Closing a Period
1. Enter all transactions.
Be sure you enter all transactions for the period. Perform all issues,receipts, and adjustments. Verify that no hard copy records exist or are waiting for data entry, such as packing slips in receiving.
2. Check Inventory and Work in Process transaction interfaces.You can set up the material and move transaction managers to execute transactions immediately, then submit an immediate concurrent request to execute, or submit a concurrent request periodically at a time interval you specify. If you do not use immediate processing, or interface external transactions, check the Inventory material transaction manager and the Work in Process move transaction manager before closing the period.
3. Check Cost Management cost interfaces.
Cost Management processes your inventory and work in process accounting transactions as a concurrent request, using a specified time interval. Before you close the period, you should check that the Cost Manager is active.
4. Check Order Management transaction processes. If you use Order Management, ensure that all sales order transaction processes complete and transfer successfully to Inventory.
5. Review Inventory transactions.
Before you close a period, review all of the transactions using the Material Account Distribution Report for the period with a high dollar value and/or a high transaction quantity. Check that you charged the proper accounts. Correcting improper account charges before you close a period is easier than creating manual journalentries.
6. Balance perpetual inventory.
Check that your ending perpetual inventory value for the period being closed matches the value you report in the general ledger. Perpetual inventory value normally balances automatically with the general ledger. However, one of the following sources can create a discrepancy:
– Other inventory journal entries. Journal entries from products other than Inventory that affect the inventory accounts.
– Charges to improper accounts: For example, you issued material from a subinventory to a miscellaneous account, but used one of the subinventory accounts as that miscellaneous account.
– Issue to miscellaneous account: For example, the following miscellaneous transaction issue would cause an out of balance situation: debit account specified at transaction 123, credit subinventory valuation account 123. The debit and credit net to zero with no financial charge, but since the inventory quantity decreased, the month–end inventory valuation reports will not equal the general ledger account balance.
– Transactions after period end reports. This occurs when you run the end of month inventory valuation reports before you complete all transactions for the period.
If you do not run the inventory reports at period end, you can also run these Reports:
– Inventory Value Report– Material Account Distribution Detail Report
– Material Account Distribution Summary Report
– Period Close Summary Report– Period Close Reconciliation report– Inventory Subledger Report (Average Costing Only)
In a organization using Project Manufacturing Average Costing, if there is more than one cost group, the following valuation reports should not be used for reconciliation purposes because these reports list the average value across cost groups.
– Transaction historical Summary Report
– Receiving Value Report
– All Inventories Value Report
– Elemental Inventory Value Report
– Subinventory Account Value Report
– Item Cost Report
7. Validate Work in Process inventory.
If you use Work in Process, check work in process inventory balances against transactions with the WIP Account Distribution Report.
8. Transfer transactions in advance of closing period (optional).
If time permits, run the general ledger transfer process up to the period end date before closing the period.
Closing a period executes the general ledger transfer automatically. However, you can also run this process without closing a period using Transfer Transactions to General Ledger. Since you cannot reopen a closed period, running this process before period close allows you to proof the interfaced transactions and make adjustments to the period via new inventory transactions as necessary.
9. Close Oracle Payables and Oracle Purchasing.
If you use Payables and Purchasing, you need to close the accounting periods in the following order:
– Payables
– Purchasing
– Inventory
If you only use Purchasing and Inventory, you need to close Purchasing first. Close Payables before Purchasing, in preparation for accruing expenses on uninvoiced receipts. Doing so ensures that all new payables activity is for the new month and you do not inadvertently match a prior month invoice in payables to a new month receipt. When you close Purchasing or Inventory, you cannot enter a receipt for that period. However, as a manual procedure, close Purchasing before Inventory. This still allows miscellaneous transaction corrections in Inventory.
10. Run the Period Close Reconciliation report.
This report automatically runs in simulation mode for the open period. It is used to match account balances with inventory value at period end.
11. Close the accounting period and automatically transfer transactions to the general ledger.
This sets your Inventory Accounting Period status to Closed not Summarized. If the CST: Period Summary profile option is set to Automatic, no other steps are necessary. The period status is set to Closed when the summarization process has completed.
12. If the CST: Period Summary profile option is set to Manual, create period summarization transactions by generating the Period Close Reconciliation report.
The concurrent program creates summarized transaction records, and displays the differences between account balances and inventory value.
Be sure you enter all transactions for the period. Perform all issues,receipts, and adjustments. Verify that no hard copy records exist or are waiting for data entry, such as packing slips in receiving.
2. Check Inventory and Work in Process transaction interfaces.You can set up the material and move transaction managers to execute transactions immediately, then submit an immediate concurrent request to execute, or submit a concurrent request periodically at a time interval you specify. If you do not use immediate processing, or interface external transactions, check the Inventory material transaction manager and the Work in Process move transaction manager before closing the period.
3. Check Cost Management cost interfaces.
Cost Management processes your inventory and work in process accounting transactions as a concurrent request, using a specified time interval. Before you close the period, you should check that the Cost Manager is active.
4. Check Order Management transaction processes. If you use Order Management, ensure that all sales order transaction processes complete and transfer successfully to Inventory.
5. Review Inventory transactions.
Before you close a period, review all of the transactions using the Material Account Distribution Report for the period with a high dollar value and/or a high transaction quantity. Check that you charged the proper accounts. Correcting improper account charges before you close a period is easier than creating manual journalentries.
6. Balance perpetual inventory.
Check that your ending perpetual inventory value for the period being closed matches the value you report in the general ledger. Perpetual inventory value normally balances automatically with the general ledger. However, one of the following sources can create a discrepancy:
– Other inventory journal entries. Journal entries from products other than Inventory that affect the inventory accounts.
– Charges to improper accounts: For example, you issued material from a subinventory to a miscellaneous account, but used one of the subinventory accounts as that miscellaneous account.
– Issue to miscellaneous account: For example, the following miscellaneous transaction issue would cause an out of balance situation: debit account specified at transaction 123, credit subinventory valuation account 123. The debit and credit net to zero with no financial charge, but since the inventory quantity decreased, the month–end inventory valuation reports will not equal the general ledger account balance.
– Transactions after period end reports. This occurs when you run the end of month inventory valuation reports before you complete all transactions for the period.
If you do not run the inventory reports at period end, you can also run these Reports:
– Inventory Value Report– Material Account Distribution Detail Report
– Material Account Distribution Summary Report
– Period Close Summary Report– Period Close Reconciliation report– Inventory Subledger Report (Average Costing Only)
In a organization using Project Manufacturing Average Costing, if there is more than one cost group, the following valuation reports should not be used for reconciliation purposes because these reports list the average value across cost groups.
– Transaction historical Summary Report
– Receiving Value Report
– All Inventories Value Report
– Elemental Inventory Value Report
– Subinventory Account Value Report
– Item Cost Report
7. Validate Work in Process inventory.
If you use Work in Process, check work in process inventory balances against transactions with the WIP Account Distribution Report.
8. Transfer transactions in advance of closing period (optional).
If time permits, run the general ledger transfer process up to the period end date before closing the period.
Closing a period executes the general ledger transfer automatically. However, you can also run this process without closing a period using Transfer Transactions to General Ledger. Since you cannot reopen a closed period, running this process before period close allows you to proof the interfaced transactions and make adjustments to the period via new inventory transactions as necessary.
9. Close Oracle Payables and Oracle Purchasing.
If you use Payables and Purchasing, you need to close the accounting periods in the following order:
– Payables
– Purchasing
– Inventory
If you only use Purchasing and Inventory, you need to close Purchasing first. Close Payables before Purchasing, in preparation for accruing expenses on uninvoiced receipts. Doing so ensures that all new payables activity is for the new month and you do not inadvertently match a prior month invoice in payables to a new month receipt. When you close Purchasing or Inventory, you cannot enter a receipt for that period. However, as a manual procedure, close Purchasing before Inventory. This still allows miscellaneous transaction corrections in Inventory.
10. Run the Period Close Reconciliation report.
This report automatically runs in simulation mode for the open period. It is used to match account balances with inventory value at period end.
11. Close the accounting period and automatically transfer transactions to the general ledger.
This sets your Inventory Accounting Period status to Closed not Summarized. If the CST: Period Summary profile option is set to Automatic, no other steps are necessary. The period status is set to Closed when the summarization process has completed.
12. If the CST: Period Summary profile option is set to Manual, create period summarization transactions by generating the Period Close Reconciliation report.
The concurrent program creates summarized transaction records, and displays the differences between account balances and inventory value.
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