Before you begin setting up your chart of accounts, consider your organizational structure and the dimensions of your business. By carefully evaluating your business needs, you can design your chart of accounts to take advantage of General Ledger's flexible tools for recording and reporting your accounting information.

To set up your chart of accounts:

1. Define value sets. Value sets determine the attributes of your account segments such as the segment length, value alignment, and value security.

   Note: Child values should not be assigned to the T Value in a value set.

   See: Defining Value Sets

2. Define your account structure using the Accounting Flexfield. Indicate how many separate segments your account will have, and for each segment, enter a name, sequence number, and an associated value set.

   Note: Number your segments starting with 1, then 2, 3, 4 and so on.

   Warning: Plan your account segment order carefully. Once you freeze your Accounting Flexfield account structure in the Key Flexfield Segments window and begin using account numbers in data entry, you should not modify the flexfield definition. Changing the existing flexfield structure after flexfield data has been created can cause serious data inconsistencies. Modifying your existing structures may also adversely affect the behavior of cross-validation rules and shorthand aliases. For a list of permitted chart of accounts changes, see Permitted Chart of Accounts Changes.

   • Designate one of your segments as the natural account segment and another as the balancing segment. You can optionally designate a cost center segment, management segment, secondary tracking segment and/or intercompany segment. If you are using Oracle Assets or Oracle Projects, you must specify a cost center segment.

   • The optional Secondary Tracking Segment qualifier designates another segment in your chart of accounts in addition to your balancing segment to track Retained Earnings, Cumulative Translation Adjustment, and Unrealized Gains and Losses. This segment can be any segment, except the balancing segment, natural account segment, or intercompany segment. This segment can be the same as your cost center segment. See: Secondary Tracking Segment.

   • Optionally assign a management segment if you want to secure management values or perform management reporting. The management segment can be any segment, except the balancing segment or natural account segment. Typically, the management segment is a segment that has management responsibility, such as the department, cost center, or line of business. By designating a segment of your chart of accounts to be the management segment, you can secure access to the management segment values with data access sets.

     Note: You can assign a management segment to an existing chart of accounts at any time by running two programs in sequence: Prepare Journal Batches for Management Segment Upgrade and Complete Management Segment Upgrade.

   • Optionally, assign the intercompany flexfield qualifier to one of the segments in your chart of accounts. You cannot use the primary balancing, cost center, or natural account as the intercompany segment.

   • Use dependent account segments when you want a "context-sensitive" segment whose values have different meanings when you combine them with different values of another segment.

     Warning: Plan your chart of accounts segments carefully. You cannot make changes to your segments or flexfield qualifiers later. Any changes made to any segment, such as adding one, removing one, changing the associated flexfield qualifier, or changing the associated value set will cause data corruption.

     Note: For a list of permitted chart of accounts changes, see Permitted Chart of Accounts Changes.

     See: Designing Your Accounting Flexfield

     Note: If you plan to use General Ledger for basic project tracking, define a project segment. See: Project Tracking in General Ledger.

3. Define rollup groups to create summary accounts whose summary balances you can review. You assign parent segment values to rollup groups.

   See: Defining Rollup Groups

4. Define your account segment values. If you plan on defining summary accounts or reporting hierarchies, you must define parent values as well as child or detail values.

   You can set up hierarchy structures for your segment values. Define parent values that include child values. You can view a segment value's hierarchy structure as well as move the child ranges from one parent value to another.

   See: Defining Segment Values

5. Define Security Rules to restrict user access to certain account segment values.

   See: Defining Security Rules

6. Define cross-validation rules to control the account combinations that can be created during data entry. For example, you may decide that your sales cost centers, 600 to 699, should only enter amounts to product sales accounts, 4000 to 4999. If you have dynamic insertion enabled, it is recommended that you also define cross-validation rules to provide additional security to prevent invalid combinations from being created during data entry.

   Note: Cross-Validation rules only affect new account combinations that are created after you define or enable the rules. If you have existing combinations that violate your rules, your cross-validation rules will not be enforced. You will need to disable all existing combinations that violate your rules before your cross-validation rules can take effect.

   See: Defining Your Cross-Validation Rules

7. Define or enable descriptive flexfields.

   See: Defining Descriptive Flexfields for General Ledger

8. Define account shorthand aliases to speed entry of account segment values. If you enable shorthand alias flexfield entry when you define your account structure, then you can define aliases, or codes, which stand for complete or partial accounts.

   See: Defining Shorthand Aliases

9. Define summary accounts to create and maintain summary balances for quick reporting and online inquiry of summarized balances.

   See: Defining Summary Accounts

10. Create account combinations.

    If you allow dynamic insertion, you can create new account combinations automatically as you use them during journal entry. If you do not allow dynamic insertion, define new account combinations manually in the GL Accounts window.

    You can define new account combinations or disable existing account combinations at any time.

    In the GL Accounts window, check the preserve check box to preserve account combinations against attribute updates when you run the Segment Value Inheritance program.

    See: Defining Accounts

You may decide to use the intercompany segment to support Intracompany Balancing Rules and Intercompany Accounting. The intercompany segment shares the same value set and security rules as the balancing segment. The security rules you have in place may conflict with intercompany balancing you want to automate.

For example, your organization has companies 01, 02, 03, and 04 sharing the same ledger. Current security rules prevent these companies from posting transactions to one another. Instead, the companies must agree on the transactions, then manually enter and post their respective side of the transaction. Should the intercompany segment adopt the same security rules, automatic intercompany balancing would conflict with the security rules.

There are two ways to modify General Ledger to function appropriately with the intercompany segment:

• In the Segments window, disable security for the intercompany segment.

• Create an intercompany segment with an identical value set as the balancing segment. Establish your own security rules for the intercompany segment value set.