DR Write-Off CR Receivables (Invoice) When you enter a positive adjustment against an invoice, Receivables creates the following journal entry: DR Receivables (Invoice) CR Write-Off Debit Memos When you enter a debit memo in the Transactions window, Receivables creates the following journal entries: DR Receivables CR Revenue (if you enter line amounts) CR Tax (if you charge tax) CR Freight (if you charge freight) DR Receivables CR Finance Charges On-Account Credits When you enter an on-account credit in the Applications window, Receivables creates the following journal entry: DR Revenue (if you credit line amounts) DR Tax (if you credit tax) DR Freight (if you credit freight) CR Receivables (On-account Credit) Receivables uses the Freight, Receivable, Revenue, and Tax accounts that you specified in your AutoAccounting structure to create these entries. Once the on-account credit is applied to an invoice, the following journal entry is created: DR Receivables (On-account Credit) CR Receivables (Invoice)