Oracle Fusion Accounting Setup-Fundamentals

Understanding Accounting Setup in Oracle Fusion

In Oracle Fusion, the Accounting Setup defines how financial transactions are recorded, classified, and reported. It brings together the key building blocks — Chart of Accounts (COA), Ledgers, Subledger Accounting (SLA) rules, and Validation Controls — to ensure consistency and compliance across all financial modules.

1. Chart of Accounts (COA)

The Chart of Accounts is the foundation of financial reporting in Oracle Fusion. It defines how transactions are categorized and tracked within the system.

A COA Structure is made up of multiple segments, each representing a business dimension.

Example COA Structure:

Segment	Description
Company	Identifies the legal entity or business unit
BU (Business Unit)	Operational unit within the company
Department	Cost-incurring or functional area
Account (Natural Account)	Defines the nature of the transaction (Expense, Revenue, Asset, Liability)
Product Line	Represents product or service category
Project	Used to track costs and revenues by project
Cost Center	Identifies departments or teams for budgeting
Intercompany	Used for transactions between entities
Future	Reserved for future expansion

Each transaction recorded in Fusion uses these COA segments to ensure proper classification in reports and ledgers.

2. Ledger

A Ledger represents the accounting “book” where all financial transactions are stored.It defines the currency, calendar, accounting method, and legal entity associated with a set of books.

In simple terms:

The ledger defines where accounting entries are maintained.

Ledger setup typically includes:

• Primary Ledger – The main book of record for statutory reporting.

• Secondary Ledger – Used for alternate accounting methods or reporting purposes.

• Currency – The functional currency used for transactions.

• Calendar – Defines the accounting periods and fiscal year.

• Accounting Method – Determines accrual or cash-based accounting.

• Legal Entity – The registered entity responsible for statutory compliance.

3. Subledger Accounting (SLA) Rules

SLA Rules define how transactions from subledgers (like Procurement, Payables, Receivables, or Assets) are converted into General Ledger (GL) journal entries.

For example:

Transaction Type	Debit (Dr)	Credit (Cr)
Purchase Invoice	Expense / Inventory	Accounts Payable Liability

SLA ensures consistency between operational transactions and financial reporting, applying defined accounting rules automatically across modules.

4. Distribution Sets & Default Accounts

These setups help automate account derivation in Procurement and Payables.They define default charge accounts that automatically populate on:

• Purchase Orders (POs)

• Invoices

• Expense Reports

This reduces manual entry errors and ensures transactions are always charged to the correct accounts.

5. Cross-Validation Rules

Cross-validation rules ensure that only valid combinations of COA segment values can be used together.For example, you can prevent transactions where a specific cost center is used with an invalid company code.This maintains the integrity of your financial data.

In Summary

Component	Purpose
Ledger	Defines where accounting records are maintained (currency, calendar, entity, rules).
COA Segments	Define how transactions are classified and reported within those books.
SLA Rules	Define how transactions from subledgers hit the GL.
Distribution Sets	Automate default account derivation for PO and invoice entries.
Cross-Validation Rules	Control valid segment combinations to ensure data accuracy.

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