Oracle ERP Cloud | Multiperiod Accounting Invoices

In accounting, the Multiperiod Accounting feature empowers users to generate accounting entries spanning multiple accounting periods for a single financial event. This functionality proves especially valuable when there’s a need to defer the recognition of expenses incurred over several General Ledger periods, aligning with the gradual accrual of benefits.


How Multiperiod Accounting Works?

Take, for instance, expenses tied to annual maintenance contracts for equipment or advance rent payments. To initiate a transaction utilizing Multiperiod Accounting, users must input essential details such as the start date, end date, and the relevant accrual account. This capability streamlines the accounting process, providing a more nuanced approach to recognizing expenses over extended periods.


Business Case Scenario:

For Example: Consider an invoice for a 3-month office rent entered on Nov 4th. The total expense is 12000 INR, and it covers the rental period from Nov 1st to Jan 31st. These rental expenses are split into each month and the accounting entries are as follows:


Multiperiod Accounting Journal Entries:

Accounting Date Dr/Cr Journal Accounting Dr Accounting Cr
November 30th Dr Item Expenses 4000
Cr Deferred Item Expense 4000
December 31st Dr Item Expenses 4000
Cr Deferred Item Expense 4000
January 31st Dr Item Expenses 4000
Cr Deferred Item Expense 4000



Setup for Multiperiod Accounting in the Cloud

To set up Multiperiod Accounting in the Cloud: 

  • Start by creating a Journal Line Rule in the “Manage Journal Line Rules” section under Payables. This rule should be configured to apply period-wise. 
  • Manage conditions within the Journal Line Rule to ensure it operates effectively. This involves defining specific criteria for when the rule should be applied. 



Fig.1: Condition details in Manage Journal Line Rule


  • Within the Journal Line Rule, configure advanced options as needed to tailor the rule to your organization’s requirements. 



Fig.2: Advanced Options in Manage Journal Line Rule


  • Assign accounting attributes within the Journal Line Rule to ensure accurate allocation of accounting entries. 


Accounting- Attributes-Assignments-in-Manage-Journal-Line-Rule

Fig.3: Accounting Attributes Assignments in Manage Journal Line Rule


  • Once the Journal Line Rule is defined, assign it to a Subledger Journal Entry Rule Set under Invoice Accrual. This step ensures that the rule is applied correctly within the broader accounting framework. 



Fig.4: Subledger Journal Entry Rule Set Assignments


  • Finally, activate the status of the Subledger Journal Entry Rule Set to enable the Multiperiod Accounting setup to become operational. 



Fig.5: Subledger Journal Entry Rule Set Activation


By following these steps, you can effectively configure Multiperiod Accounting in the Cloud to streamline expense recognition across multiple accounting periods.


Functional Workflow of Multiperiod Accounting Invoice

  • Create an AP invoice. Enter the values for multiperiod start and end dates and the multiperiod accrual account in Line Level.
  • Validate the invoice.
  • Post to Ledger for Account the Invoice
  • Submit the Schedule Process “Create Multiperiod Accounting” to generate multiperiod recognition journal entries using multiperiod journal line rules.
  • View the report output detailing account details in required formats such as PDF, Excel, etc…


AP Invoice Creation

To create an AP invoice:

  • Navigation: Payables > Create Invoice
  • Fill in the necessary details for Multiperiod Accounting, as shown in Figure 6, ensuring accuracy in the live environment. 


AP-Invoice-Multiperiod-Accounting-Details-in-Line- Level

Fig.6: AP Invoice Multiperiod Accounting Details in Line Level


  • Validate the invoice to check for any errors or discrepancies.  
  • Post the validated invoice to the ledger to record the transaction. 
  • View the accounting entries for the AP invoice, as depicted in Figure 7. 



Fig.7: AP Invoice Accounting Entries


  • Submit the Multiperiod Accounting Program to generate accounting entries spanning multiple periods. 
  • Monitor the progress of the Multiperiod Accounting process, as illustrated in Figure 8. 



Fig.8: Create Multiperiod Accounting Schedule Process


  • Access the report output in PDF format, organized by period, for detailed insights into Multiperiod Accounting for each month (November, December, January), as shown in Figures 9, 10, and 11, respectively. 


PDF-Report-Output- for-Multiperiod-Accounting-for-November-Period

Fig.9: PDF Report Output for Multiperiod Accounting for November Period



Fig.10: PDF Report Output for Multiperiod Accounting for December Period


PDF Report Output for Multiperiod Accounting for January Period

Fig.11: PDF Report Output for Multiperiod Accounting for January Period


Roles and Privileges

  • Accounts Payable Manager
  • General Accountant


Tips and Considerations

  • The accrual account can’t be modified once the Invoice has been posted into the Ledger.
  • Run the “Create Multiperiod Accounting” Schedule Process at the time the Period closes.
  • Invoices must be approved and not on hold
  • The start date and end date will not be editable after the expenses are completely recognized in Multiperiod Accounting.


Business Benefits

  • Multiperiod accounting enables you to create entries across more than one accounting period for a single accounting event.
  • Determine how to distribute the amount across accounting periods.
  • Specify a prepaid expenses or deferral account.
  • Preview of multiperiod journal entries before creating and posting final entries by:
    1. Submitting the Multiperiod Accounting process in Draft mode.
    2. Review the multiperiod journal entries in the Create Multiperiod Accounting Execution Report.


The Bottom Line:

In conclusion, Multiperiod Accounting presents a sophisticated solution for managing expenses over extended periods, aligning with the complex financial needs of modern businesses. By offering flexibility in recognizing expenses and providing detailed insights into accounting entries, it enhances accuracy and transparency in financial reporting. Embracing Multiperiod Accounting can lead to improved financial management practices and ultimately contribute to organizational success in the long run.


Author: Srinivas Mamidi, Oracle ERP Cloud Functional Consultant

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