how to correct misclassified accounts in general ledger

7/21/2019 How to Correct Misclassified Accounts in General Ledger

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How To Correct Misclassified Accounts in General Ledger PROBLEM DESCRIPTIO

The goal of this note is explain the correction of Misclassified Accounts. An account is misclassified if the account type of the segment value is different from the account type on a code

combination that uses that value. It occurs when the account was initially created with the wrong account typeand had code combinations generated from it. Then the account type is subsequently changed on the accountvalue screen to a different account type. This change does not change the account type of the code combinationit keeps its original type.

The process of changing the account type of a code combination is complicated because you can not do itthrough the form. This is deliberate as it prevents the account type of a code combination being changed after it isused without users making decisions on how to correct the accounting of journals posted in earlier years. At yearend balance sheet balances will be rolled forward and !" balances will be rolled up into retained earnings.Manual intervention is required to correct the year end balances.

There are # account types available and they form two groups$

rofit and loss accounts or income statement accounts$

%xpense&evenue

'alance sheet accounts$

Asset"iability(wners equity

The major difference between these two groups is that at year end the Income statement accounts are rolled upinto the retained earnings account when you open the first period. 'alance sheet accounts are rolled forward tothe same code combination when you open the first period of a new year.

There are two type of misclassificationa. )impleb. *omplex

The simple form is between account types in the same group. At year end the behaviour of the rollforward isunchanged.%xample Account +,,, is setup as %xpense

*ode combination ,+.+,,,.+,,, is created Account +,,, is changed to account type &evenue. This does not change ,+.+,,,.+,,, but any new codecombinations will be revenue.

The complex form is where the account type of one is in a different group to the other. -or example the accounttype is an asset in the account value ++,, and expense in the code combination ,+.#,,,.+,,,. At year end thebehaviour of the rollforward is different between these two account types so the code combination does notbehave correctly for its position in the statement of accounts.

%xample Acount ++,, is setup as %xpense the default/*ode combination ,+.#,,,.+,,, is created

Account value 0,,, is changed to Asset. This does not change ,+.#,,,.+,,, but any new code combinations willbe Asset.



S!MPTOMS

In 'udgets

1ou are unlikely to see the )imple form causing symptoms in many circumstances but you will find that

budget uploads become debit (r *redits depending on whether they are account type %xpense2 Assetor owners equity for 3r4s or &evenue and "iability for *redits.55 6ote.7#89#:.+;; 4Misclassified Accounts *aused 'udget Amounts to be "oaded Incorrectly4 to helpidentify budgets loaded the wrong way round because of misclassifications. 1ou also see this in the complex formif for example the account type started as expense and was changed to liability. The budget would be a 3rinstead of a *r.

)tandard &eports

In standard reports like the Trial balance or account analysis in the first period of the newyear you find that the (pening balance is <ero instead of matching the previous years closingbalance. (n further investigation you notice that either the retained earnings is inflated by the amount

or that the account has rolled into the new year when you did not expect it. 1ou will not get this in the simple formonly the complex form.

-)= &eports

The 'alance sheet account 1T3 amount start at <eros in the new year because the balance as at the lastperiod of the year is rolled over to &etained earnings at year end. This only happens for the complex case.

*reate Account *ombination -orm

In )etup ; Account ; *ombinations you can see the wrong account type defaults in when you entera code combination in the form =">A**M' ? *reate Account *ombinations. 1ou can see this in either case.DETECTIG MISCLASSI"IED ACCO#TS

3etection of misclassified accounts depends on a change being made to the account segment valueafter code combinations have been generated causing the account type of one to vary from theaccount type of the other. If you have not yet changed th account type on the account value thefact that the code combination is of the wrong account type will not show up with any of thesemethods. Then it is a case of spotting that the code combination is not behaving properly seesymptoms/

IMPORTAT OTEThis article is a technical description of how to correct misclassified accounts. It is envisaged

that the misclassification will be discovered shortly after year end and that accounts have notyet been published. -or the complex type problem if accounts have been published or the problemgoes back over several years then consideration must be given to whether the amounts arematerial. 1ou may need advice from your accountants and auditors in that case as for materialamounts it would be normal to report this as a prior year adjustment in the income statement.IMPACT O" OT RESOL$IG MISCLASSI"IED ACCO#TThe first year where there is a misclassified code combination there is no impact. In the -irstperiod of the second year the balance will roll forward incorrectly. It will either remain as thebought forward balance for (wners equity2 Asset or "iability account or it will be rolled forwardas part of the retained earnings balance for the new year for %xpense and &evenue accounts. As yetthe reports at year end will still be correct because the accounts are reported according to where theyappear in the chart of accounts not by the account type.

In the first period of the second year the 1ear To 3ate 1T3/ figures reported for the account



will be incorrect in monthly management reports. -or Income statement accounts this means thatthe expenditure or income against budget will be overstated or in the balance sheet the asset orliability will be understated the difference being in retained earning.

In the last period of the second year the published accounts will have incorrectly stated the

retained earnings. This will be higher or lower depending on the type of account and whether itsa debit or credit. This time although the code combination will still appear in the right part ofthe accounts the value will be under or over stated. Income statement accounts classified asbalance sheet will be showing last years balance included in this year while balance sheet accounts will beunderstated by last years year end balance.

In the third years opening balance you will have two years of miscalculation. If you have gonepast the second years reporting and published the accounts without fixing the code combinationthe accounts will contain errors. If you think these errors are material in si<e the accountingtreatment of this error must be discussed with your accountants or auditors to satisfy the rulesgoverning the publication of company financial statements. If the misclass is to an incomestatement account type the difference will be between the retained earnings and the balance sheet

ie an asset or liability is understated the difference going to retained earning which is in(wners %quity. -or a balance sheet account type the difference is that the revenue or expensewill be overstated.

Technically not fixing all the years that the code combination existed would only be a problem ifyou had to later do a fix to the same account combination and that fix corrected all thebalances for previous years. This might lead you to think the problem had been incorrectlyresolved. -inally translation looks back at all transactions since the code combination wasraised so it will be affected by changes.Solution

SOL#TIO DESCRIPTIO-or the simple situations where the account type is within the same group then go to the sqlsolutions in the appendix. 1ou do not need to make any journal adjustments for the case whereyou are changing an expense to a revenue or revenue to expense or asset to liability or asset toowners equity or liability to asset or liablity to owners equity or owners equity to liability orowners equity to asset. 1ou also do not need journals if there are no balances in previous years.

-or complex situations you will need to clear the balance from the previous year then re?enter itonce the correction is done. If more than one year is involved you need to consider whether theamounts are material and need to be reported in the year end report otherwise this process willsuffice.

This is a @ step process$

+. Identify all the code combinations that are misclassified0. eroise the balances in the code combinations with the problem as at the end of last year inall currencies and all "edgers that share the chart of accounts. If you dont do it in the endof last year it will not effect this years balances and so will not show in the reports correctly at year end.7. Ask the 3'A to run the script that corrects the problem code combinations.@. &everse the Bournals that <eroised the balances in step 0 to bring them back into the accountsfor this year

%>AM"% +

*hanging !" to 'alance sheet.In 0,,8 the account ,+.#,,,.+,,, is setup as an expense account. Its location in the accounts



hierarchy means its reported as an asset in the financial statement. At year end there isC0,2,,,.,, in this account. This amount is passed to retained earnings ,+.D9,,.+,,, in the firstperiod of the year 0,,D.

Account 3ec?,8 Ban?,D

dr *r 3r *r ,+.#,,,.+,,, 0,,,, ,,+.D9,,.+,,, , 0,,,,

In 0,,D a dr of 7,,,, is journaled to this account if its not corrected the position relating tothis account in the first period 0,,9 is

Account 3ec?,D 1T3 Ban ?,9 1T3dr *r 3r *r ,+.#,,,.+,,, 7,,,, ,,+.D9,,.+,,, 0,,,, #,,,,

so if you only adjust the last years accounts the balance sheet accounts opening balance isincorrect by 0,,,,2 we need to adjust both years. The fix would bestep + journal to <ero both year ends. That is open 3ec 0,,8 and 3ec 0,,D and <ero both accountsto another balance sheet account say suspense ,+.0999.+,,,0,,8

Account 3ec?,8 Ban?,Ddr *r 3r *r ,+.#,,,.+,,, 0,,,, 0,,,, ,,+.D9,,.+,,, , 0,,,, 0,,,,,+.0999.+,,, 0,,,, 0,,,,

In 0,,D Account 3ec?,D 1T3 Ban ?,9 1T3dr *r 3r *r ,+.#,,,.+,,, 7,,,, 7,,,, ,,+.D9,,.+,,, 0,,,, 0,,,, #,,,, #,,,,,+.0999.+,,, #,,,, ,

6ow if we correct the code combination step 0 and reverse the correcting journal in both years wewould have$

0,,8

Account 3ec?,8 Ban?,Ddr *r 3r *r ,+.#,,,.+,,, @,,,, 0,,,, ,,+.D9,,.+,,, 0,,,, 0,,,, 0,,,, 0,,,,,+.0999.+,,, 0,,,, 0,,,, ,

In 0,,D Account 3ec?,D 1T3 Ban ?,9 1T3dr *r 3r *r ,+.#,,,.+,,, 7,,,, 7,,,, 7,,,,,+.D9,,.+,,, #,,,, #,,,, #,,,, #,,,,

,+.0999.+,,, #,,,, 0,,,, #,,,, #,,,,



6ote the retained earnings account is netting to <ero but the correction will remain on it.This would look better if we had reversed the adjustment using change signs

Account 3ec?,8 Ban?,Ddr *r 3r *r

,+.#,,,.+,,, 0,,,, , 0,,,,,+.D9,,.+,,, 0,,,, 0,,,, 0,,,, 0,,,,,+.0999.+,,, , , , ,

In 0,,D Account 3ec?,D 1T3 Ban ?,9 1T3dr *r 3r *r ,+.#,,,.+,,, #,,,, , #,,,,,+.D9,,.+,,, #,,,, #,,,, #,,,, #,,,,,+.0999.+,,, , ,

'ecause we adjusted both years the opening balance of both years is correct. Ee could haveachieved the same roll forward by doing a journal for 3ec 0,,D as above and in the last step whenthe account combination had been corrected we could journal 0,k from the retained earnings to theaccount ,+.#,,,.+,,,There are certain ramifications in this case for teh accuracy of the accounting that you need to be aware of.

'efore this fix you have a balance sheet account that does not have the correct balance. That balance does notreflect whatever it is supposed to represent whether its cash in the bank or the value of laptops in the office. %achyear for the last number of years this account combination was misclassified and the balance has been effctively4written off4 to retained earnings at each year end.

If you want a true and fair representation of the balance sheet this needs to be fixed. That means changing thebalance that have already been published andFor reporting in the published accounts if its large enough to benecessary.

I can think of @ methods to fix it$

+. -ix the opening balance of this year and all past years as above. This gives you a true reflection of the openingbalance but it changes the published accounts of past years.

0. -ix last years closing balance so all the amounts written off to retained earnings in previous years are journalled back into this account in the last period of last year before you fix the code combination using sql. Thenrun the glbalfix against the fixed code combination. This would still change the reported figures permanently so

they dont match published reports but you wont need to reopen last years accounts. 1ou will need an )r raised toget the glbalfix script. this is time consuming and gives no added benefit. Its only used where localisations meanyou cannot open the period again.

7. (nly journal last years balance so the opening balance this year matches the closing balance last year. Thiswould be bad accounting as the balance sheet figure would have no basis in reality.

@. 1ou could correct the code combination using sql and create a journal between retained earnings and themisclassified accounts in the current period or the first period of this year using the first period of this year avoidsmaking this months T3 figures look distorted2 when managers look at them the 1T3 will still have changed/.This does mean that the fixing journal would be identifiable as the cause of the change in the retained earningsfrom last year and may need explaining with a note in the published accounts. This is the most visible method

and possible the best for audit purposes since its easily explained why it was done where as the suddenunexplained change in last years accounts may look like an attempt to hide the need to fix the issue. It does not



fix the years opening balance though so is not usually used.Top of age

%>AM"% 0

If the problem account is !" and should be 'alance sheet.In 0,,8 the account ,+.+,,,.+,,, is setup as an expense account. Its location in the accountsmeans its reported as an expense in the financial statement. At year end there is C+,2,,,.,, inthis account. This amount is rolled forward to 0,,D not to retained earnings ,+.D9,,.+,,, in thefirst period of the year 0,,D.

Account 3ec?,8 Ban?,Ddr *r 3r *r ,+.+,,,.+,,, +,,,, +,,,,,+.D9,,.+,,, , ,

In 0,,D a dr of +#,,, is journaled to this account if its not corrected the position relating to

this account in the first period 0,,9 is

Account 3ec?,D Ban?,9dr *r 3r *r ,+.#,,,.+,,, 0#,,, 0#,,,,+.D9,,.+,,, , ,

In this example the correction journal is only required in 3ec?0,,D since we have the 1T3 figureEe <ero the amount to another balance sheet account say suspense ,+.0999.+,,, step 0

Account 3ec?,D 1T3 Ban ?,9 1T3dr *r 3r *r ,+.#,,,.+,,, 0#,,, 0#,,, 0#,,, 0#,,,,+.D9,,.+,,, , , , ,,+.0999.+,,, 0#,,,

Then we get the 3'A to change the code combination to !" step 7 and reverse the journal using

change signs step @

In 0,,D Account 3ec?,D 1T3 Ban ?,9 1T3dr *r 3r *r

,+.#,,,.+,,, 0#,,, , , ,,+.D9,,.+,,, , , 0#,,, ,,+.0999.+,,, ,

1ou can see in this illustration it only effects the last year end. This is because the amountwas reported in the correct place and the adjustment is for what had been a balance sheet accountso the last 1T3 holds all the values from prior years.

6ote +$ If mutiple ledgers share a *hart of Accounts you will need to make sure that all affected accounts in allledgers are <eroised.

select name ledgername2 chartGofGaccountsGid from glGledgers

where chartGofGaccountsGid in )elect chartGofGaccountsGidfrom glGledgers where name H 4!ledgername4/



Ehen there are consolidation2 secondary or reporting ledgers and the ledgers share the same value set for theaccounts segment then check that the code combinations associated with that account value are correct in thoseother ledger. If changing the value then the appropriate journals should be raised in both sets of ledgers and theaccounts <eroised before changing the account type.

In &+0 you can see which other hierarchies are associated with a valueset in )etup $ -inancials $ -lexfields $ Jey$)egments query your hierarchy2 click on segments button2 click on the account segment and click on the valuesetbutton. (n the valueset screen you have a 4Ksages4 button top right. *lick on this and you can see whichhierarchies use this valueset. *lick on the Jey flexfield tab and it will give you the Application name2 -lexfieldTitle2 )tructure name and segment name. If you change the account type it will change for all the structureshierarchies/ that share that valueset.

6ote 0$ 1ou may have a situation where the code combination have been correctedbut not the balances. In that case you may be asked to reset the codecombinations to the original incorrect setting before <eroising the accounts.

6ote 7. If the misclassification has not crossed fiscal years2 you only need to

complete steps D and 9.

6ote @. This article contains the steps (racle =eneral "edger users must complete inorder to change the account type of a mis?classified account. 1ou need tocomplete all steps if the mis?classification has existed before the current financial year.

6ote #. If you are using Average 3aily 'alances2 and have a misclassified account type2 and theaccount type is misclassified to be an income statement instead of a balance sheet2 or a balancesheet instead of an income statement2 then you need to reverse all journals in all periods thathave been posted to that account.(nce you have posted these reversals2 you can then fix the account type2 reverse the reversals2and post them. see 6ote +#,:D8.+ Low to *orrect Misclassified Account Types if Ksing Average 3aily 'alancesThere is a script available log an )& and request it quiting this note/ by using glbalfix.sql that does this but it hassome performance issues due to the volume of work.

6ote :. The Account type attribute is not inherited from the alue to the *ombinationswhen you run ="6)I ? rogram ? Inherit )egment alue Attributes.

6ote 8. If the misclassification only effects summary templates then you can drop and recreate the summarytemplate after step D instead of journaling the affected accounts if you wish.)ummary template combinations always have a type of (wners %quity. )ince the summary template is updatedby the detail level only and a summary code combination could have several account types rollup into it. As you

cannot post directly to a summary account template it is virtually impossible for this to occur in a summarytemplate only.

SOL#TIO+. &eopen the last period of your prior fiscal year2 if it is closed using the open close period form. If the accountwas not active before the beginning of this year skip to step D.

0. )ometimes the problem code combination is fixed before you discover the unbalanced account. %nsure theaccount type is still misclassified because you need to make a correction journal while the combination andsegment value are the same as it was when the original journals were raised.To find the account type in use on the segment$

6avigation$ )etup ; financial ; flexfields ; Jey ; values.

https://support.oracle.com/CSP/main/article?cmd=show&type=NOT&id=150687.1

https://support.oracle.com/CSP/main/article?cmd=show&type=NOT&id=150687.1



Application$ )elect 4(racle =eneral "edger4 from the list of values"(/.

Title$ )elect 4Accounting -lexfield4 from the "()tructure$ )elect the applicable chart of accounts for your ledger from the "(

)egment$ )elect your natural account segment from the "(Nuery back the bad account use the qualifier tab and check the account type.

7. If you did not run the diagnostic to check which code combinations are misclassified followthis step to do it manually.

a. *heck all the code combinations with this account value to see if theymatch the segment value account type.6avigate ;)etup; Account; *ombinations Nuery on the account segment value with the rogueaccount type value.

b. -ind out what the account type is for each one.Make a note or screen shot of these so you can see what values are currently against them.

c. (btain balances as of the last period of the previous fiscal year by running an accounting report =eneral"edger2 Trial 'alance2 Account Analysis/ or view the balance online by using the AccountInquiry form. Make sure you check all currencies.

In order to correct the balances over the year end and so effect your reports this must remainIncorrect until steps 7?: are complete.

6ote$ If you use &eportingFsecondary ledgers then you must check the reportingFsecondary ledger as well.

@. Kse the account inquiry screen or the account analysis report to find what the balances were in the last periodof the previous years/. Ehere there is no balance atthe end of last year skip to step D.

If multiple years are involved its a business decision on how you would handle this. -or changingan existing code combination with a &evenue or %xpense account type it may be necessary tocorrect many prior years so that amounts originally passed to retained earnings can form the 1T3opening balance of the current year otherwise the 1T3 balance would be inaccurate.The assumption here is that you would have discovered the issue in the first year.

#. *reate a journal entry that brings the misclassified account combinationsbalances to <ero for the last period of your prior fiscal year for every currency.

The contra entry should go to a temporary account such as )uspense but not to retainedearnings or another combination with the same account segment value as the one being fixed.you will reverse this batch in a later step to re?post the balances using change signs so there will be no visibleeffect/.eg.,+.+,,.####.,, is misclassified because account #### is expenseinstead of asset. This is causing the opening balance of ,+.+,,.####.,,to be <ero the amount has been passed to the retained earnings account.

99.+,,.9999.,, is a clearing account with the currect classification



any account type as long as its right/.

At the end of the year there is an amount of ++,.,, =' base currency/To clear this the appropriate journal raised in the last period is$3r 99.+,,.9999.,, ++,.,, ='

*r ,+.+,,.####.,, ++,.,, ='

6ote$ If you have multiple currencies in the account balance2 create journal entries to <ero out entries in yourfunctional currency and to <ero out entries for each foreign currency. 1ou would set the profile 4Bournals$ AllowMultiple %xchange &ates4 to 1es and enter the entered amount and accounted amount suchthat it clears the account.

6ote$ If you use &eportingFsecondary ledgers then you must check that the journal generated in these ledgers will<eroi<e the account as well. If not generate a journal in the ledger to cope with the rounding differences.The sameapplies to any secondary ledgers.

:. ost the journal entry. -or those with reporting ledgers or secondary ledgers that share this valueset users thismust post the &eportingFsecondary ledger Bournals. Then run a summary Trial 'alance for this account to ensurethe closing balance is <ero in all ledgers.

8. erify the misclassifed account4s balance is <ero by running an accounting report =eneral "edger2 Trial'alance2 Account Analysis/ or view the balance online by using the Account Inquiry form.

D. *orrect the account type of the misclassified account as follows$

&esponsibility H =eneral "edger )uper Kser =KI=KI 6avigation H )etupF-inancialsF-lexfieldsFJeyF)egments=KI )hort -orm H -63--MI) Jey -lexfield )egments/

a. 6avigate to the Jey -lexfield )egments form.

b. (racle =eneral "edger prevents you from changing the account type unless you first unfree<e all Accounting-lexfield structures that reference your account segment. see 6ote +,+#9#,.:

?? Kncheck the -ree<e -lexfield 3efinition check box.

?? &epeat steps a and b for each accounting flexfield structure which references your misclassified account type.

c. 6avigate to )etupF-inancialsF-lexfieldsFJeyFalues.

Application$ )elect 4(racle =eneral "edger4 from the list of values"(/.Title$ )elect 4Accounting -lexfield4 from the "()tructure$ )elect the applicable ledger from the "()egment$ )elect your natural account segment from the "(

?? %nter your account value and click on the O-indP button.

?? Eith your cursor on the value2 tab over to the 4Nualifier4column. This will bring up the Nualifier window and youwill see for example$

? Allow 'udgeting 1es



? Allow osting 1es? Account Type %xpense

?? In the 4Account Type4 field2 select Asset2 "iability2(wnershipF)tock or &evenue from "(.

?? )ave your changes before exiting the form.

d. 6avigate back to the Jey -lexfield )egment form2 refree<eyour accounting structures/ and click on the O*ompileP button.

9. 1ou must ask your 3atabase or )ystem Administrator to correct the account type of all accounts referencingthe misclassified account by correcting the A**(K6TGT1% column in the ="G*(3%G*(M'I6ATI(6)table using )N"Qlus an example script is shown below appendix A/ and appendix '.

If you attempt to correct it on the code combination screen you will receive the message 4-&M?@,0,, -ieldrotected Against Kpdate4.

+,. &estore the misclassified account balance by reversing the journal entry you posted to the last period of yourprior fiscal year )tep :/.&everse the journal entry into the same period in which it was originally posted using the change signs method ofreversal change signs will reverse a +,,3r with a ?+,,dr so the 1T3 amount will be unchanged by this fix.osting rolls the balances forward correctly to the next fiscal year and updates retained earnings wherenecessary.

++. ost the reversing journal entry. If you are using &eporting or )econdary ledgers make sure thereversal is posted in those ledgers as well.+0. If in your close process you normally run 4*reate Income )tatement Bournals4 or 4*reate 'alance )heet*losing Bournals4 then this will now be incorrect so you may need to take steps to correct them. The decisionwhether or not to do this is an accounting decision so you may need to discuss with your accountants andForauditors if the Bournal results have been published.

)hould you need to make adjustments after the income statement closing journals or *reate 'alance )heet*losing Bournals are posted2 reverse and post the original closing entries2 make your adjustments2 then rerun theclosing process to capture the new adjustments.If the 4*reate 'alance )heet *losing Bournals4 have already been reversed in the following year you may need toreverse the reversed journal. *hange the period to the last period of the previous year post it and reverse it againin that period to get the balances back to their original state. Then proceed with regenerating the 4*reate 'alance)heet *losing Bournals4.

+7. &eview the corrected account balance by running an accounting report such as a Trial 'alance or view thebalance online by using the Account Inquiry form.

1. Correcting Misclassified Account Types2. In the event you have an account with a misclassified account type that results in an erroneous

Retained Earnings calculation, you can correct your account balances and the misclassified

account type.3. For example, after running a trial balance for the first period of your new fiscal year, you notice

that your ash account balance is !ero. "ou discover that your ash account was originally

created with an account type of Expense rather than #sset. $herefore, when you opened the

first period of your new fiscal year, %eneral &edger automatically closed out your ashaccount balance to Retained Earnings.



'. To correct balances for a misclassified account:

(. ). Reopen the last period of your prior fiscal year, if it is closed.*. 2. reate a +ournal entry that brings the misclassified account balance to !ero for the last day of

the last period of your prior fiscal year. se a temporary account such as -uspense for the

offsetting amount.. 3. /ost the +ournal entry on the last day of the last period of your prior fiscal year.0. '. 1erify that the misclassified account balance is !ero by reviewing account balances online or

in reports.. (. orrect the account type of the misclassified account by changing the segment value

ualifiers. %eneral &edger prevents you from changing the account type unless you firstunfree!e all account structures that reference your account segment using the 4ey Flexfield

-egments window.)5. *. #s6 your -ystem #dministrator to correct the account type of all accounts referencing the

misclassified account by updating the #78$9$"/E column in the%&97:E97;<I8#$I78- table using -=&>/lus.)). . Restore the misclassified account balance by reversing the +ournal entry you posted in

-tep 3 above. Reverse the +ournal entry into the last day of the same period that it wasoriginally posted.

)2. 0. /ost the reversing +ournal entry.)3. sing the previous example, the ash account type is now #sset so when you post the

reversing +ournal entry, %eneral &edger rolls forward your ash and Retained Earnings balances into the first period of the new fiscal year.

)'. . Review the corrected account balances online or in reports.

How To Correct Misclassified Accounts in General Ledger R12 [ID 872162.1]

How To Correct Misclassified Accounts in General Ledger in 11i [ID 1050920.6]

Chargebacks and Adjustments

Receivables lets you create adjustments and chargebacks against transactions to whichyou are applying a receipt.

Use chargebacks to create a new debit item for your customer when closing an existingdebit item. For example, your customer sends payment of $! for a $"## invoice. ou canapply the receipt to the invoice, then create a chargeback for the balance due.

%f you use &racle 'rade (anagement, then you can create chargebacks against receiptswhen resolving cash claim investigations. ou can use the Receipt )pplications window tocreate a chargeback against a receipt. &r, 'rade (anagement users can createchargebacks against transactions and receipts without any intervention re*uired by aReceivables user. +ee -orking with laims.

Chargebacks and Adjustments against Transactions

ou can create multiple chargebacks and adjustments against each transaction, for positiveor negative amounts.

http://docs.oracle.com/cd/A60725_05/html/comnls/us/gl/misclass.htm#p_post_step

https://docs.oracle.com/cd/E18727_01/doc.121/e13522/T355475T382159.htm#I_nx2Dclaim

http://docs.oracle.com/cd/A60725_05/html/comnls/us/gl/misclass.htm#p_post_step




Receivables lets you enter a chargeback against a credit memo or an on/account credit ifthey have a positive balance.

Receivables uses the transaction type of the transaction you are adjusting to validate theadjustment or chargeback amount. %f the transaction type does not allow overapplication,

you cannot enter an amount that would reverse the sign of the balance of the debit item.hargebacks and adjustments do not follow the natural application rules0 this lets youadjust transactions in either direction, regardless of the 1atural )pplication 2ag. For moreinformation, see 'ransaction 'ypes, Oracle Receivables Implementation Guide.

%f the pro3le option )R ash / )llow )ctions is set to 1o, the hargebacks and )djustmentsbuttons are not available in the )pplications window.

Chargebacks against Receipts

%f you use 'rade (anagement to track your customers4 short payments and over payments5claims6 on receipts, then the claims that you create in Receivables are automaticallypassed to 'rade (anagement for claim tracking, analysis, and resolution. %f a chargeback isre*uired to resolve a claim, then the chargeback is created directly in 'rade (anagement

• 'o resolve an invalid invoice related claim, the 'rade (anagement user can create achargeback against the related transaction.

• 'o resolve an invalid non/invoice related claim 5for a short payment6, however, thereis no related transaction to create the chargeback against. %nstead, the 'rade(anagement user can create a chargeback against the receipt that held the claim. )chargeback against a receipt brings the ash laims total closer to 7ero and

increases the )pplied total for the receipt.

Note: 'rade (anagement passes additional information about the claim back toReceivables after the chargeback is created. 8iew the chargeback4s transaction2ex3eld 5'rade (anagement context6 in the 'ransactions +ummary window to seethe customer reason, customer reference, claim number, and claim reason.

ou can view the 'rade (anagement claim reason if you set up claim reasonscorrectly in 'rade (anagement. +ee Resolving laims.

)lternatively, you can manually create a chargeback against a receipt in the Receipt

)pplications window in Receivables.

9oth the chargeback application on the receipt and the actual chargeback transaction arecreated in the currency of the receipt. %n the event of an exchange rate adjustment,Receivables calculates a foreign exchange gain or loss on the receipt for the functionaldi:erence between the chargeback transaction and the chargeback application.

For other resolution options, see -orking with laims.

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Creating a Chargeback

Receivables re*uires that you automatically number your chargebacks. 'he base numberfor your chargeback numbering se*uences is determined when you install &racleReceivables. +ee 'ransaction 9atch +ources,Oracle Receivables Implementation Guide.

Prerequisites

• ;e3ne chargeback standard memo line, Oracle Receivables Implementation Guide• ;e3ne reason lookups, Oracle Receivables Implementation Guide

• ;e3ne chargeback adjustment activity, Oracle Receivables Implementation Guide

• ;e3ne chargeback transaction types, Oracle Receivables Implementation Guide

• <nter receipts

• )pply receipts

To create a chargeback against a transaction:

". 1avigate to the Receipts window.=. >uery or enter the receipt. +ee <ntering Receipts.

?. hoose )pply.

@. +elect or enter the 'ransaction to which you want to apply this receipt. +ee)pplyingReceipts.

!. hoose the hargebacks button.

A. <nter the transaction 'ype and the )mount of this chargeback. 'he defaultchargeback amount is the remaining amount of the transaction. Receivables displaysthe new remaining amount in the 9alance ;ue 3eld. ou can enter an amountgreater than the balance due only if the )llow &verapplication option for thistransaction type is es. For more information, see 'ransaction 'ypes, OracleReceivables Implementation Guide.

. %f document numbering is enabled and the document se*uence associated with thisreceipt is (anual, enter a ;ocument 1umber for this chargeback. %f the se*uencetype is )utomatic, Receivables assigns a document number when you save.

B. <nter the )ccount for this chargeback. 'he transaction type provides the defaultaccount, but you can change it.

C. <nter the ;ue ;ate for this chargeback. 'he default due date is the value of thehargeback ;ue ;ate parameter in the +ystem &ptions window. For exampleurrent ;ate, ;eposit ;ate, &pen %nvoice ;ue ;ate, or Receipt ;ate.

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"#. &pen the (ore tabbed region, then enter a Reason for creating this chargebackand any omments 5optional6. ou can de3ne additional chargeback reasons in theReceivables Dookups window. +ee ;e3ning Receivables Dookups, Oracle ReceivablesImplementation Guide.

Note: +ee )pplications Field Reference for a description of the 'ransaction ode3eld.

"". +ave your work. Receivables uses the chargeback batch source toautomatically number your chargeback and assigns the default payment term4%((<;%)'<.4

Note: ou can view the payment term, ED date, and other information about thischargeback in the 'ransactions window. 'o do this, perform a *uery using thechargeback number.

To create a chargeback against a receipt:

Note: %f you have 'rade (anagement installed, then the 'rade (anagement user, not theReceivables user, will create these transactions to resolve invalid non/invoice relatedclaims.

". 1avigate to the Receipts window.=. >uery or enter the receipt. +ee <ntering Receipts.

?. hoose )pply.

@. +elect or enter the claim investigation application for which you want to create thechargeback. +ee )pplying Receipts.

Note: )fter entering a claim investigation application, you must 3rst save theapplication record before you can enter a chargeback against it.

!. hoose the hargebacks button.A. <nter the transaction type of this chargeback. 'he default chargeback amount is for

the full amount of the claim, and cannot be changed.

. %f document numbering is enabled and the document se*uence associated with thisreceipt is (anual, enter a document number for this chargeback. %f the se*uencetype is )utomatic, Receivables assigns a document number when you save.

B. <nter the account for this chargeback. 'he transaction type provides the defaultaccount, but you can change it.

C. <nter the due date for this chargeback. 'he default due date is the value of thehargeback ;ue ;ate parameter in the +ystem &ptions window. For exampleurrent ;ate, ;eposit ;ate, &pen %nvoice ;ue ;ate, or Receipt ;ate.

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"#. <nter a reason for creating this chargeback and any comments 5optional6. oucan de3ne additional chargeback reasons in the Receivables Dookups window. +ee;e3ning Receivables Dookups, Oracle Receivables Implementation Guide.

Note: +ee )pplications Field Reference for a description of the 'ransaction ode

3eld.

"". +ave your work.

Receivables uses the chargeback batch source to automatically number yourchargeback and assigns the default payment term 4%((<;%)'<.4

%n the )pplications window, Receivables automatically unapplies the claiminvestigation application and reapplies the claim amount to a chargeback with anactivity of hargeback )djustment.

Note: ou can view the payment term, ED date, and other information about thischargeback in the 'ransactions window. 'o do this, perform a *uery using thechargeback number.

Cross Currency Receipts

-hen your customer remits payment for an invoice, debit memo, or chargeback, thereceipt is usually in the same currency as the transaction. owever, there may be timeswhen your customer remits payment in a currency that is di:erent than the currency of theopen debit item. For these occasions, Receivables lets you create cross currency

receipt applications to let you fully or partially process the payment.

For example, you create %nvoice "#" in anadian dollars 5);6 but your customer sends areceipt in euro 5<UR6 as payment. Using the remittance information provided by yourcustomer, you can either fully or partially apply this receipt to %nvoice "#". Receivablesautomatically calculates the open balance on the invoice 5if any6 and the foreign exchangegain or loss 5FGED6 for this application.

ou can apply receipts to transactions using any currency de3ned in &racle Eeneral Dedger.

Note: ou can also apply a receipt with an on/account credit to open debit items indi:erent currencies. +ee )pplying a receipt with an on/account credit memo.

Calculating the Foreign Currency Echange !ain or "oss

9ecause of 2uctuating exchange rates between currencies, cross currency applicationsmust be evaluated to determine their e:ect within Receivables and the correspondingaccounting entries created in your general ledger. -ith each cross currency application,you can incur either a foreign exchange gain or loss (FXGL).

-hen you apply a receipt to a transaction that is in a di:erent currency, Receivables 3rst

determines the transaction and the receipt amounts in your functionalcurrency. Receivables then compares these amounts to determine the foreign exchange


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gain or loss for this application. %f the result is positive, you will incur a foreign currencyexchange gain for this application0 if the result is negative, you will incur a foreignexchangeloss.

Note: )s with same currency receipt applications, Receivables accounts for your FGED

using the Reali7ed Eains and Reali7ed Dosses accounts that you de3ned in the +ystem&ptions window.

Receivables calculates the FGED using the following formula

Receipt Amount #as o$ the receipt date% & 'n(oice Amount #as o$ the in(oice date%) Foreign Echange !ain or *"oss+ ,

H Receivables calculates each amount in your functional currency.

Using the 3elds in the )pplications window, this formula can be also represented as shownbelow

Allocated Receipt Amount -ase & Amount Applied -ase ) F.!"

+ee )pplying ross urrency Receipts / <xamples.

Euro /alidation

%n accordance with the laws of the <uropean (onetary Union, from Ianuary ", "CCC to;ecember ?", =##", certain former <uropean currencies were considered 1ational

urrency Units of the euro currency, and had a 3xed/rate relationship with the euro.Receivables supports currencies that are 3xed/rate denominations of the euro.

9ecause the 1ational urrency Units of the euro had 3xed, prede3ned exchange rates, the)pplications window can enter some default values when you create applications for 1Utransactions.

For example, currencies within ountry ) and ountry 9 are euro/denominated and arede3ned as such in the general ledger. ou issue an invoice in 1U ), then later apply areceipt to that invoice in 1U 9. 9ecause the rate for these 1Us is 3xed, you only need toenter either the amount applied or the allocated receipt amount in the )pplications

window. -hen you do this, Receivables automatically calculates and displays a defaultvalue for the other amount.

'his example supports the following situations in which your customer provides either

• 'he amount of this receipt to apply to the transaction 5for example, )pply !# dollarsof this receipt to %nvoice "#"6

or

•

)n amount to reduce the open balance 5for example, Use this receipt to close =!dollars of %nvoice "#=6

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/ie0ing 1iscounts on a Cross Currency Receipt Application

-hen you apply a receipt to multiple transactions that are in di:erent currencies,Receivables does not display the total discount amount in the Receipts window. 'his isbecause Receivables always calculates discounts in the currency of the transaction.

+ince there are multiple transactions with multiple currencies involved in this type ofapplication, the total discount cannot be expressed in a single currency. 'herefore, you canonly view the discount for each application separately in the )pplications window.

'o do this, perform the following

• *uery the receipt in the Receipts window• choose )pply

• scroll to display the ;iscounts 3eld 5if this 3eld does not appear in the window,choose +how Field, then ;iscounts from the Folder menu6

Accounting Entries in 2ultiple Currencies

-hen you enter a receipt or a transaction that is not in your functional currency,Receivables re*uires that you enter the applicable exchange rate in the <xchange Ratespop up window. 'his lets Receivables account for amounts in both your functional currencyand the currency of the transaction.

For more information, see Foreign urrency 'ransactions.

Customer Remittance 'n$ormation

-hen applying cross currency receipts, your customer needs to provide you with thefollowing remittance information

• to which invoice5s6 this receipt should be applied• if the receipt is a partial payment, how much of each invoice is to be settled 5this is

the 4)mount )pplied4 3eld in the )pplications window6

• how much of the receipt should be allocated to this transaction 5this is the 4)llocatedReceipt )mount4 3eld in the )pplications window6

Note: )lternatively, your customer can provide the exchange rate used to convert thetransaction currency to the receipt currency 5this could be a previously agreed upon rate6.%f your customer provides this exchange rate, Receivables automatically calculates the)llocated Receipt )mount. For information on how the cross currency rate 3eld and the)llocated Receipt )mount are mutually exclusive, see )pplying ross urrency Receipts /<xamples.

Related Topics

+etting Up ross urrency Receipts

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)pplying ross urrency Receipts / <xamples

)pplying ross urrency Receipts

3etting 4p Cross Currency Receipts

'o set up Receivables to use cross currency receipts, perform the following steps.

3tep 5 1e6ne Cross Currency Rounding Account

;e3ne a ross urrency Rounding )ccount in the +ystem &ptions window. Receivablesuses this account to record any rounding error amounts created during a cross currencyreceipt application for currencies that have a 3xed rate relationship.

3tep 7 1e6ne a 3uspense Account in 8racle !eneral "edger

-hen you create a cross currency receipt application, the resulting accounting entryincludes several currencies the receipt currency, the functional currency, and theaccounting or functional currency. Receivables ensures that the proper FGED is calculatedso that the entry balances in your functional currency. 'he entry, however, does notbalance in the entered currency 5see the entry created in <xample " in which a <UR receiptis applied to a ); invoice6. +ee )pplying ross urrency Receipts / <xamples.

-hen Receivables posts these multi/currency journal entries, &racle Eeneral Dedgerseparates the entries by currency before balancing them. 1ext, Eeneral Dedger creates oneentry to a clearing account so that each journal entry will balance in the entered currency.

) clearing account is called a 4+uspense )ccount4 in &racle Eeneral Dedger.

Note: 'he entry to the clearing account will always be 7ero in your functional currency asthe journal already balances in functional currency.

'mportant: ou do not need to enable suspense accounting for your ledger to apply crosscurrency receipts in Receivables. ou only need to dene a suspense account for journalentries created by your cross currency receipt applications.

'he &racle Eeneral Dedger Iournal %mport Jrogram identi3es all journals with a category of4ross urrency4 that are imported from the source 4Receivables4. Receivables creates

multi/currency entries each time you apply a receipt in one currency to a transaction in adi:erent currency.

For each of these entries, &racle Eeneral Dedger does the following

• 'gnores the 8ut o$ -alance Errors: )ll cross currency receipt applications will beout of balance, since the currency of the receipt is not the same as that of thetransaction.

• Creates -alancing "ines: &racle Eeneral Dedger will look to the suspense accountthat you de3ne in the +uspense )ccounts window and create a line to balance the

journal entry.


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-hen de3ning a +uspense )ccount for your ledger, enter a +ource of 4Receivables4 and aategory of 4ross urrency.4 +ee ;e3ning +uspense )ccounts, Oracle General LedgerImplementation Guide.

3tep 9 1e6ne ournals: 1isplay 'n(erse Rate Pro6le 8ption

'he pro3le option Iournals ;isplay %nverse Rate lets you determine how you enter anddisplay conversion rates in the <xchange Rate window. -hen you create a cross currencyapplication, the 3eld 4ross urrency Rate4 in the )pplications window displays a valueindependent of this setting. 'his 3eld will always display a value in accordance with thefollowing

Transaction Amount , Cross Currency Rate ) Receipt Amount

Receivables will always use multiplication as the operation to convert the transactioncurrency to the receipt currency. %n <xample " Receivables multiplies the )mount )pplied5C# );6 by the cross currency rate 5#.""""""6 to calculate the )llocated Receipt )mount5A@ <UR6. +ee Jro3le &ptions in &racle Eeneral Dedger., Oracle ReceivablesImplementation Guide

Related Topics

)pplying ross urrency Receipts / <xamples


Applying Cross Currency Receipts & Eamples

'his section provides two examples of cross currency receipt applications. 'he 3rstexample shows how you can apply a receipt in one currency to an invoice in a di:erentcurrency and the calculations Receivables performs during each step. %n this example, boththe invoice and receipt currencies are di:erent from your functional currency.

'he second example shows how you can apply a receipt to several invoices, each in adi:erent currency.

Note: 'he )pplications window is a folder form, which means you can choose the 3elds

you want to see and the order in which they appear. 'he examples below show onepossible way to set up the )pplications window to help you create cross currency receiptapplications0 your implementation may be di:erent. For more information about folders,see ustomi7ing the Dayout of a Folder, Oracle Applications User's Guide.

Eample 5

'his example shows how you can apply a receipt in euro 5<UR6 to an invoice in anadiandollars 5);6. For this example, assume that your functional currency is U+ dollars 5U+;6,and that there is no tax, freight, or applicable discount.

3tep 5: Create a Transaction

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&n I)1/#" you create %nvoice "#" for "## anadian dollars 5);6. 'he corporate exchangerate on I)1/#" is " U+; K ".! );. Receivables uses this rate to calculate the amount ofthe invoice in your functional currency to be AA.A U+; 5"## L ".! K AA.A6.

Receivables creates corresponding journal entries for this amount in both the invoice and

your functional currency, as illustrated in this table

Account 1ebit Credit

)ccounts

Receivable

"## ); MAA.A

U+;N

+ales "## ); MAA.A

U+;N

3tep 7: Enter and Apply Receipt

&n I)1/?", you receive payment of A@ <UR for %nvoice "#". our customer informs you thatthe entire amount 5A@ <UR6 is a partial payment of C# ); for %nvoice "#". 'he corporateexchange rate on I)1/?" is " U+; K "."? <UR. -hen you enter the receipt information,Receivables uses this rate to calculate a receipt amount in your functional currency of!A.A@ U+; 5A@ L "."? K !A.A@6.

ou choose )pply, then enter 4"#"4 in the )pply 'o 3eld. Receivables enters the balance

due in your functional currency 59alance ;ue 9ase6 and the invoice currency 59alance;ue6.

'he )pplications window now appears as shown in the table below 5see 1ote above6

Apply

To

-alance

1ue

-ase

-alance

1ue

Amount

Applied

Amount

Applied

-ase

Cross

Currency

Rate

Allocated

Receipt

Amount

Allocated

Receipt

Amount

-ase

Echange

!ain;"oss

"#" AA.A "##.##

Following your customer4s remittance information, you enter a new value of C# in the)mount )pplied 3eld. Receivables automatically calculates the amount applied in yourfunctional currency 5)mount )pplied 9ase6 and updates the balance due in your functionalcurrency 59alance ;ue 9ase6 and the invoice currency 59alance ;ue6.

'he )pplications window now appears as shown in the table below

Apply

To

-alance

1ue

-alance Amount Amount

Applied

Cross

Currency

Allocated

Receipt

Allocated

Receipt

Echange



-ase 1ue Applied -ase Rate Amount

Amount

-ase !ain;"oss

"#" A.A "#.## C#.## A#.##

alculations

• 9alance ;ue K "## / C# K "# 5);6• 9alance ;ue 9ase K "# L ".! K A.A 5U+;6

• )mount )pplied 9ase K C# L ".! K A# 5U+;6

1ext, you enter the amount of the receipt to apply to this invoice 5A@ <UR6 in the )llocatedReceipt )mount 3eld. Receivables uses this amount to determine the ross urrency Rate

of #."""""" 5A@LC#6. Receivables then determines the )llocated Receipt )mount 9ase 5inyour functional currency6 of !A.A@ U+;, using the exchange rate as of the receipt date 5see<xample +ummary below6. Finally, Receivables calculates an <xchange Doss of ?.?A U+;.

'he )pplications window now appears as shown in the table below

Apply

To

-alance

1ue

-ase

-alance

1ue

Amount

Applied

Amount

Applied

-ase

Cross

Currency

Rate

Allocated

Receipt

Amount

Allocated

Receipt

Amount

-ase

Echange

!ain;"oss

"#" A.A "#.## C#.## A#.## #."""""" A@.## !A.A@ O?.?AP

alculations

• ross urrency Rate K A@ 5<UR6 L C# 5);6 K #.""""""• )llocated Receipt )mount K A@ 5<UR6 L "."? K !A.A@ 5U+;6

• <xchange EainLDoss K !A.A@ 5U+;6 / A# 5U+;6 K O?.?AP 5U+;6

-hen you save this application, Receivables creates the accounting entries as illustrated inthis table

Account 1ebit Credit

ash A@ <UR M!A.A@

U+;N

Foreign <xchange

Doss

?.?A U+;



)ccounts

Receivable

C# ); A#

U+;N

Eample 3ummary

'he table below summari7es each step in this example and the corresponding calculationsthat Receivables performs.

Action Echange Rate Calculation

ou create %nvoice "#" for "## );. " U+; K ".! );

5exchange rate on

invoice date6

"## ); L ".! K

AA.A U+;

ou enter receipt for A@ <UR. Receivables calculates

amount in functional currency.

" U+; K "."??" <UR

5exchange rate on

receipt date6

A@ <UR L "."? K

!A.A@ U+;

ou enter C# ); in )mount )pplied 3eld. Receivables

calculates )mount )pplied in your functional currency.

" U+; K ".! ); C# ); L ".! K A#

U+;

ou choose to apply the entire A@ <UR receipt to

%nvoice "#". Receivables calculates the cross currency

exchange rate from this value.

#.""""""

5cross currency rate

derived byReceivables6

A@ <UR L C# ); K

#.""""""

Receivables calculates )llocated Receipt )mount in

your functional currency.

" U+; K "."? <UR

5as of I)1/?", receipt

date6

A@.## L "."? K

!A.A@

Receivables calculates Foreign <xchange Eain or Doss. 51)6 !.@B U+; / A# U+;

K O?.?AP U+;

Eample 7: Applying a Receipt to 3e(eral 'n(oices in 1i<erent Currencies

Using the same procedure described in the previous example, you can apply a receipt inone currency to several transactions, each in a di:erent currency.

Applying a Cross Currency Receipt



)s in <xample ", to apply a receipt to several transactions in di:erent currencies, yourcustomer must provide detailed remittance information.

For example, your customer remits a Receipt "=?@ for ?## <UR and includes theinformation as described in this table

'n(oice

Num 1ate

'n(oice

-alance

Paid

Amount

Rate to

E4R

E4R

Remitted

"#" "/

I)1

"## ); C# ); .=!=CB A!.=B

"#= =/

I)1

"## U+; "## U+; "."!CBC ""!.CC

"#? @/

I)1

B### IJ B### IJ .##BAC= AC.!@

• Total Remitted Amount: =!#.B <UR



• 8n Account: @C.==

• Total Remittance: ?##.## <UR

Note: %n this example, your customer4s remittance advice included rate information for

each invoice. 'his is an alternative to re*uiring that your customer provide the )llocatedReceipt )mount for each invoice. Receivables automatically calculates the )llocatedReceipt )mount for each application when you enter the ross urrency Rate.

)fter you enter and apply the receipt according to your customer4s remittance information,the )pplications window appears as shown in the table below

Apply

To

-alance

1ue

-ase

-alanc

e 1ue

Amount

Applied

Amount

Applied

-ase

Cross

Currency

Rate

Allocated

Receipt

Amount

Allocated

Receipt

Amount

-ase

Echange

!ain;"oss

"#" A.A "#.## C#.## A#.## .=!=CB A!.=B !."@ 5=.BA6

"#= #.## #.## "##.## "##.## "."!CBC ""!.CC CC."= 5#.BB6

"#? #.## #.## !##.## CA."! .##BAC= AC.!@ [email protected]" ".!@

&n

)ccoun

t

@C.== A.=

Tip: ou can also use the Receivables +earch and )pply feature to automatically selecttransactions for cross currency receipt application. For more information,see )utomatically +electing %nvoices for ross urrency Receipt )pplication.

4sing the Cross Currency Echange !ain;"oss Report

Receivables lets you review detailed information about your cross currency settlements.

'he ross urrency <xchange EainLDoss report lets you analy7e each cross currency receiptapplication for a customer, customer site, receipt date range and receipt currency. 'hisreport is useful when you need a record of the cross currency rates used in your crosscurrency receipt applications.

'he ross urrency <xchange EainLDoss report provides much of the same information asthe )pplications window during cross currency receipt application. %n addition, this reportprovides a 4Rate Reconciliation4 section that shows what the foreign exchange gainLloss foran application would have been if you had used the cross currency rate maintained in&racle Eeneral Dedger. 'his information lets you analy7e any signi3cant discrepancies inthe FGED that can result from cross currency receipt applications.

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'o illustrate the Rate Reconciliation section of the report, consider <xample " in this sectionwhere the cross currency rate used 5in accordance with the remittance information6 in theapplication was #."""""". 'he Rate Reconciliation section of ross urrency <xchangeEainLDoss report will default the system4s orporate rate, for example, between ); and<UR on ?"/Ian of #.=A!!A. 9ased on this rate, it would have taken A!.?C <UR to close C#

); 5where C# ); x #.=A!!A K A!.?C <UR6 of the customer4s balance. %n this case, youwould have experienced a loss of #.A" U+; instead of the reali7ed loss of =.BA U+; 5referto <xample "6.

'he report shows that the variance between the foreign exchange loss you actuallyexperienced and the loss you would have experienced is =.=! 5=.BA / #.A"6. 'his detailedinformation may be necessary to determine whether the cross currency rate used by yourcustomer was appropriate. +ee ross urrency <xchange EainLDoss Report.

Related Topics

reating &n/)ccount redit (emos

<ntering Receipts

Foreign urrency 'ransactions


Applying Cross Currency Receipts

Use the )pplications window to manually apply receipts that are in one currency to one ormore transactions in di:erent currencies. For example, you can apply a U+; receipt to oneinvoice denominated in euros 5<UR6 and another in anadian dollars 5);6. ou can applyreceipts to invoices, debit memos, and chargebacks.

ou can apply a receipt to an unrelated customer4s debit items if the system option )llowJayment of Unrelated %nvoices is set to es.

'o apply cross currency receipts, de3ne a +uspense )ccount for your ledger. +ee +ettingUp ross urrency Receipts.

Tip: 'o help you manage cross currency receipt applications, we recommend that you setup the )pplications window to display the 3elds shown in the section )pplying rossurrency Receipts / <xamples. +ince the )pplications window is a folder form, you canchoose which 3elds to display and in what order they will appear. For example, to includethe 9alance ;ue 3eld in the window, choose +how Field from the Folder pulldown menu,then choose 9alance ;ue from the list of available 3elds. Receivables will insert the 3eld atthe cursor4s current location. ou can also reposition 3elds by choosing (ove Deft or (oveRight from the Folder menu.

-hen you post a cross currency receipt application to the Eeneral Dedger, Receivables

records a reali7ed gain or loss amount. ) reali7ed gain or loss occurs when the exchange

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rate changes between the invoice date and the receipt date. +eealculating the Foreignurrency <xchange Eain or Doss.

ou can also use the +earch and )pply window to automatically select a range of invoicesfor cross currency receipt application. +ee )utomatically +electing %nvoices for ross

urrency Receipt )pplication.

Use the ross urrency <xchange EainLDoss Report to review your cross currency receiptapplications and the foreign exchange gain or loss for each. +ee ross urrency <xchangeEainLDoss Report.

Prerequisites

• <nter receipts

To manually apply a receipt to one or more transactions in a di<erent currency:

". 1avigate to the Receipts window.=. <nter or *uery the receipt to apply. +ee <ntering Receipts.

?. %f the receipt is unidenti3ed, enter the ustomer or ustomer 1umber who remittedthis receipt.

@. hoose )pply.

!. +elect the transaction to which you want to apply this receipt from the list of values.

Receivables displays the balance due in both the invoice currency 59alance ;ue6 andyour functional currency 59alance ;ue 9ase6.

A. <nter the amount to apply to this transaction 5based on your customer4s remittanceinformation6 in the )mount )pplied 3eld. Receivables performs the following

o converts the amount to your functional currency and displays the result in the)mount )pplied 9ase 3eld

o updates the balance due in both the invoice currency 59alance ;ue6 and yourfunctional currency 59alance ;ue 9ase6

. <nter either the ross urrency Rate used to convert the transaction amount to thereceipt amount or the )llocated Receipt )mount. %f you enter the ross urrencyRate, Receivables calculates the )llocated Receipt )mount, and vice versa.

Receivables calculates the <xchange EainLDoss for this application.

B. 'o apply this receipt to another transaction, repeat steps !/.

Note: 'he default ;iscount is the amount of earned discounts available for this

application, but you can change it. %f the system option )llow Unearned ;iscounts is

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set to es, you can apply these discounts here. Receivables skips this 3eld if thistransaction is a credit memo. +ee ;iscounts.

C. 'o place any remaining amount on account, create a separate application and enter4&n )ccount4 in the )pply 'o 3eld. 'he default amount is the unapplied amount of the

receipt, but you can change it."#. -hen you are satis3ed with this receipt application, save your work.

Receivables updates your customer4s account balances.

Automatically 3electing 'n(oices $or Cross Currency Receipt Application

ou can use the +earch and )pply window to automatically select transactions for crosscurrency receipt application. Use this window to select transactions for application byentering selection criteria, such as a range of open balances, transaction types, or duedates.

%f you have set up your system to use ross urrency receipts, Receivables displays aross urrency check box in the +earch and )pply window. heck this box to apply areceipt to transactions in di:erent currencies.

%f you set ross urrency to es, then Receivables

• selects all transactions that meet your selection criteria, regardless of their currency• disables the )pply button 5in this case you can only preview selected transactions0

you need to manually create each cross currency application6

%f you set ross urrency to 1o, Receivables limits its search to transactions that are in thesame currency as the receipt.

To automatically select transactions $or cross currency receipt application:

". 1avigate to the Receipts window.=. >uery or enter the receipt to apply. +ee <ntering Receipts.

?. %f the receipt is unidenti3ed, enter the name or number of the customer who remittedthis receipt.

@. hoose +earch and )pply.

!. +pecify the invoices to which you want to apply this receipt by entering 'ransactionselection criteria. For example, enter a range of transaction 'ypes, transaction1umbers, ;ue ;ates, or 9alances. Deave a 3eld blank if you do not want to limit thesearch to transactions matching that criterion.

A. +pecify how to order selected transactions by entering +ort riteria 5optional6. oucan mark transactions by 9alance ;ue, ;ue ;ate, %nvoice ;ate, or %nvoice 1umberand in )scending or ;escending order. For example, to order items with the largestbalances 3rst, choose 9alance ;ue, ;escending.

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Tip: Use sort criteria to ensure that the invoices you want to pay 3rst are listed 3rstin the )pplications window.

. +pecify the type of transactions to include for this receipt application. For example,check the %nvoices, ;ebit (emos, and ;isputed 'ransactions check boxes to include

these transactions.B. heck the ross urrency box. 'his lets you apply this receipt to transactions

regardless of their currency.

C. <nter an )pply ;ate. %f the receipt date is later than the current date, the default isthe receipt date0 otherwise the default is the current date. Receivables uses this dateas the application date for all invoices included in this application.

"#. hoose Jreview.

"". +elect the invoices to which you want to apply this receipt. +ee )pplying rossurrency Receipts.

Note: 'he default ;iscount is the amount of earned discounts available for thisapplication, but you can change it. %f the system option )llow Unearned ;iscounts isset to es, you can apply these discounts here. Receivables skips this 3eld if thistransaction is a credit memo. +ee ;iscounts.

"=. -hen you are satis3ed with this receipt application, save your work.Receivables updates your customer4s account balances.

Related Topics

Reviewing Receipts and )pplications

ross urrency <xchange EainLDoss Report

Cross Currency Echange !ain;"oss Report

Use this report to review detailed information about your cross currency settlements.

'his information includes

• the transaction number and currency• the amount applied to each transaction in both the transaction and your base

5functional6 currency

• the amount of the crosss currency receipt allocated to the transaction

• the cross currency rate used for each application

• the foreign exchange gain or loss 5FGED6 for each application




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• information necessary to compare the FGED you would have reali7ed if you had usedthe cross currency rate maintained in your Eeneral Dedger

ou can run this report from the Jrint )ccount Reports window.

'mportant: 'o run this report, you must set up Receivables to use cross currencysettlements. +ee +etting Up ross urrency Receipts.

Report Parameters



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