The period close process for perpetual costing enables you to summarize costs related to inventory and manufacturing activities for a given accounting period.
Generally, you should open and close periods for each separate inventory organization independently. By keeping only one period open, you can ensure that your transactions are dated correctly and posted to the correct accounting period. (For month-end adjustment purposes, you can temporarily hold multiple open periods.)
The accounting periods and the period close process in Cost Management use the same periods, fiscal calendar, and other financial information found in General Ledger (GL).
Inventory and Work in Process (WIP) transactions automatically create accounting entries. All accounting entries have transaction dates that belong in one accounting period. You can report and reconcile your transaction activity to an accounting period and GL.
Note: Transactions use default accounts when standard costing is used. If Subledger Accounting (SLA) is enabled and SLA rules are customized, then the default accounts are not used.
Note: Purchasing holds the accounting entries for receipts into receiving inspection and for deliveries into expense destinations. This includes any perpetual receipt accruals. Purchasing also has a separate period open and close, and uses separate processes to load the general ledger interface.
It is not required to summarize transaction records before closing one accounting period, and opening the new accounting period. The period status is set to Closed not Summarized until the summarization process is completed. You can set the profile option CST:Period Summary to perform the summarization process automatically when you close the period. You can also set the option to perform the summarization process manually, which enables you to delay or not perform summarization. The Period Close Reconciliation report can be run at any time during the period.
If generated for an open period, then it is a simulation of the period summarization.
If generated for a Closed not Summarized period, then it creates summarization data that cannot be changed and sets the period status to Closed..
If generated for a Closed period, then it retrieves the summarized data.
Caution: If you are using Oracle Enterprise Install Base and have the profile option 'CSE: Use eIB Costing Hook set to Y, then be aware that the accounted value and onhand value of eIB trackable items will not reconcile if your asset subinventories have quantities of these items that have already been converted to fixed assets. For details about the meaning of some of the terms used in this discussion and for a set of recommendations to avoid potential reconciliation issues for eIB trackable items, see the Oracle Enterprise Install Base and Implementation Guide.
See: Overview of Receipt Accounting,
Functions of Period Close Process,
Closing a Period, and
Period Close Reconciliation Report
The Cost Management period close process for perpetual costing performs a number of functions:
Closes the open period for Inventory and Work in Process
Calculates ending period subinventory values
Closes Open Period
The period close process permanently closes an open period. You can no longer charge transactions to a closed period. Once you close a period, you cannot reopen it. As a precaution, you can do a GL transfer without closing the period. See: Transactions to General Ledger.
Calculates Ending Period Subinventory Values
For each subinventory, the period close adds the net transaction value for the current period to the prior period's ending value. This, along with values intransit, creates the ending value for the current period.
See: Closing an Accounting Period and Unprocessed Transaction Messages
Transfer of accounting transaction information to General Ledger takes place through the Subledger Accounting (SLA) process. See: Transfer Journal Entries to GL Program.
Summarization of transaction records for the open period is the last step in period close. You have the option to perform this process automatically or manually using the profile option CST:Period Summary. If the profile option is set to Automatic, then the period is closed and summarized when you change the period status from Open to Closed.
If the profile option is set to Manual, then you can delay summarization, but you must summarize these delayed periods in accounting period order. For example, if you delay summarization for a given period, then the following period cannot be summarized until the previous period is summarized. In situations where summarization is delayed, the longer the delay, the larger the number of transaction records needed for reconciliation purposes. This situation can cause summarization to take more time to complete.
If you do not choose to summarize periods, then set the period status to Closed not Summarized.
The Period Close Reconciliation report is used to compare account balances with inventory value at period end. You can run the report in simulation mode by generating it for an open period. The report can be generated at any time during the period.
Warning: Discrepancies shown in the Period Close Reconciliation Report will not be accurate indications of error in account balances or inventory value if you have backdated transactions across periods. Such discrepancies can be prevented by setting the Cost Cutoff Date. See the Oracle Inventory User's Guide for setting the Cost Cutoff Date. You should set the Cost Cutoff Date to be the end of a period, and not change it until you summarize that period. For example, if JAN06 is your current period, set the Cost Cutoff date to the end of JAN06. In the future, when you start performing transactions in FEB06, do not move the cost cutoff date forward until you have closed and summarized JAN06.
See: Profile Options and Security Functions and Period Close Reconciliation Report