Accounts in Ledger Setup R12

YEAR END PROCESSING

Retained Earnings Account:

This account is used during the year-end processing to record cumulative retained earnings.

Net Closing Balance flag: Yes or No?

You have two choices at close period of the year end:

A. Let the open new period close down all the income statement accounts and put the results in the retained earnings in the same way it has always done. This also rolls the balance sheet accounts into the first period of the new year like it does any other period.

B. Create a journal showing the movement of the income statement accounts into retained earnings or an account of your choice. You can also create a journal for the balance sheet accounts showing what will be used as opening balances next year. This is to fulfill a legal requirement in some countries specially France.

If you choose B then the option in the 'Net Closing Balance Journal' choice in the Accounting Setup Manager comes into effect. This will close the balances either as a net figure to the closing journal (when ticked) or as Cr and Dr figure to the closing journal (by default). The Net closing flag allow users to choose between closing balances by journaling out both the Dr and the Cr balance or just the net balance on a code combination [ Retained Earnings ].

CURRENCY TRANSLATION OPTIONS:

Cumulative Translation Adjustment Account:

This account is used to record the cumulative adjustment for translations. Once this account is used in a translation, it cannot be updated.

The CTA account is not filled through a calculation, it is simply a plug between the difference in the debits and credits after translation is run. Since the Assets/Liabilities, OE, and Revenue/Expenses typically use different translation rates, it is common for the translated balances not to equal. Therefore, the CTA will simply fill in the difference to make the debits equal the credits. There is no calculation for this account.

AVERAGE BALANCES

Net Income Account:

This account captures the net income on the average balances.

ROUNDING ACCOUNT & SUSPENSE ACCOUNT

When the rounding account is used and when the suspense account is used?

A. During Journal Import of a foreign currency journal
1.If the currency conversion type in GL_INTERFACE is not provided, and the accounted amounts are provided, then any imbalance in the accounted amounts will go to Suspense.
2.If the currency conversion type is provided in GL_INTERFACE for the  foreign currency journal, and the currency conversion type is User with a currency conversion rate of 1, then any imbalance in the accounted amounts will be posted to the Suspense account.
3.If the currency conversion type is provided for a foreign currency journal, and it is not User with a rate of 1,  then and only then will the imbalance go to the rounding account.
This is because when Journal Import and consequently Posting is presented  with user-defined accounted amounts, GL has no way of knowing the if the difference in the accounted amounts is due to suspense or rounding.
Currently, we are assuming that the difference should go to suspense.

B. In the Enter Journals form:

1. If the user manually overrides the    accounted amounts, the assumption is that the difference in the accounted  amounts is due to suspense and not rounding, since the user explicitly chose to override the accounted amounts.If you manually change the accounting amount the conversion_flag is set to  'N' in    the created headers, therefore, posting is rejecting the batch instead of balancing it by adding the rounding difference to a  journal lines.

Oracle doc Doc ID 340341.1