Bank

Reconciliation

Customer
SL-GL Receipts
Reconciliation

Sales
Asset Invoicing
Management

Payables
Processing

Subledger
Accounting

Financial
Accounting

Oracle EBS (R12) Financial Functional

Interview Questions

Edition

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1
 Oracle Financial
Functional

Interview Questions

Edition 2

Author

Oracle ACE, Atul Kumar

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Q: What is the basic distinction between revaluation and translation and when are they
used?
Ans: Revaluation is the reporting of open foreign currency exposure as per the month
end exchange rates. In revaluation, generally the open receivables and payables are
revalued, so that the unrealized (presumed) gain loss on open receivables and payables
due to foreign currency exchange fluctuation may be calculated and reported in functional
currency of the ledger. The revaluation entry is recorded through a journal entry in
functional currency in the ledger. Revaluation journals are generally posted at the month
end, and then reversed in the next non-adjusting period.

However, translation is the full trial balance conversion in a foreign currency.

Translation is generally carried out when the balances of a particular ledger are to be
reported along with the balances of another ledger in a different currency. It is generally
done for consolidation reporting or reporting of ledger balances from two different
countries. Translation balances are not reversed and one the translation is completed, a
secondary reporting currency ledger in the foreign currency is configured automatically,
where the translated trial balance in foreign currency is recorded.

Q: What is cumulative translation adjustment (CTA) account?

Ans: For translation option in GL, as per regulatory and statutory requirements, the
Balance Sheet account balances are translated using period end exchange rate whereas the
Profit and Loss accounts are translated using periodic average exchange rate. The
corresponding differential arising due to difference of exchange rates for Balance sheet
and P&L accounts is recorded as Cumulative Translation Adjustment. Accounting code
combination for CTA is provided at Ledger level in GL Accounting Setup Manager.

Q: What are the 4Cs of a ledger?

Ans: Every Ledger in Oracle EBS is constituted with four basic structural components
– Chart of Accounts, Calendar, Currency and Accounting Convention. The Subledger
Accounting (SLA) Method assigned at the ledger determines accounting Convention.

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Q: What is difference between a reporting currency ledger and secondary ledger?
Ans: The 4Cs concept in oracle – Chart of Accounts, Currency, Calendar and SLA
(Accounting Convention) define the basic structure of a ledger in Oracle eBS.
Oracle eBS provides the functionality of having a secondary ledger to a primary ledger
where the transactions or leger balances from the primary ledger can be directly posted.
The balances in secondary ledger can be posted at journal level, balances level or even at
transactions level detail. The data posted in secondary ledger may have a different
currency, calendar, SLA or Chart of Accounts.
A reporting currency ledger is a type of secondary ledger where only currency is different
than that of the primary ledger and the other three Cs remain the same. A reporting
currency ledger is defined by the standard functionality of defining reporting currency
ledger by providing the specific currency.
However, for a secondary ledger, there is an option to define any or all of the 4Cs and
other ledger options in Accounting Setup Manager against a ledger.

Q: What are the different types of budgetary control?

Ans: There are two different types of budgetary control available in eBS. Absolute and
Advisory.
In absolute budgetary control, budgetary encumbrance is enabled, and the budget is an
absolute one, meaning the actual expenses/ balances cannot exceed the total budget
defined for an account or code combination. Budgetary encumbrance always results in
absolute budgetary control.
The advisory budgetary control means that the actual GL balances in an account or
code combination may exceed the total budget defined against that. However, the system
may give a warning when the budget exceeds. The advisory budget balances may be
uploaded in system directly through balances or through journals. However, the
encumbrance or absolute budget may only be defined in system through budget journals.

Q: What is Multi-fund Account Receivables?

Ans: Multi-fund account receivables is an accounting option to track the receivables
fund for transactions.
The option allows tracking the accounting of Account Receivables for AR transactions,
Receipts for different Balancing Segments or other segments derived from Revenue
Account.
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Suppose an AR Transaction has below distribution accounts

Accounting Class Source Balancing Cost Natural Account

Segment Center
Receivables Auto-Accounting 100 000 1401
Revenue Transaction Line 100 CC1 4001
Revenue Transaction Line 200 CC2 4002
Revenue Transaction Line 300 CC2 4003

Now, Multi-Fund Accounting may be set in two ways –

Balancing Segment Method, where the receivables is posted with Cost Center andNatural
Account derived from default receivables account and BSVs as per revenue lines.
Account Segment Method, where the where the receivables is posted with Cost Center
and BSV derived as per revenue lines and only natural account from default receivables
account. In case of multiple segments, all the segment values apart from natural account
is derived from revenue accounts.
In both the cases, the receivables account splits based on the ratio of amount against each
revenue account.

Q: How can we close and reopen a Fixed Assets period?

Ans: A fixed Asset period is closed by running the Depreciation in final mode. While
running depreciation, there is a flag for “Final Close”. If checked while running
depreciation, it will close the FA period for which depreciation was run permanently.
Once, an FA period is closed, it cannot be reopened ever. Also, it not possible to have
more than one FA period open at any point of time.

Q: How can we merge lines of two different invoices to create a single asset in mass
additions?
Ans: Oracle Mass Additions window allows to merge the invoice lines of only a single
invoice to form a single asset. In case, invoice lines from more than one invoice needs to
be merged to form an asset-
a) Merge the invoice lines of a single invoice and post mass additions to create an asset.
b) Note the asset number for the created asset.

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c) Go to other lines from different invoices in mass additions window.
d) Select the option of Add to Asset and select the newly created asset to which the mass
addition lines need to be added.
e) Post Mass Additions

Q: What is Bank Statement Cashflow Mapping?

Ans: Bank Statement Cashflow mappings are used to create journal entries
automatically against imported bank statements in system. Cashflow mapping setup is
defined against the banks transaction code for reconciliation.
Once the bank statement is imported with the given transaction code, for which cashflow
mapping is defined, running the program “Create Bank statement Cashflow” will create
journal entries for the bank statement lines. These journal lines are the offset entries for
the bank account line in the journal. The account code combination for the bank account
may be debited or credited, depending on the setup at bank transaction codes definition.

Q: What is the difference between recurring invoices and multi-period accounting

invoices?
Ans: Recurring invoice is a standard functionality provided by Oracle Payables where a
template of an invoice is defined, and the invoice can be regenerated every period.
Because of this, there will be a new invoice every period and the liability and expenses
are accounted in each new period as the invoices are generated. A separate recurring
invoice calendar is required to generate these invoices periodically.
Multi-Period Accounting is an SLA driven functionality in Oracle Payables where a
single AP invoice is booked and provided with Multi-period accounting flag, number of
periods in which expense is to be booked. The liability for the entire invoice amount is
booked in the period of the invoice booking whereas the expense is calculated and booked
every period of the multi-period accounting.

Q: What are “Key Indicators” calendar in AP?

Ans: Key Indicators calendars are a type of special calendar which can be used for the
reporting a set of key indicators from payables module. This special calendar is a pre-
requisite for running the Key Indicators Current Activity Report in Payables. The
calendars are setup as special calendars with date ranges defined as periods in these

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calendars. The periods here would be the set of time interval across which reporting is
required for the payable’s related key activities.
The Key Indicators activity report may be run for any of the periods defined here. The
checkbox “Report Run” shows whether the report has already been run for a given period
or not.

Q: What are AP “Distribution Sets”?

Ans: Oracle provides the standard functionality to default a given account code
combination or a set of accounts for different kinds of expenses, which need to be
booked. Using distribution sets, we can define a set of account code combinations under a
single name. When the AP invoice is created, a distribution set may be attached at the AP
invoice line level. Once the distribution set are defined and applied at AP Invoice line, the
invoice line would copy all the account code combination from the distribution set and
create as many distributions at the AP invoice line level.

Q: What is the “Production” method of depreciation and how is it configured?

Ans: Production method of depreciation is a type of depreciation method, where the
depreciation of an asset is calculated based on the total units of production done for a
given FA period rather than any specific pre-defined rate. Total capacity of units of
production is defined for an asset with production method of depreciation. Thence, for
every depreciation period, total units produced using that asset is defined.
Subsequently, when depreciation runs, the depreciation of the asset for the given period is
calculated as (Units produced in given month/ Total production capacity)*Total Asset
Cost.

Q: What is Dunning?
Ans: Oracle Account Receivables (AR) allows sending the reminder letter to customers
for whom the invoices have been open for over 90 days or as defined.
The functionality is available through the shared (free) Advanced Collections setup in
AR. System allows three levels of dunning with different letter formats for each of the
round. If the dunning is enabled for a customer, upon running the dunning program, the
reminder letter is generated and may be printed or sent by an email if the email setups are
configured.

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Q: What is an Auto-Reversal Criteria Set?
Ans: Auto Reversal Criteria Set or Journal Reversal Criteria Set is a standard
functionality available in Oracle that enables the auto-reversal of GL journals. A Journal
Reversal Criteria Set is defined as whether or not different journal categories will be
reversed and in which period and whether the reversed journals will be auto-posted in GL
or will have to be manually posted. We can also defined whether the reversal will be with
switching the debit or credit of the original journal or whether the reversed journals will
have amount changed to negative for the reversed journals.
Once defined, the journal reversal criteria set is assigned at Ledger level through
Accounting Setup Manager.

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If you have any queries related to Oracle Financial Functional training or for feedback
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