Interview Question on Finance Module Oracle EBS R12

1. What is journal, how many types of journal?

Journals it is used to record the business transaction it contains debit and credit lines always debit must be equal to credit. Types of journals are Suspense Journal or Unbalanced Journal, Recurring Journals and Reversal journals.

2. P2P Process & O2C Process.

A. P2P process start with

 -Requisitions 

-RFQ 

- Quotations’ 

- Analysis 

- PO 

 -Receiving 

- Invoices 

- Payment.

B. O2C processing four high-level processes i.e. Order, Invoices, Recognize the COGS and Cash 

Receipt.

Sales order

Book Oder

Release the Order

Confirm the Order

Close the Order

Import 

Invoice

Print the Invoice

Revenue Recognition

Defer the Cost of Goods 

Enter Receipt

Apply the Receipt.

3. What is Translations & Revaluation and which level its working?

Translation: It is used to translate functional currency balances into foreign currency balances at

the account level.

Revaluation: It is used identify the unrealized gain or loss .which is occurring on the currency 

fluctuation.

Example:

On 01-Dec-2022 

-Functional Currency is USD

-Foreign Currency is INR. 

-Conversion Rate is 2.

-Created invoice for 100 INR, validated and accounted. Not Paid.

As per the above journal lines on 01-Dec-2022, customer is liable to pay 200 USD to the supplier. 

-End of the period, conversion rate has been changed to 2.5.

-So customer's liability will get increased to 250 USD (100*2.5).

-So customer suppose to pay 250 USD instead of 200 USD to the supplier.

-This is the true liability at the end of the period and this need to be reflected in customer's General 

Ledger. Loss 50 USD should be populated in Loss account. 

-Revaluation adjusts these amounts and keeps gain/loss amounts in Unrealized Gain/Loss accounts 

defined in Revaluation window.

4. What is Security Rules and Cross validation Rules?

A. It is used to restrict the users from entering the segments. It will work at the responsibility level.

B. It is used to restrict the end users from entering the code combinations. It will work at 

structure level.

5. What is Dynamic Insertion? 

In GL, you can dynamically create new account code combinations when entering data by enabling 

dynamic insertion in the Key Flexfield Segments window. The alternative method for this is, you can 

require all accounts to be define manually in the Accounts Combinations window.

Points to Remember:

-Dynamic insertion can be enabled or disabled at any time.

-You can define cross validation rules to prevent incorrect account combinations from being created by 

dynamic insertion.

-If you are defining an Accounting Flexfield for Oracle Projects, you must define your segment with the 

Allow Dynamic Inserts option set to Yes. 

6. Difference between Standard Accrual and Standard Cash?

Standard Accrual

In case of Standard Accrual, Invoice and Payment Accounting will be there. 

Reason: Transaction happens in two phases.

1) Order goods and receive goods (Create PO, Create Receipt, Create Invoice and account it)

2)Pay the amount for received goods within due time set by the supplier( Pay the invoice and account it)

Since you are not paying the amount immediately, you need to keep track of the amount needs to pay to 

the supplier after phase one. You maintain this amount in LiabilityA/C(Cr). After second phase, you debit your Liability A/C and credit your CashA/C which shows your cash flow from your organization to the supplier.

Standard Cash

In case of Standard Cash, only payment accounting will be there.

Reason: While purchasing an item you pay amount immediately to the supplier. So you don't have any 

debt to the supplier to record. So there is nothing to record in Liability A/C.

7. Explain Flexfield Qualifiers in GL?

Need to assign qualifiers to individual accounting key flexfield segments to identify or represent the 

purpose in COA. 

Natural Account Each Accounting Flexfield structure must contain only one natural account segment. 

When setting up the values, you will indicate the type of account as Asset, Liability, Owner's Equity, 

Revenue, or Expense. 

Balancing Account Each structure must contain only one balancing segment. Oracle General Ledger 

ensures that all journals balance for each balancing segment. 

Cost Center This segment is required for Oracle Assets. The cost center segment is used in many Oracle 

Assets reports and by Oracle Workflow to generate account numbers. In addition, Oracle Projects and 

Oracle Purchasing also utilize the cost center segment. 

Intercompany General Ledger automatically uses the intercompany segment in the account code combination to track intercompany transactions w/i0thin a single ledger. This segment has the same value set and the same values as the balancing segment.

8. Primary Ledger Vs Secondary Ledger Vs Reporting Currency

Primary Ledger Vs Secondary Ledger

Use secondary ledgers for supplementary purposes, such as consolidation, statutory reporting, or 

adjustments for one or more legal entities within the same accounting setup. For example, use a primary ledger for corporate accounting purposes that use the corporate chart of accounts and sub ledger accounting method, and use a secondary ledger for statutory reporting purposes that use the statutory chart of accounts and sub ledger accounting method. This allows you to maintain both a corporate and statutory representation of the same legal entity's transactions in parallel. 

Reporting Currency Vs Secondary Ledger

Reporting Currencies are not the same as secondary ledgers. Looking at the 4 C's that define a ledger, we have a chart of accounts, calendar, accounting method, and currency. If you only need multiple currencies to support your reporting requirements, use reporting currencies. If you need to account for your data using different calendars, charts of accounts, accounting methods in addition to currency, use a secondary ledger. 

9. What is Adjusting Period?

Typically, the last day of the fiscal year is used as an adjusting period to perform adjusting and closing 

journal entries. Once you begin using your accounting calendar, you cannot change its structure to remove or add an adjusting period. Choosing whether to include an adjusting period or not in your calendar is a very important decision. You can have an unlimited number of adjusting periods.

10. What is 2 way, 3 way and 4 way matching?

 Making payments to the suppliers in 3 ways. Whatever you have ordered for the PO we will 

make the payment for the suppliers in 2-way (we will compare two documents PO and Invoice).

eg: Suppose we Had given PO for 100 items, for that we will receive invoice for 100 items. So 

that we will make payment for that 100 items. 

2) In 3-Way we will compare 3 documents 

PO+reciept+Invoice

Eg:Suppose we have ordered 100 items in PO. But we had received only 80 items, But we had 

received invoice for 100 items. so, we will make payment for only 80 items.

3) IN 4-Way we will compare 4 documents

PO+Receipt+Invoice+Inspection

Eg: Suppose we have 100 items in PO. Suppers send us 80 items We will do inspection on those items 

whatever we have received, If 10 items got damaged. finally, we are going to make payment to the 70 

items only.

11. What is Payment Terms and How to define Payment Terms?

Payables uses payment terms to automatically calculate due dates, discount dates, and discount amounts for each invoice you enter. Payment terms will default from the supplier site. If you need to change the payment terms and the terms you want to use are not on the list of values, you can define additional terms in the Payment Terms window.

12. What is SWEEP Program? Explain Process Of Sweep Program?

This particular program is run in order to transfer un-accounted invioce to next opened period during 

period end closing of Accounts Payable. In fact you can't close Payable Period if you have Un-Accounted Invoice in Payables. In order to negotiate (Transfer) these invoice to next open period this program is run.So that the Payable period can be closed.

13. How many types of Purchase Orders (PO’s)?

Standard Purchase Order: It’s a legal document to buy the goods or services by supplier it will be 

created when we know the goods or services, price, quotation, delivery schedule and accounting 

distribution and also is one time purchase order.

Blanket PO: Blanket PO is created when you know the detail of the goods or services you plan to buy 

from a specific supplier in a period, but you do not know the detail of your delivery schedules.

Planned PO: Planned PO is a long–term agreement committing to buy items or services from a single 

source. You must specify tentative delivery schedules and all details for goods or services that you want to buy, including charge account, quantities, and estimated cost.

Contract PO: Contract PO is created when you agree with your suppliers on specific terms and 

conditions without indicating the goods and services that you will be purchasing.

Particulars                SPO |PPO | BPA |CPA

Terms and Conditions √| √| √| ×

Goods or Services √ |√ |√| ×

Price √| √|May be /May not |×

Quantity √ |√| ×| ×

Delivery Schedule √ |May be/May not |×| ×

Distribution √ |√ |×| ×

14. Explain Approval Hierarchies in PO.

Approval hierarchies let you automatically route documents for approval. There are two kinds of approval hierarchies in Purchasing: position hierarchy and employee/supervisor relationships.

If an employee/supervisor relationship is used, the approval routing structures are defined as you enter 

employees using the Enter Person window. In this case, positions are not required to be setup.

If you choose to use position hierarchies, you must set up positions. Even though the position hierarchies require more initial effort to set up, they are easy to maintain and allow you to define approval routing structures that remain stable regardless of how frequently individual employees leave your organization or relocate within it.

17. How many types of AP Invoices?

AP INVOICES: 11 invoice are there

1) Regular invoice (9) 2) Special invoice (2)

1) Regular Invoice

1. Standard invoice 2. Credit memo 3. Debit memo 4. Prepaid invoice 5. Expense report

6. Quick invoice 7. Mixed invoice 8. PO default 9. Withholding Tax invoice.

2) Special Invoice

1. Recurring invoice2. Interest invoice.

18. How Many types of AR Invoices?

AR TRANSACTIONS (Invoice) 7

1. Invoice 2. Credit memo 3. Debit memo 4. Deposit 5. Guaranty 6. Chargeback 7. Bills Receivables.

19. Difference between Standard and mixed Invoices?

Standard Invoices: Standard Invoice are invoices from a supplier representing an amount due for goods or services purchased. Standard invoices can be either matched to a purchase order or not matched. Standard invoices must be positive amounts.

Mixed Invoices: Mixed Invoices can be matched to both purchase orders and invoices. Mixed invoices 

can have either positive or negative amounts.

20. Difference between AP Invoice and AR Invoices?

AP Invoice: it is nothing but what amount going out towards receiving Raw material from the 

vendor or supplier. (Expenses)

AR Invoice: it is nothing but what amount coming in selling the product to customer or parties 

(Revenues).

21. What is Pre Payment in AP?

Prepayment is Advance Payment made to supplier by Organization or Employee. Later it will apply 

against the feature debit items.

These are two types Permanent Prepayment, Temporary Prepayment.

22. What is Key flex filed how many types in GL, AP, AR, & FA?

Key Flex field: is used to capture mandatory information of the organizations.

In GL 3 types 

1. Accounting flex field (mandatory) 

2. Reporting attribute (optional) 

3. GL ledger flex field (optional)

IN AP No flex fields 

IN AR Two types 

1. Sales Tax Location flexfield (mandatory) 

2. Territory Flexfield

In FA Three Flex field 

1. Category (mandatory)

2. Asset key (mandatory)

3. Locations flex field.

23. What is Debit Memo and Credit Memo in AP?

Its negative amount identified by Customer and sent to Supplier. Ex: Purchase Returns. 

Its negative amount identified by Supplier and sent to the Customer. Ex: TDS Payables

In Payable we are receiving the material from supplier. so we have to pay the amount to the 

supplier in case supplier has send the goods more than what we order at the point of we have to 

return the goods reduce the accounting balance.

We send a memo to the supplier is called as debit memo or supplier send a memo is called as 

credit memo. Both of the reducing our liability.

Ex: In Payables Debit Memo and Credit Memo functionality is same It decreases the supplier 

balance (i.e. decreases the liability) Eg Supplier has send you invoice X with an amount of $100 

but Later we found there is mismatch in quantity (more quantity billed)so we will inform to 

customer. Then customer has sent you the credit memo but if customer says send me the debit 

memo then you will generate debit memo from your end. Both are same as functionality.

24. What is Debit Memo and Credit Memo in AR?

In AR Debit memo is Positive Amount for example we are selling the product to the customer.

Either we may forget to add a freight charges or some other thing. So at that time we are prepare

or Rise the Debit memo it is increased the Org balance.

(Customer is Under Charged at that time Org prepare Debit memo).

In AR Credit memo is Negative Amount if you billed more than your customer then Org need to 

raise Credit memo to give the credit to your Customer, so it is decreasing the Org balance.

(Customer is Over Charged at that time Org prepare Credit memo)

25. What kind of necessary AP information u gather from the client?

1) All necessary accounting information.

2) Invoice Tolerances

3) Supplier, Sites details

4) Internal bank and supplier bank in case they maintain

5) Payment terms

6) Any reports

7) Currency,

8) Calendar type

9) Payment Accounting

10)Invoice approval

11)Tax and code 

12)WHT tax information , if they are going to use

13)Payment format 

26. How to do the Analysis of discounts lost and fixing the root cause?

There is a discount taken and lost report which can tell us

about this. This report can be submitted from the SRS window.

27. What is the procedure of: Analysis of invoice holds and getting them released in Accounts 

Payables?

For any Invoice which goes on Hold can be viewed from 

Invoice Header report under Holds Tab along with the reason.

for hold.

There are 2 types of Holds.

1) Manual Hold.

2) System Hold.

Manual hold can be applied on any invoice as per the requirement and same can be released 

manually.

System holds can be only addressed be resolving the cause of the error.

28. What is Automation of Accounts Payable activities (Evaluated Receipt settlement)?

Payment on receipt enables u to automatically create standard,unapproved invoices for payment 

of goods based on receipt transaction.Invoices r created using a combination of receipt & PO 

info,eliminating duplicate manual data entry and ensuringmatching accurateand timely data 

processing. Payment on receipt is also known as Evaluated Receipt Settlement (ERS) & Self 

Billing

29. What is Multi Org? What is difference between 11i and 12i Multi Org Structure?

The multiorg architecture is meant to allow multiple companies or subsidiaries to store their 

records within a single database. The multiple Organization architecture allows this by 

partitioning data through views in the APPS schema. Multiorg also allows you to maintain 

multiple sets of books. Implementation of multiorg generally includes defining more than one 

Business Group.

Basically the different entities in multi-org are:

• Business Group (BG) 

• Sets of Books (SOB) 

• Legal entities (LE) 

• Operating units (OU) 

• Inventory organizations (IO)

30. What is meaning of Deprecation?

Depreciation means spread the cost of an asset over the span of several years.

If you buy a machine for 1000 in April-22, you cannot treat it as expense for the month of April22 since this machinery is going to be used for next 10 years.To match revenue and cost, 1000 

will be divided across 10 years.

It’s called depreciation.

31. How to Support projects life cycles details?

It depends on companies planned but the basic rule is 

1. Receiving/Creating Functional Requirements

2. Developing

3. Testing and Validation (includes meeting with business users)

4. Production

32. What is the meaning holding tax?

These are the setup's u need to do for Automatic 

withholding tax.

1)define tax authority supplier

2)define special calendar

3)define withholding tax code

4)enable the option called "use withholding tax" in payables options.

5) Assign the tax code to supplier site --> here the tax code will beassigned to the normal supplier in 

withholding tax tab.

33. How to implement Letters of credit full cycle starting from negotiation to receipt of payment 

from customer, its amendment and related issues under Oracle Apps order management modules?

There is sales contract between beneficiary and applicant and doesn’t have an trust with him they

want to open letter of creditfavor of exporter the documents required to open letter of credit 

application , proforma invoice or purchase order applicant will approach the issuing bank. 

Issuing bank will open the letter of credit and send to advising bank which is called nominating 

bank advising bank will send to exporter they will check as per comply documents accordingly 

beneficiary check the letter of credit the given condition is correct and I can able to fulfill the 

condition exporter is satisfied make the shipment and send the documents as per letter of credit 

to advising bank advising bank will send to issuing bank.Issuing bank will make the payment to 

exporter.

34. What is the Entry in Oracle Apps AP, AR,GL for following Transactions

1.One Pipe purchase at Rs.100

2.One Pipe Sales At Rs.150

1) Whenever we buy item there is no journal Entry.

2) When we Receive Material into inventory Org

Material Value A/C ---- Dr

Inventory AP Accrual A/C --- Cr

3) When we are going for payment

Charge A/c --- Dr

Liability A/c --- Cr

Liability A/c --- Dr

Cash Clearing A/c --- Cr

4) In Cash Management 

Cash Clearing A/c --- Dr

Cash A/c --- Cr

5) When we Making Sale 

Cost of Goods A/c --- Dr

Material A/c --- Cr

35. What is the use of below profile options while configure multiorg?

1. HR: Security Profile

2. MO: Security Profile 

3. GL Set of books name

4. MO: Operating Unit

5. HR: User type

HR:SECURITY PROFILE->restricts data in HR according to Business Group or whatever the 

criteria we mentioned in the security profile.

HR: User Type-> to complete the org setup, purchasing, payables and receivables responsibilities

need it.

MO:SECURITY PROFILE->it restricts the access to certain operating units. Not necessary for 

general ledger and inventory responsibilities and for HR it is optional.

MO:OPERATING UNIT->which operating unit a particular responsibility corresponds to.

GL SET OF BOOKS NAME->each responsibility identified with thisprofile. Can see only the 

accounting information

36. Is it possible to retire an asset in the same period it is added?

Answer #1

there is no retirement possible, because the depreciation for the same can be posted at the end of 

the period. That means you can delete the transaction n number of times in the same period, but 

retirement is not possible.

Answer #2

It is possible to delete the asset in the same period but you cannot retire the assets added in the 

same period. However, if the assets are interfaced through other modules like PA and AP the 

system does not allow you to delete such assets. In such cases you need to run the depreciation 

and roll over the period and then retire such assets. 

37.What is gap analysis, how do you defined. What are the pre-requisities?

GAP analysis in ERP implementation is to identify andsuggest the ways to bridge the gap 

between 'as is' and 'tobe'. GAP analysis suggests the changes and steps to bring inthese changes, 

so that ERP benefits are received in full.