R12 Encumbrance Accounting

R12 ENCUMBRANCE ACCOUNTING
Contents
Overview
Introduction....
Prerequisites....
Encumbrance Flow..
Encumbrance Setup....
Accrue on Receipt For Expense destination
Accrue at Period End With Invoice Matching.
Negative Encumbrance
Negative Funds Available
Encumbrance Carry Forward...
Differences between 11i and R12.
Technical Section..
Encumbrance Accounting
2
2
3
3
4
16
44
59
71
73
81
82
Page 1
Overview:
The purpose of the document is to understand the encumbrance accounting flow
from Purchasing to General Ledger in Release12.
Introduction:
General Ledger can record pre-expenditures commonly known as encumbrances. The
primary purpose of tracking encumbrances is to avoid over spending a budget. Encumbrances
can also be used to predict cash outflow and as a general planning tool.
Encumbrance Accounting:
Encumbrance accounting is a form of budgetary control within Oracle Applications that enables
a company to allocate funding for specific accounts. The funds checking feature which is an
integral part of encumbrance accounting, checks for availability of funds on a particular
accounting combination.
The funds checking feature can be performed either at the entry level itself before committing
the transaction or when the approval is made for the transaction. The approval process checks
for the funds check level and the approval is made only when the transaction is passed with the
funds check process.
Modules Involved in Oracle Application:

The encumbrance accounting involves the following modules.
Oracle Purchasing
Oracle Payables
Oracle General Ledger
Prerequisites:
The pre-requisites to enable encumbrance are as follows:
Installation of required modules

Creation of ledger in General Ledger
Create a Encumbrance Calendar
Assign the ledger to other modules (Purchasing and Payables)
Enable Budgetary Control in Accounting Setup Manager
Page 2
Encumbrance Flow:
The following flow chart explains the process followed during the encumbrance cycle. The encumbrances
can be created in GL as well as from Payables and Purchasing.
Page 3
Encumbrance Setup:
General Ledger
The following are setups to be done in General Ledger.
Step 1: Enable Budgetary Control and Assign Reserve Encumbrance Account
Navigation: General Ledger>Setup > Financials > Accounting Setup Manager >Query
Ledger>Update Accounting Options
Page 4
Populate the Reserve for Encumbrance account and Select Enable Budgetary Control and
Require Budget Journals.
Step 2: Populate the Subledger Accounting Method with Encumbrance Accrual.

Subledger Accounting Method:
An accounting method is the composite of accounting definitions for all products used by an
Organization. Each Ledger must use an accounting method to determine how to account for Subledger
transactions. Because Ledgers are set up for specific reporting purposes, each Ledger may require a
different accounting method.
The sub-ledger accounting method is the accumulation of all product accounting definitions. With each
product accounting definition, the user can decide whether to create an accounting entry when invoices
are approved/completed or when they are paid.
The sub-ledger accounting method is a cross product set of product accounting definitions which
determine how accounting events will be processed by the accounting program to create Subledger
accounting entries. The sub-ledger accounting method is assigned to a legal entity and
ledger.
Encumbrance Accrual:
Subledger Accounting Method is having the option of

a) Standard Accrual
b) Encumbrance Accrual
c) Standard Cash
d) Encumbrance Cash
If Encumbrance needs to be enabled, then the Subledger Accounting Method has to be set as
Page 5
"Encumbrance Accrual" in case of Accrual basis accounting method.
"Encumbrance Cash" in case of cash basis accounting method for the ledger.
If Encumbrance is not used, then the Subledger Accounting Method has to be set as "Standard Accrual"
or "Standard Cash" for the ledger.
Navigation: General Ledger>Setup > Financials > Accounting Setup Manager >Query
Ledger>Update Accounting Options
Step 3: Open the Encumbrance Year

Opening the encumbrance year is done to enable the encumbrance entries. When users open the
first period ever for the Ledger, General Ledger automatically opens the first encumbrance year
as well. When Users open additional encumbrance years, General Ledger automatically rolls
Users project-to-date encumbrance balances forward through the last period of the latest open
encumbrance year.
Navigation: General Ledger>Setup > Open/Close
Page 6
Step 4: Define the Budget

The encumbrance is basically for the budgets defined for an organization. Budget is the
collection of the estimated amounts defined for an organization. Choose appropriate status for
the budget in the Define Budget Organization Form.
Open: The budget is available for update and budget entry.

Current: The budget is open, and it is the default budget when users use most budgeting
and inquiry window. Users can have only one Current budget at a time for the Ledger.
Frozen: The budget is unavailable for update or budget entry. General Ledger displays
the Created Date and Frozen Date, if applicable, for the budget.
Users must select the appropriate period to enter the budget. Users can have the budget opened
for a maximum of 60 periods and there is no such restriction available for number of years.
Navigation: General Ledger>Budgets > Define Budget
Page 7
Step 5: Define the Budget Organization

Budget Organization is the budget entity, to which the budgets are estimated. Budget
Organization can be created at various hierarchies. When separate budgets needs to be prepared
for sales department, purchase department and so on. Each one of them has to be defined as the
budget organization. Again each budget organization can be created only for specific flexfield
combinations. For each combination chosen, we can define budget amount and the budgetary
control can be enforced separately for each combination.
Choose the accounts for which the budgetary control is required and link it to the budget defined
as above. Users need to complete the header level information and then navigate to the ranges
and define the ranges for the budget organization. While defining the Account Ranges, set the
appropriate Funds Check level for each Account Range Users choose.
Navigation: General Ledger>Budgets > Define>Organization
Page 8
Funds Check Level is selected based on the following business requirements
Absolute: Allows only when the funds are available

Advisory: Allows the transaction with a warning when the funds are not available
None: No funds checking is performed and thereby allows the transaction to commit
whether or not the funds are available.
Page 9
Budgetary Control Group:

Navigation: General Ledger>Budget > Define > Controls
Page 10
Assign Budgetary Control Groups:

Navigation: System Administrator: Profile>System>Query the profile Budgetary Control Group
The profile Budgetary Control Group is set Standard at the responsibility level.
Page 11
Purchasing
Step 6: Open Period in Purchasing
Open the Purchasing periods where the transaction is to be performed.
Navigation: Purchasing> Setup > Financials > Accounting > Control Purchasing Periods
Page 12
Payables
Step 7: Set Financial Options in Payables
Users need to select the appropriate encumbrance types and the value so selected can be used by
the system while creating the accounting entries. Encumbrance has to be enabled in Financial
Options form either in Payables or Purchasing module.
Navigation: Payables>Setup>Options>Financial
Select Encumbrance Tab.
Page 13
Step 8: Open the Payables period.

Navigation: Payables > Setup > Calendar > Accounting Periods
Page 14
Inventory
Step 9: Open the Inventory period. This is mandatory for receiving.
Navigation:- Inventory > Accounting Close Cycle > Inventory Accounting Periods > Choose the
Organization
Page 15
Encumbrance Transaction
Accrue on Receipt For Expense destination:
Enter budget for the account 01-000-1313-0000-000 in the period Feb-13 for a debit amount of
10000.Post the budget journal.
Navigation: General Ledger>Budget>Enter>Journals
Page 16
Navigation: General Ledger>Journal>Enter>Review the Budget Journal
Transaction Passed:
Budget
Account
Account Code Combination
Debit
Budget Account
01-000-1313-0000-000
1000
Credit
The funds available is 10000 as per the calculation of

Funds Available = Budget - (Encumbrance + Actual).
Budget
Encumbrance
Actual
10000
Funds
Available
10000
Page 17
Navigation: General ledger >Inquiry>Funds
Page 18
Requisitions:
Log in to Purchasing Responsibility
Navigate: Requisitions > Requisitions
Create a requisition for an amount of 100 with expense item. The charge account and budget
accounts get populated automatically once you move to the distributions page.
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Reserve and submit the encumbrance. The encumbrance is reserved for the Requisition.
Page 20
Once the reservation is done the Budgetary Control Results can be viewed.
Create a requisition, reserve and approve the requisition. Reserving the requisition kicks of the
funds checker program and encumbrance line gets created in the table GL_BC_PACKETS. The
encumbrance journal entries get created when "Transfer Journal entries to GL" is run from
Purchasing Responsibility
.
The data in GL_BC_PACKETS table would get deleted when the encumbrance journal is posted
in GL.
Table Snapshot:
GL_BC_PACKETS
XLA_AE_HEADERS
Page 21
XLA_AE_LINES
The funds available is 10000 as per the calculation of

Funds Available = Budget - (Encumbrance + Actual).
Budget
Encumbrance
Actual
10000
Commitment - 100
Funds
Available
9900
Navigation: General Ledger>Inquiry>Funds
Page 22
The encumbrance entries created by the Requisition can be transferred to GL.
The journal created has the following accounting lines as shown in the figure.
Transaction Passed:
REQ
Account
RFE
01-000-3400-0000-000
Charge Account
01-000-1313-0000-000
Debit
Credit
100
100
Page 23
Navigation: General Ledger>Journal>Enter
Purchase Order:
Log into Purchasing Responsibility.
Users can create, approve and reserve Funds for Purchase Order from requisition
Navigation: Purchasing>Auto Create
Find the requisition, Select the requisition and go to automatic. Make sure that the supplier
information is entered and select create. This creates the PO. Complete, reserve and approve the
PO. When approved users can do funds check and this should be in PO phase, assuming PO
encumbrance is the type attached at PO level.
No journal entries are created at this stage but similar to the previous step, Users can create
encumbrance entries by "Transfer Journal entries to GL". While using PO Encumbrance, users
cannot change price, quantity, shipment or currency once a PO has been reserved and approved,
the only way to deal with such a situation is to cancel the existing PO and create a new one when
a PO is cancelled system takes care of adjusting encumbrance.
The encumbrance created on Requisition is relived when the PO encumbrance is created and
Funds are reserved for the PO.
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Reserve the encumbrance and approve the purchase order.
Page 25
The funds available is
Budget
Encumbrance
Actual
10000
Obligation - 100
Funds
Available
9900
Navigation: General Ledger>Inquiry>Funds
Page 26
Table Snapshot:
GL_BC_PACKETS
XLA_AE_HEADERS
XLA_AE_LINES
Transaction Passed:
Reversal
- REQ
PO
Account
Debit
RFE
01-000-3400-0000-000
100
Charge Account
01-000-1313-0000-000
100
RFE
01-000-3400-0000-000
100
Charge Account
01-000-1313-0000-000
Credit
100
Page 27
The following are the encumbrance journal entries created in GL.

Navigation: General Ledger>Journal>Enter
Page 28
Receiving:
Navigate to Receiving > Receipts
For the purchase order created and approved perform receipt. For the expense item the
destination type is Expense Routing. The routing is direct delivery, hence Receive and Deliver
happens as a single action. Observe that the quantity of 10 amounting to 100 is received and
delivered successfully.
As the On-line accrual method is selected, the PO encumbrance is relieved when the goods are
received.
The create accounting program is run to transfer the receiving entries to GL.
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Page 30
Create Accounting Receiving:

This Create Accounting Process can be submitted from Purchasing>View Requests
Create Accounting Receiving program only accounts for Expense destination PO Receipt.
Parameters used while submitting the Create Accounting concurrent program:
Ledger - Ledger name to be given

End date - Accounting entries to be created for all receipts TO DATE
Mode
i)
Draft - Draft mode creates the SLA journals as Draft which can be modified. Hence
these entries will not get transferred to General Ledger and it will be available only
in SLA. Once the entries created in Draft mode are verified and confirmed, Create
Accounting program has to be run in Final mode and the entries getting created
now will override the draft entries in SLA and will get transferred to General
Ledger.
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ii) Final - Final mode creates SLA journals which cannot be modified and can be
transferred to General Ledger.
Report - Options available are Detail or Summary

Transfer to General Ledger - Yes or No
If the mode is set to Final and the value for this parameter is set to No, then the
accounting entries will get created only in SLA table and it will not be available in
GL_INTERFACE or GL. You need to submit the program "Transfer to GL" in Cost
Management Responsibility > SLA to transfer the entries created in Final mode from
SLA to General Ledger.
Post in General Ledger - Yes or No
Table Snapshot:
RCV_RECEIVING_SUB_LEDGER
Page 32
Transaction Passed:
RCV
Account
Debit
Receiving
Inspection
01-000-1410-0000-000
100
Receiving
Inspection
01-000-1410-0000-000
100
Accrual Account
01-000-2215-0000-000
100
Charge Account
01-000-1313-0000-000
Credit
100
Page 33
Transaction Passed:
Enc
Reversal
PO
Account
Debit
RFE
01-000-3400-0000-000
100
Charge Account
01-000-1313-0000-000
Credit
100
Page 34
The funds available is
Budget
Encumbrance
Actual
10000
100
Funds
Available
9900
Page 35
Invoice:
Once the Goods are received and matched against the Purchase Order, the next step is to create
an invoice for the Goods received.
The invoice is created and matched against the PO created. Then the validation is done.
Once validated the Create Accounting is run to create the accounting entries and to transfer the
data to GL.
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Matching:
Page 37
Transaction Passed:
Invoice
Account
Liability Account
01-000-2210-0000-000
Accrual Account
01-000-2215-0000-000
Debit
Credit
100
100
Page 38
Payments:
The payment is made for the invoice created and this would Credit the cash and Debit the
Liability accounts.
Page 39
Page 40
Transaction Passed:
Payment
Account
Cash Account
01-000-1250-0000-000
Liability Account
01-000-2210-0000-000
Debit
Credit
100
100
Page 41
The following is the journal created from the Payment cycle.
Page 42
Accounting for Accrue on Receipt For Expense destination:

REQ
Enc Reversal
REQ
PO
RCV
Enc Reversal
PO
Invoice
Payment
Account
RFE
01-000-3400-0000-000
Charge Account
01-000-1313-0000-000
100
RFE
01-000-3400-0000-000
100
Charge Account
01-000-1313-0000-000
100
RFE
01-000-3400-0000-000
100
Charge Account
01-000-1313-0000-000
100
Receiving
Inspection
01-000-1410-0000-000
100
Receiving
Inspection
01-000-1410-0000-000
100
Accrual Account
01-000-2215-0000-000
100
Charge Account
01-000-1313-0000-000
100
RFE
01-000-3400-0000-000
100
Charge Account
01-000-1313-0000-000
100
Liability Account
01-000-2210-0000-000
100
Accrual Account
01-000-2215-0000-000
Cash Account
01-000-1250-0000-000
Liability Account
01-000-2210-0000-000
Debit
Credit
100
100
100
100
Page 43
Accrue At Period End Invoice Matching:

Accrue At Period End:
Accrue at period end is recording the total un invoiced receipt liabilities accrued during the
accounting period.
Actual journal entries are created for the amount of the receipt liabilities, debiting the charge
account and crediting the PO distribution accrual account.
The purchase order encumbrance is relieved when the invoice matched to the purchase order are
posted to the general ledger.
The expense item can be accrued at
Receipt
Period End
Here the same item mvrexp is used for accrue at period end flow.
Page 44
Budget Journal:
Create the budget journal for an amount of 10000.Post it in GL.
Funds Available:
Budget
Encumbrance
Actual
10000
Funds
Available
10000
Page 45
Page 46
Purchase Order:
Create a purchase order for an amount of 100.For this expense item the Accrue at Receipt is
not checked.
Page 47
Reserve the encumbrance and approve the PO.
Page 48
Transaction Passed:
PO
Account
RFE
01-000-3400-0000-000
Charge Account
01-000-1414-0000-000
Debit
Credit
100
100
Funds Available:
Budget
Encumbrance
Actual
10000
Obligation - 100
Funds
Available
9900
Page 49
Page 50
Invoice:
Create an invoice and match it against the PO 3386. Validate and run the create accounting.
Page 51
Page 52
Transaction Passed:
PO
Invoice
Account
RFE
01-000-3400-0000-000
Charge Account
RFE
01-000-1414-0000-000
01-000-3400-0000-000
RFE
01-000-3400-0000-000
Charge Account
Charge Account
01-000-1414-0000-000
01-000-1414-0000-000
Debit
Credit
100
100
100
100
100
100
Page 53
Page 54
Funds Available:
Budget
Encumbrance
Actual
10000
Other - 100
Funds
Available
9900
Page 55
Transaction Passed:
PO
Encumbrance
Invoice
PO
Encumbrance
Reversal
Account
RFE
01-000-3400-0000-000
Charge
Account
RFE
01-000-1414-0000-000
100
01-000-3400-0000-000
100
RFE
01-000-3400-0000-000
Charge
Account
Charge
Account
Liability
Account
Charge
Account
RFE
01-000-1414-0000-000
Charge
Account
01-000-1414-0000-000
Debit
Credit
100
100
100
01-000-1414-0000-000
100
01-000-2210-0000-000
100
01-000-1414-0000-000
100
01-000-3400-0000-000
100
100
Page 56
Page 57
Funds Available:
Budget
Encumbrance
Actual
10000
100
Funds
Available
9900
Page 58
Negative Encumbrance:
Case I
PO reserved in a period X and cancelled in period Y without unreserve the
encumbrance.
Create a PO in Feb-13.The encumbrance is created in this period for an amount of 200 as shown
in the funds inquiry.
Funds Available: Feb-13

Budget
Encumbrance
Actual
10000
200
100
Funds
Available
9700
Page 59
Funds Available: Mar-13
Budget
Encumbrance
Actual
Funds
Available
0
There is no encumbrance in the period mar-13.
Page 60
Cancel PO:
Navigate to Purchase Order > Purchase Order > Query the PO.
Go to Tools > Cancel.
During the process of cancellation choosing the GL Date for a different month would result in
the encumbrances not relieved for the original period.
The encumbrance reversal is accounted in the different period resulting in negative
encumbrance.
Page 61
Page 62
Observe that the status of the PO is closed.

Budget
Encumbrance
Actual
-200
Funds
Available
200
Page 63
Page 64
Case II
Unreserve the encumbrance in a different period:
The Feb-13 period has the following funds availability.
Budget
Encumbrance
Actual
10000
100
Funds
Available
9900
Page 65
Create a Purchase Order in the Feb-13 period. Reserve the encumbrance.
Page 66

Budget
Encumbrance
Actual
10000
100
100
Funds
Available
9800
Now navigate to Tools > Unreserve.

Unreserve the PO in Mar-13.This is one of the scenarios that can occur resulting in negative
encumbrance.
Page 67
Page 68

Budget
Encumbrance
Actual
-100
Funds
Available
100
Page 69
Page 70
Negative Funds Available:

Funds Available becomes negative when Encumbrance amount or Actuals exceeds the budget.
The funds check level is set as Advisory.
Page 71
Now pass a Encumbrance manual encumbrance journal.
Funds Available:
Budget
Encumbrance
Actual
1000
Funds
Available
-1000
The similar situation could occur in Subledger and can result in negative funds available. This is
once of the scenario in which the negative funds can occur.
Page 72
Encumbrance Carry Forward:

Navigation: Journals > Generate > Carryforward
You can carry forward year-end encumbrances into the following year. You can also
carry forward budget amounts equal to encumbrances and/or funds available.
When you carry forward year-end encumbrances, the Carry Forward rule you specify
determines the amounts to be carried forward.
Note :- General Ledger carries forward balances, not as period activity, but as beginning
balances.
Page 73
Carry Forward rules:

You can choose from the following Carry Forward rules:
1.Encumbrances Only:
General Ledger determines the year-to-date encumbrance
balances as of the end of the fiscal year and carries forward those balances as the
beginning balances of the first period of the next fiscal year.
2. Encumbrances and Encumbered Budget:
Page 74
General Ledger determines the year-to-date encumbrance balances as of the end of the
fiscal year and carries forward those balances, plus equivalent budget amounts, as
beginning balances of the first period of the next fiscal year.
3. Funds Available:
General Ledger calculates funds available as year-to-date budget
balances less year-to-date actual and encumbrance balances. General Ledger carries
forward budget amounts equal to funds available at the end of the fiscal year as
beginning balances of the first period of the next year.
Prerequisites to carry forward year-end encumbrances can be found in the GL User Guide.
Topic : Year-End Encumbrance Processing
Page : Encumbrance Accounting 3-11
Page 75
Encumbrance Only:
Carry forward the encumbrances balances of 01-000-1413-0000-000 from 2013 to 2014 can be
performed using the Year end carry forward with rule Encumbrance carry forward.
1)Check the balances of the accounts using the Encumbrance trial balance report.
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2)Close the periods of the current fiscal year once all the transactions are posted.
Page 77
Open the next encumbrance year.
Page 78
Preview:
Since the carry forward is a onetime activity the preview option should be used to verify the
balances. Clicking on the preview button would show the preview of the actual execution.
Page 79
Carry Forward:
Once the preview is done the carry forward is done for the range.
Encumbrance Trial Balance:

The Encumbrance trial balance can be run for period Jul-14 shows beginning balance of 1000 for
the account 01-000-1413-0000-000.
Page 80
Differences between 11i and R12:

11i
R12
Encumbrance related set ups include enabling

the Budgetary control flag ,defining the RFE
a/c, enabling the encumbrance for REQ,PO
and INVOICE in Financial Options
Sub ledger Accounting Method has to be set for the ledger

in addition to other set ups done in 11i
Option to choose different encumbrance types

for REQ,PO and INVOICE in Financial
options
Financial options does not have the LOV to choose the

encumbrance type Commitment for Requisitions Obligation
for Purchase Orders INV (Other) for Invoices
Encumbrance entries will get transferred to

GL by running the concurrent program
"Program-Create Journals" from GL
responsibility
"Transfer Journal Entries to GL" has to be submitted from

Purchasing Responsibility to create the encumbrance entries
in GL.
It is not possible to view the encumbrance

entries in Purchasing module
The entries can be viewed from SLA menu in Purchasing.
A credit against the Reserve For

Encumbrance a/c (RFE) can be seen only at
the time of posting the Encumbrance debit
entry in GL.
RFE a/c gets credited along with the budget a/c debit entry
which can be viewed from SLA menu in Purchasing.
Encumbrance entries created in

GL_BC_PACKETS will be directly moved to
GL_JE_LINES by running the CJE program
Encumbrance entries gets generated in a new table

PO_BC_DISTRIBUTIONS and also in XLA tables in
addition to GL_BC_PACKETS..
If encumbrance is enabled, encumbrance

reversal and actuals will undergo funds check
when these entries are populated in
GL_INTERFACE and GL funds inquiry will
reflect the encumbrance reversal and actuals
even before posting the entries in GL
Encumbrance reversal and actuals will hit the GL funds

inquiry only when these entries are posted in GL even
though funds check happens in SLA itself
PO details will not available in reference

columns(reference_1,reference_2...) in tables
GL_JE_LINES and GL_BC_PACKETS.
Accounting entries in these tables can be retrieved only

using SLA tables(XLA_AE_HEADERS,XLA_AE_LINES,
XLA_DISTRIBUTION_LINKS) and
GL_IMPORT_REFERENCES table.
Page 81
Technical Section:
a)Tables:
Module
PO
Table
What columns to Look For?
PO_BC_DISTRIBUTIONS
EVENT_TYPE_CODE
PO_DISTRIBUTIONS_ALL
ENCUMBERED_FLAG
ENCUMBERED_AMOUNT
RCV_RECEIVING_SUB_LEDGER
SOURCE_DISTRIBUTION_TYPE
ACCOUNTING_DATE
RCV_SUB_LEDGER_ID
ACCOUNTING_LINE_TYPE
XLA
XLA_AE_HEADERS
EVENT_TYPE_CODE
GL_TRANSFER_STATUS_CODE
GL_TRANSFER_DATE
JE_CATEGORY_NAME
ACCOUNTING_ENTRY_STATUS_CODE
XLA_AE_LINES
GL_TRANSFER_MODE_CODE
GL_SL_LINK_ID
ACCOUNTING_CLASS_CODE
CODE_COMBINATION_ID
XLA_DISTRIBUTION_LINKS
SOURCE_DISTRIBUTION_TYPE
SOURCE_DISTRIBUTION_ID_NUM_1
ACCOUNTING_LINE_CODE
Page 82

R12 Encumbrance Accounting

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R12 ENCUMBRANCE ACCOUNTING

Modules Involved in Oracle Application:

Installation of required modules

Step 2: Populate the Subledger Accounting Method with Encumbrance Accrual.

Subledger Accounting Method is having the option of

"Encumbrance Accrual" in case of Accrual basis accounting method.

Step 3: Open the Encumbrance Year

Step 4: Define the Budget

Open: The budget is available for update and budget entry.

Navigation: General Ledger>Budgets > Define Budget

Step 5: Define the Budget Organization

Funds Check Level is selected based on the following business requirements

Absolute: Allows only when the funds are available

Budgetary Control Group:

Assign Budgetary Control Groups:

Step 8: Open the Payables period.

Navigation: General Ledger>Journal>Enter>Review the Budget Journal

Account Code Combination

The funds available is 10000 as per the calculation of

Navigation: General ledger >Inquiry>Funds

The funds available is 10000 as per the calculation of

Navigation: General Ledger>Inquiry>Funds

The encumbrance entries created by the Requisition can be transferred to GL.

Account Code Combination

Navigation: General Ledger>Journal>Enter

Reserve the encumbrance and approve the purchase order.

The funds available is

Navigation: General Ledger>Inquiry>Funds

Account Code Combination

The following are the encumbrance journal entries created in GL.

Create Accounting Receiving:

Ledger - Ledger name to be given

Report - Options available are Detail or Summary

Post in General Ledger - Yes or No

Account Code Combination

Account Code Combination

The funds available is

Account Code Combination

Account Code Combination

The following is the journal created from the Payment cycle.

Accounting for Accrue on Receipt For Expense destination:

Account Code Combination

Accrue At Period End Invoice Matching:

Reserve the encumbrance and approve the PO.

Account Code Combination

Account Code Combination

Account Code Combination

Funds Available: Feb-13

Funds Available: Mar-13

There is no encumbrance in the period mar-13.

Observe that the status of the PO is closed.

Funds Available: Mar-13

Create a Purchase Order in the Feb-13 period. Reserve the encumbrance.

Funds Available: Feb-13

Now navigate to Tools > Unreserve.

Funds Available: Mar-13

Negative Funds Available:

Now pass a Encumbrance manual encumbrance journal.

Encumbrance Carry Forward:

Carry Forward rules:

Open the next encumbrance year.

Encumbrance Trial Balance:

Differences between 11i and R12: