Ledger Creation in GL:

Creating a ledger is the most important process in the GL application. As discussed earlier all the data from sub-ledgers will be transferred to GL before closing the periods, and all the financial statements are prepared in GL, one most take utmost care while defining a ledger.

What is a ledger?

A ledger is a book which maintains all the monetary transactions an organization do in a financial year. All these transactions will be put in a set of way so that financial statements and balance sheet can be prepared.

How Ledger will be created?

Ledger created using 4 C’S in R12 application of GL.

CHART OF ACCOUNTSCALENDARCURRENCY CONVENTION (ACCOUNTING CONVENTION).

What is COA?

Chart of Account Structure (COA), also called GL Key flex fields in EBS, consist of different segments that make up your account combination. Some of the segments such as plant number, have no significance in how the system behaves other than to store transactional data separated by plant. Other segments such as balancing segment, greatly impact how the system works, because all debits and credits associated with any value in the balancing segment must net to zero. EBS requires that a balancing segment and a natural account segment must assign to every chart of account. Oracle supports upto 30 segments and the length of these segments cannot exceed more than 255 characters.

What is a Calendar?

Your calendar determines the period type your organization is using i.e. monthly, quarterly, and weekly, etc, this is called period types. And we create one financial or accounting calendar which contains the total number of periods. If you are using 13 periods you must create 13 periods in your accounting calendar otherwise your calendar throws you an error.

Currency:

We must use a valid currency for organization, and the condition is the currency which your organization is use must be approved by the ISO, and you cannot use currencies other than Valid ISO currencies.

Convention:

Accounting convention must be used to find out how your accounting data from other sub-ledgers impact your GL, we are using STANDARD ACCRUAL method.

Creation of Ledger:

First Give a valid name for your COA and create your segments, for each segment create a value set. Value set becomes the location where the valid values are stored for use. After creating segments and assigning value sets to all the segments give flexfield qualifers to your segments, for company it is balancing segment, and for account it is natural account segment.

Insert values for your segemts first, (setup>fin>ff>key>values) then save the record.

Come back to the COA creation page, here you have to do the following:

Choose your segment separator: these are 4 types: period (.), Dash (-), pipe (!) and Custom (we can create our own style).

Select allow dynamic insertion and , cross validate segments and then freeze flexfield definition. Say ok to the caution note. And now compile your COA, compiling COA will create a unique chart of account structure in the database and this COA will be available for future usages.

Accounting Setup manager:

Please create your business group and location in HRMS before doing this step.

Using accounting setup manager, we can finish the required setups for creating our ledger, first we have to create a legal entity, legal entity is a location using which company takes care of their legal and

government requirements. For example, submitting taxes and registrations for imports and exports etc.

We have to create a legal entity and separate address for legal entity, then add legal entity , then go to next step to create your ledger name, COA name, Calendar, Currency, Convention etc., once these steps are over we can update all the required options. While updating Ledger we have to give RETAINED EARNINGS ACCOUNT, it is an undistributed profit and loss account which holds all the financial transactions total value.

We have to assign balancing segment values, as well as assign operating units with business group and legal entity name and after this click on COMPLETE, now your ledger is ready to use.

After creating your ledger don’t forget to assign GL:LEDGER NAME profile option to all your responsibilities and open the necessary periods in GL to carry on with GL process.