Flexfield Qualifiers and Segment Qualifiers - "Natural Account"

Steps for the significance of Natural Account Qualifier

 

1.  Types of Natural Accounts and their Details

2.  Flex field Qualifiers Setup

3.  How and where the type of account was assigned to Natural segment values in oracle apps.   

 

1. Types of Natural Accounts and their Details

There are 5 natures of account. Every account can have any one nature and that’s why we can also call it natural account. These natures are:

1.     Assets

2.     Liabilities

3.     Revenue

4.     Expenses

5.     Owner’s Equity

 ASSET: Literally asset is anything which is valuable to a person, organization, or any entity. For example, we say that “his quick learning ability is an asset to him” or “Her writing ability is her asset”. Why do we say that? Because quick learning skill or writing ability adds value to a person. A writer sells his writing skills to earn money, similarly in terms of business anything which is valuable to a business is the asset.

Say your organization is a pharmaceutical and manufactures Medicines, then all the chemicals used to manufacture medicine is your asset or in other words the Raw Material is your asset. The cash your organization own is an asset because it can be used to buy items or pay your employee who in turn are used to run your business. There are different types of assets, the broader categories of asset are Current Asset and Fixed, but let’s not discuss it here. For now, it is enough to know that asset is anything which is valuable to your organization.

Asset INCREASES when it is Debited and DECREASES when Credited.

Any organization which is registered with the government and exists as Legal Entity is obligated to disclose its Assets on the balance sheet to the government and its Creditors. You might ask Who are creditors and why is it that an organization is obligated to disclose asset to them? With Creditor comes in the liability. 

LIABILITY: Comes from the word “Liable”. Literal meaning of Liable is “to be obligated”, “to be responsible” or “Legally responsible”. In terms of accounting, you become liable, responsible to pay when you buy or purchase anything from another entity. You are liable to compensate whatever you’ve bought. Generally, an organization records its liability and pays it afterward. Again, there are different types of liabilities like Short Term Liability and Long-Term Liability.

Liability INCREASES when it is Credited and DECREASES when Debited. 

OWNER’S EQUITY: This is the share of owner in the business. Equity INCREASES when it is Credited and DECREASES when Debited. 

REVENUE: It is the total gain before inducting any expense. It is mostly associated with the Asset. When any organization sell goods or renders its services, it records an increase in Asset and with this increase comes the gain it has made from selling the goods or services. This gain is called Revenue or Income.

Revenue INCREASES when it is Credited and DECREASES when Debited.

Revenue is not displayed in Balance Sheet. They are reflected in Owner’s Equity.

 EXPENSE: Any payment made is an expense. How are payments made? Either by Cash or Credit which eventually means Cash. So redefining Expense “The outflow of cash to any person or organization for its supplied Goods or rendered Services”. We incur expenses daily, for example, taxi fare is an expense, dine-out payments are expenses. Expenses are associated with Liability. Whenever an organization books a liability, it is mostly against some expense. There is different type of expense

Expense INCREASES when it is Debited and DECREASES when Credited.

Following table shows the Tabular form of the effect

 

Nature	DEBIT	CREDIT
Asset	Increase (+)	Decrease (-)
Liability	Decrease (-)	Increase (+)
Equity	Decrease (-)	Increase (+)
Revenue	Decrease (-)	Increase (+)
Expense	Increase (+)	Decrease (-)

Flex field Qualifiers Setup:

Flex field Qualifiers are registered as part of Flex field Registration.

Navigation: Flex field Registration Form

Query For the title “Accounting Flex field”

Then Click the Qualifiers button in the above form to check the registration of Flex field Qualifiers and Segment Qualifiers.

To check the types of Segment Qualifiers allowed Query for the Quick code type mentioned in the above screenshot in quick codes form.

In Oracle General Ledger, when we attach the “Natural Account” Flex field Qualifier to a segment. System attaches the above set of nature on the Value form. When we add the Natural Account Value, we have to define the nature of the account as well. 

How and where the type of account (Segment Qualifiers) was assigned to Natural segment values in oracle apps.   

Query for the title “Accounting Flex field” in the SEGMENTS Form

Click on the segments button in the above form to view segment details

Choose the appropriate segment and click the “Flex field Qualifiers” button to view the below screen

Close the form and open the “values” to check the values attached to segment

Query for the Accounting Flex field

Choose the segment which has flex field Qualifier as “Natural Account” and then click the “Values, Hierarchy, Qualifiers” tab to check the segment qualifiers assignment.

When we define the natures of the account, the accounting rules of Debit and Credit works accordingly. Like in Payables, the line item is Debit side, so if you’ll give an expense or asset account, it will increase and vice versa. The Flex field qualifiers has more significant in COA setup.