R12 SLA: Accounting Methods Builder

Posted on April 17th, 2008 by Sanjit Anand | Print This Post | Email This Post

In Subledger Accounting, have you heard something called Accounting Methods Builder,
which is sort of toolset to define journal entry rules for the transactions and events of a
subledger application . This allows us defining multiple sets of rules to be used
concurrently for different requirements.

How AMB work?

Lets try to understand on the basis of Journal entry. Normally a journal are split into
three main components:

• Descriptions
• Line Types
• Account Derivation rules

A particular Journal can be best described as figure 1.0(adopted) as below.

Description : Description can be on the entry or its individual lines. You set up
descriptions, as many as you want, by using pieces of data from the transaction and
constant values.

Purposely it identify the journal line types, descriptions, and account derivation rules
that will be used to create a journal entry for a particular event type
 Type :The Line Type is another component, actually one of the two main
components of the entry. The line type defines whether this is a debit or a credit, what
the accounting class is, where the amount should come from etc. Again, you set up as
many as you need of these for a particular entry. You can have a single invoice line or
distribution create as many debits or credits as needed.

• Under type you can identify the natural side of entry like
Debit,Credit,Gain/Loss
• This will determine the accounting class
• You can set under which conditions the rule will create a line
• This can be tighten by defining the values needed for entry line
generation, such as amount, currency, conversion rate information

Account derivation rule : This determines to which GL account a line should be

booked. You can have lot of flexibility around the account derivation rules. You can also
set up a rule for each flexfield to be used, or you can make it more complex and build
each flexfield segment by segment by combining multiple rules.

Normally these rules can be setup to derive the accounts or segment values from
transactional data, including conditions of when to use a particular rule versus another.

You can also note,this will:

• Determine which rule will be generic or specific for a given chart of

accounts
• This will identify what will be derived like Accounting flexfield or there
respective segment or qualifier value or Value from a value set
• This will also have a provision to define how the value will be derived for
defaulting some Constant values or any Source value or any mapping set

Accounting Methods Builder

The transaction objects and the sources carry transaction information into the rules
defined for each component of an entry.

These components, for example, journal line type, account derivation rule, journal entry
descriptions, are attached together as a journal line definition for a particular event.
Take a case if you set up a Journal line description for an invoice validation event,
another one for a payment creation, another one for payment clearing. The set of such
rules for a particular sub ledger application is called the application accounting
definition. And the set of application accounting definition for multiple applications is
called the sub ledger accounting method.

In reality this accounting methods is assigned to each ledger, which determines which
rules are applied when accounting is being generated for a particular ledger. If you
have a setup with a primary and a secondary ledger, you could have different
accounting methods attached to and used for each.