1. How to create and use a supporting reference in Subledger Accounting
Andrea Auld
Senior Principal Instructor Oracle University October 22, 2018
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2. Subledger Accounting – Supporting References
What you’ll learn
In this presentation we will cover:
Basic Subledger Accounting Setup – Subledger Accounting Method, Application Accounting Definition, Journal Lines Definition, Journal Line types, Account Derivation rules
How to create a Supporting reference to capture balances at a level not represented by a segment in your chart of accounts
Subledger Accounting – Supporting References

3. Accounting Methods Builder (AMB) Overview
Ledger
Subledger Accounting Method
Application Accounting Definition
Journal Line Types
Account Derivation Rules
Journal Entry Descriptions
Journal Line Definition
Transaction Objects
Sources
Basic Subledger Accounting concepts
-Every ledger is attached to one Subledger Accounting Method
-Every Subledger Accounting Method consists of one or more Application Accounting Definitions, one per feeder application.
-Every Application Accounting Definition contains one or more Journal Lines Definitions, one for each combination of Event Class and Event Type.
-Every Journal Lines Definition has one or more Journal Line Types, each of which specifies whether the line should be a debit or a credit.
-Every Journal Line Type is associated with one ore more Account Derivation Rules. An Account Derivation Rule can derive an entire accounting flexfield string or just a single segment such as the Natural Account segment.
Subledger Accounting – Supporting References

4. Subledger Accounting – Supporting References
Ledger Definition
Every ledger is attached to one and only one Subledger Accounting Method..
Subledger Accounting – Supporting References

5. Subledger Accounting Method
Every Subledger Accounting Method consists of one or more Application Accounting Definitions (AAD), one per feeder application.
Subledger Accounting – Supporting References

6. Application Accounting Definition
Every Application Accounting Definition contains one ore more Journal Lines Definitions – one for each unique combination of Event Class and Event type.
For Payables an example of an Event class would be a transaction type like an AP invoice or an AP Credit Memo or an AP Debit Memo or an AP Payment or an AP reconciled payment
For Payables an example of an Event Type would be an action that happens to a transaction that would create a different journal entry.
For example, invoice Validation should create a journal entry that debits expense and credits liability, whereas Invoice Cancellation should create a journal entry that debits liability and credits expense.
Application Accounting Definitions must be validated before they can be used. The validation process ensures that the various components are present = Journal Lines Deifnition, Journla Line Types, Account Derivation rules, etc.
Subledger Accounting – Supporting References

7. Journal Lines Definition – Expense Line
The Journal Lines Definition provides instructions on how to create each line in the journal entry for a specific combination of event class and event type. Each journal line type in a journal lines definition may be associated with conditions – for example, maybe that line is only created if the AP invoice has a distribution of type Freight or Item Expense or Tax, and if the transaction does not have that type of distribution the line does not get created.
Each journal line type in a Journal Lines Definition is associated with one or more Account Derivation rules. An Account Derivation rule can produce a complete string by grabbing a default account combination from a source such as the transaction distribution, or the rule can simply produce a single segment, in which case you might need multiple rules. Rules with a segment type of ALL are evaluated first, and then segment-specific rules are evaluated.
This journal lines definition has two Journal Line Types – one for the Expense (Debit) line and one for the Liability (Credit) line. Each of those Journal Line Types is associated with an Account Derivation rule and in this case, both Account Derivation Rules derive a complete Accounting Flexfield string.
This slide shows the Expense Line
Subledger Accounting – Supporting References

8. Journal Lines Definition – Liability line
The Journal Lines Definition provides instructions on how to create each line in the journal entry for a specific combination of event class and event type. Each journal line type in a journal lines definition may be associated with conditions – for example, maybe that line is only created if the AP invoice has a distribution of type Freight or Item Expense or Tax, and if the transaction does not have that type of distribution the line does not get created.
Each journal line type in a Journal Lines Definition is associated with one or more Account Derivation rules. An Account Derivation rule can produce a complete string by grabbing a default account combination from a source such as the transaction distribution, or the rule can simply produce a single segment, in which case you might need multiple rules. Rules with a segment type of ALL are evaluated first, and then segment-specific rules are evaluated.
This slide shows the Liability line.
Subledger Accounting – Supporting References

9. Journal Line Types – Expense Line
The Journal Line Type for the Expense line shows that the line should be created as a Debit, and if there are multiple distributions on the transaction with the same account combination, then the lines will NOT be merged into a single subledger journal entry line.
Subledger Accounting – Supporting References

10. Journal Line Types – Liability Line
The Journal Line Type for the Liability line shows that the line should be created as a Debit, and if there are multiple distributions on the transaction with the same account combination, then the lines will NOT be merged into a single subledger journal entry line.
Subledger Accounting – Supporting References

11. Account Derivation Rules – Expense Line
The Account Derivation rule for the Expense line shows derivation of a complete accounting flexfield combination which will be used regardless of the account combination on the transaction distribution.
Note that this Account Derivation Rule has a condition that the supplier name must be Advantage Corp.
Subledger Accounting – Supporting References

12. Account Derivation Rules – Liability Line
The Account Derivation rule for the Liability line shows derivation of a complete accounting flexfield combination which will be used regardless of the account combination on the transaction distribution.
Subledger Accounting – Supporting References

13. Supplier Type supporting reference
The supporting reference definition allows us to specify a particular attribute which will be used to calculate supporting reference balances. We have chosen supplier type. So, for example, we have a single AP liability account , but we will be able to view supporting reference balances within that liability account balance – so if the balance in account was , might be from the UTILITY supplier type and 500. might be from the EMPLOYEE Supplier type.
Notice that most pieces of information from the document can be used as a supporting reference as long as they were defined by product development as a valid source column in the transaction tables.
Subledger Accounting – Supporting References

14. Subledger Accounting – Supporting References
Supporting Reference attached to the appropriate Journal Line Type in the Journal Lines Definition
Once we’ve created the supporting reference we must attach it to the appropriate journal line type in the journal lines definition for the transaction type against which we wish to capture this additional level of detail.
Subledger Accounting – Supporting References

15. Enter a Payables invoice to test
I enter an AP invoice from Advantage Corp, so it meets the criteria of the account derivation rule for the expense account in my Subledger Accounting method. Advantage Corp belongs to the “VENDOR” supplier type (as opposed to the “UTILITY” supplier type.
Subledger Accounting – Supporting References

16. Validate invoice/Create Accounting
Before I can run Create Accounting I must validate the invoice to verify it meets any matching requirements and the vendor is not on payment hold. Then I can run Create Accounting in Final mode, which will create a Subledger Journal Entry and a General Ledger Journal entry and will post the General Ledger Journal entry to update ledger balances.
Subledger Accounting – Supporting References

17. Subledger Journal Entry
This shows the resulting Subledger journal entry. The expense line was created as a debit using account from the Account Derivation rule attached to the expense line. The Liability line was created as a credit using account from the Account Derivation rule attached to the Liability line. Note the Accounting class was derived from the line types as well.
Subledger Accounting – Supporting References

18. Supporting Reference Balance Inquiry
The Supporting Reference balance inquiry screen lets me do an inquiry for the balance in account , broken out by each possible value of the supporting reference which was the supplier type. So the total balance is associated with the Vendor Supplier type to which Advantage Corp belongs.
Subledger Accounting – Supporting References

19. Subledger Accounting – Supporting References
Summary
In this presentation you learned about:
Basic Subledger Accounting Setup – Subledger Accounting Method, Application Accounting Definition, Journal Lines Definition, Journal Line types, Account Derivation rules
How to create a Supporting reference to capture balances at a level not represented by a segment in your chart of accounts
Subledger Accounting – Supporting References