1. ORACLE APPLICATIONS WHITE PAPER
ACCOUNTING IN R12 ORACLE
RECEIVABLES
OCT 2011
Author: Mohamed Nazih
CPA, PMP, Oracle Financials Consultant
m.nazih@gmail.com
Version 1.0
3. AR-9 Apply On-account credit to invoice................................................................................................................17
AR-10 Adjustment to invoice..................................................................................................................................17
AR-11 Deposit .........................................................................................................................................................17
AR-12 Invoice applied to Deposit............................................................................................................................18
AR-13 Guarantee ....................................................................................................................................................18
AR-14 Invoice applied to Guarantee.......................................................................................................................19
AR-15 Unidentified Receipt ....................................................................................................................................19
AR-16 Unapplied Receipt........................................................................................................................................20
AR-17 Applied Receipt ............................................................................................................................................20
AR-18 On Account Receipt......................................................................................................................................20
AR-19 Receipt with Discount ..................................................................................................................................21
AR-20 Miscellaneous Receipt .................................................................................................................................21
AR-21 Receipt Write-Off .........................................................................................................................................21
AR-22 Receipt requiring Remittance ......................................................................................................................21
AR-23 Standard Remittance....................................................................................................................................22
AR-24 Clearing of Remitted Receipts......................................................................................................................22
AR-25 Factoring Remittance...................................................................................................................................22
AR-26 Maturity of Factored Receipts or Eliminating Risk.......................................................................................22
AR-27 Clearing Factored Receipts...........................................................................................................................22
AR-28 Non-Invoice related Claim............................................................................................................................23
Notes Receivable........................................................................................................................ 24
NR-01 Note Receivable requiring Remittance........................................................................................................24
NR-02 Standard Remittance ...................................................................................................................................24
NR-03 Clearing of Remitted Notes Receivable .......................................................................................................24
NR-04 Factoring Remittance...................................................................................................................................24
NR-05 Maturity of Factored Receipts or Eliminating Risk.......................................................................................24
NR-06 Clearing Factored Receipts ..........................................................................................................................25
Special Accounts......................................................................................................................... 26
Cross Currency Rounding........................................................................................................................................26
Header Rounding....................................................................................................................................................26
AutoInvoice Clearing Account.................................................................................................................................27
Information Sources................................................................................................................... 28
4. Accounting in R12 Oracle Receivables
Page 4 of 28
About the Author
Mohamed Nazih is a proficient functional consultant in Oracle e-Business Suite with more
than seven years of experience of solutions design, configuration, testing and documentation
and three full life cycle implementations.
Prior to Oracle, he worked as a certified accountant and auditor for six years. This experience
gave him an advantage to team up with financial staff in many companies in delivering high
quality professional services, such as consulting, support, and training.
While not working, Mohamed Nazih takes care of his family. Furthermore, he is a self-learner
and avid reader in project management, change management, business intelligence, science,
and environment issues.
Mohamed Nazih values an atmosphere of ethics, punctuality, and team-working.
Introduction
Accounting Journal Entries are embedded in every aspect of Oracle Financials Applications.
Since they are “Financials”, you must have a good understanding of how these journals are
generated and integrated. This understanding affects how you design and implement solution
and it is the ground of discussion with customer’s representatives in this sector. They may
have little knowledge of Oracle but, mostly, are good accountants.
Purpose
This whitepaper will provide a detailed overview of accounting events, entries, and source.
This overview may help designing better chart of accounts and justifying decisions taken to
setup system parameters and options
Scope
This whitepaper will cover Oracle R12 Receivables accounting except those of:
• Bills Receivable
• Credit Cards
• Trade Management and Claim Investigation
5. Accounting in R12 Oracle Receivables
Page 5 of 28
Audience
This whitepaper is aimed to super users and functional consultants and implementers as well
as applications’ auditors.
6. Accounting in R12 Oracle Receivables
Page 6 of 28
Accounting in R12 Oracle Receivables
Determinants - Accounts
Receivables’ Journal Entries are controlled by the definition of:
1. System options
2. Transaction Type
3. Customer Bill-to Site
4. Remittance Bank
5. Receivable Activity
6. Sales Person
7. Standard Line
Account Qualifier System
options
Transaction
Type
Customer
Bill-to Site
Remittance
Bank
Receivable
Activity
Sales
Person
Standard
Line
Receivable Asset
Revenue Revenue
Freight Revenue
Clearing Asset
Unbilled receivable Asset
Unearned revenue Liability
Tax Liability
Realized Gain Revenue
Realized Losses Expense
Unallocated Revenue Revenue
Cross Currency Rounding Expense
Header Rounding Expense
Offset Asset
Cash Asset
Bank charges Expense
Receipts Confirmation Asset
Remittance Asset
Factoring Asset
Short Term Debt Liability
Unapplied Receipts Asset
7. Accounting in R12 Oracle Receivables
Page 7 of 28
Account Qualifier System
options
Transaction
Type
Customer
Bill-to Site
Remittance
Bank
Receivable
Activity
Sales
Person
Standard
Line
Unidentified Receipts Asset
On Account Receipts Liability
Unearned discount Expense
Earned discount Expense
Adjustment (write-off) Revenue
Bank Error Expense
Finance Charges Revenue
Refund Liability
Misc. Cash Revenue
System Options Accounts
Figure 1
8. Accounting in R12 Oracle Receivables
Page 8 of 28
Transaction Type
Figure 2
9. Accounting in R12 Oracle Receivables
Page 9 of 28
Customer Bill-To Site
Figure 3
10. Accounting in R12 Oracle Receivables
Page 10 of 28
Remittance Bank
Figure 4
11. Accounting in R12 Oracle Receivables
Page 11 of 28
Receivables Activities
Figure 5
Salesperson
Figure 6
12. Accounting in R12 Oracle Receivables
Page 12 of 28
Standard Line – Inventory Item
Figure 7
Standard Line – Memo Lin
Figure 8
13. Accounting in R12 Oracle Receivables
Page 13 of 28
Determinants - Options
AutoAccounting
If an account can be defined in more than one window, AutoAccounting Setup determines
which account segment will be picked from which source. That does apply only to
transactions’ accounting since receipts’ accounting has one source (i.e., Receipt Class -
Remittance Bank). AutoAccounting applies to the following accounts:
• AutoInvoice Clearing Account
• Freight
• Receivable
• Revenue
• Tax
• Unbilled Receivable
• Unearned Revenue
14. Accounting in R12 Oracle Receivables
Page 14 of 28
Receivables Journal Entries
Oracle Receivables has the following accounting events:
AR-1 Regular Invoice
Accounts Debit Credit
Receivables X
Revenue X
Tax X
Freight X
AR-2 Bill in Arrears Invoice
(Every Period within the Accounting Rule)
Accounts Debit Credit
Unbilled Receivables X
Revenue X
(Last Period)
Accounts Debit Credit
Receivables X
Unbilled Receivables X
Tax X
Freight X
15. Accounting in R12 Oracle Receivables
Page 15 of 28
AR-3 Bill in Advance Invoice
(First Period)
Accounts Debit Credit
Receivables X
Unearned Revenue X
Tax X
Freight X
(Every Period within the Accounting Rule)
Accounts Debit Credit
Unearned Revenue X
Revenue X
AR-4 Debit Memo
Accounts Debit Credit
Receivables X
Revenue X
Tax X
Freight X
Accounts Debit Credit
Receivables X
Late Charges (1)
X
(1) Late Charges account is defined in a Receivable Activity of type Finance Charges. This
activity assigned to System options and can be overridden on customer Bill-To site.
16. Accounting in R12 Oracle Receivables
Page 16 of 28
AR-5 Credit Memo
Accounts Debit Credit
Revenue X
Tax X
Freight X
Receivables (2)
X
(2) The profile option AR: Use Invoice Accounting for Credit Memos determines how JE for
credit memos are generated. If Yes, Receivables credits original transaction. If No,
Receivables uses AutoAccounting to determine accounts.
AR-6 Apply credit memo to invoice, debit memo, or chargeback
Accounts Debit Credit
Receivables (3)
X
Receivables (4)
X
(3) Credit Memo account
(4) Invoice account
AR-7 Apply credit memo to commitment
Accounts Debit Credit
Revenue (5)
X
Receivables (6)
X
(5) Credit Memo account
(6) Invoice account
17. Accounting in R12 Oracle Receivables
Page 17 of 28
AR-8 On-account credit
Accounts Debit Credit
Revenue X
Tax X
Freight X
Receivables (7)
X
(7) JE is the same as this of Credit Memo
AR-9 Apply On-account credit to invoice
Accounts Debit Credit
Receivables (8)
X
Receivables (9)
X
(8) On-account credit account
(9) Invoice account
AR-10 Adjustment to invoice
Accounts Debit Credit
Adjustment X
Receivables (10)
X
(10) This is a negative adjustment
AR-11 Deposit
Accounts Debit Credit
Receivables (11)
X
Offset (12)
X
(11) Deposit account
18. Accounting in R12 Oracle Receivables
Page 18 of 28
(12) Offset account can be an account such as unearned revenue and is controlled by profile
option = AR: Deposit Offset Account Source (AutoAccounting or deposit's transaction type)
(Cash is received against Deposit)
Accounts Debit Credit
Cash X
Receivables (13)
X
(13) Deposit account
AR-12 Invoice applied to Deposit
Accounts Debit Credit
Receivables (14)
X
Revenue X
Tax X
Freight X
Offset X
Receivables (15)
X
(14) This is the invoice part of the transaction
(15) Invoice account
AR-13 Guarantee
Accounts Debit Credit
Receivables (16)
X
Revenue (17)
X
(16) Unbilled Receivables account can be used
(17) Unearned Revenue account can be used
19. Accounting in R12 Oracle Receivables
Page 19 of 28
AR-14 Invoice applied to Guarantee
Accounts Debit Credit
Receivables (18)
X
Revenue X
Tax X
Freight X
Revenue X
Receivables (19)
X
(18) This is the invoice part of the transaction
(19) Invoice account
(Cash is received against Guarantee)
Accounts Debit Credit
Cash X
Receivables (20)
X
(20) Guarantee account
AR-15 Unidentified Receipt
Accounts Debit Credit
Cash X
Bank Charges (21)
X
Unidentified Receipt X
(21) Bank Charges can be entered if profile option "AR: Create Bank Charges" = Yes and
receipt's creation status is 'Cleared' (clearance method of receipt class is set to 'Directly').
20. Accounting in R12 Oracle Receivables
Page 20 of 28
Change from unidentified to unapplied
Accounts Debit Credit
Unidentified Receipt X
Unapplied Receipt X
AR-16 Unapplied Receipt
Accounts Debit Credit
Cash X
Bank Charges X
Unapplied Receipt X
Change from unapplied to applied
Accounts Debit Credit
Unapplied Receipt X
Receivables X
AR-17 Applied Receipt
Accounts Debit Credit
Cash X
Bank Charges X
Receivables X
AR-18 On Account Receipt
Accounts Debit Credit
Cash X
Bank Charges X
On Account X
21. Accounting in R12 Oracle Receivables
Page 21 of 28
AR-19 Receipt with Discount
Accounts Debit Credit
Cash X
Earned / Unearned Discount X
Receivables X
AR-20 Miscellaneous Receipt
Accounts Debit Credit
Cash X
Bank Charges X
Misc. Cash (22)
X
(22) This usually a revenue account
AR-21 Receipt Write-Off
Accounts Debit Credit
Unapplied Cash X
Write-Off (23)
X
(23) This usually a revenue account
AR-22 Receipt requiring Remittance
Accounts Debit Credit
Receipt Confirmation X
Receivables X
22. Accounting in R12 Oracle Receivables
Page 22 of 28
AR-23 Standard Remittance
Accounts Debit Credit
Remitted Receipt X
Receipt Confirmation X
AR-24 Clearing of Remitted Receipts
Accounts Debit Credit
Cash X
Bank Charges X
Remitted Receipt X
AR-25 Factoring Remittance
Accounts Debit Credit
Factored Receipt X
Receipt Confirmation X
AR-26 Maturity of Factored Receipts or Eliminating Risk
Accounts Debit Credit
Short-Term Debt X
Factored Receipt X
AR-27 Clearing Factored Receipts
Accounts Debit Credit
Cash X
Bank Charges X
Short-Term Debt X
23. Accounting in R12 Oracle Receivables
Page 23 of 28
AR-28 Non-Invoice related Claim
Accounts Debit Credit
Claim Investigation X
Unapplied Cash X
24. Accounting in R12 Oracle Receivables
Page 24 of 28
Notes Receivable
NR-01 Note Receivable requiring Remittance
Accounts Debit Credit
Notes Receivable X
Receivables X
NR-02 Standard Remittance
Accounts Debit Credit
Notes Receivable X
Notes Receivable X
NR-03 Clearing of Remitted Notes Receivable
Accounts Debit Credit
Cash X
Bank Charges X
Remitted Notes Receivable X
NR-04 Factoring Remittance
Accounts Debit Credit
Factored Notes Receivable X
Notes Receivable Confirmation X
NR-05 Maturity of Factored Receipts or Eliminating Risk
Accounts Debit Credit
Short-Term Debt X
Factored Notes Receivable X
25. Accounting in R12 Oracle Receivables
Page 25 of 28
NR-06 Clearing Factored Receipts
Accounts Debit Credit
Cash X
Bank Charges X
Short-Term Debt X
26. Accounting in R12 Oracle Receivables
Page 26 of 28
Special Accounts
Cross Currency Rounding
Is used to record rounding error amounts created during a cross currency receipt application
for currencies that have a fixed rate relationship. These errors:
• May occur because there are usually more decimal places defined for an exchange rate
than for the standard precision of functional currency. When a receipt amount is
multiplied by an exchange rate and then rounded to match standard precision, the
result can be slightly different from the transaction amount specified in the
transmission file.
• May be expected if receipt in foreign currency (USD) is to be applied to invoices in
different foreign currency (EUR) while functional currency is EGP.
Header Rounding
Is used to record any rounding differences occur upon converting foreign currency
transactions to functional currency.
Upon creating a transaction with several line items, total amount in the two currencies may
vary slightly (usually by the minimum accountable unit defined for functional currency). These
differences occur due to rounding.
Example:
Item Amount in EUR Exchange Rate Amount in EGP
A 15 8.639 129.59
B 12 8.639 103.67
C 23 8.639 198.70
431.96
Total 50 8.639 431.95
Rounding Difference 0.01
Total amount of lines after conversion is EGP 431.96 while header amount is 431.95. This
results in a rounding difference of 0.01. The journal entry would be:
Accounts Debit Credit
Receivables 431.95
Header Rounding 0.01
Revenue 431.96
27. Accounting in R12 Oracle Receivables
Page 27 of 28
Unless it’s a legal requirement, Header Level Rounding is not recommended. If so, Receivables
rounds amounts at line level (EUR 50), multiply by exchange rate (EGP 8.693), and posts any
rounding difference to the Receivables account. When more than one receivable account is
used – according to AutoAccounting setup – the account with largest amount is affected by
the rounding difference.
Accounts Debit Credit
Receivables A 129.59
Receivables B 103.67
Receivables C 198.96
Revenue 431.95
AutoInvoice Clearing Account
If “Create Clearing” option is enabled for imported transactions batch source, this account will
be used to hold any difference between the specified revenue amount and the selling price
times the quantity for imported invoice lines. In other words, (quantity * unit price) ≠
extended price.
Finance charge
28. Accounting in R12 Oracle Receivables
Page 28 of 28
Information Sources
o AutoAccounting Setup White Paper [ID 215376.1]
o Oracle Recivables User's Guide Release 12.1 Part No. E13522-04
o Oracle Payables Implementation Guide Release 12.1 Part No. E13510-04
