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What is difference between encumberance accrual and standard accrual

Discussion in 'Oracle Financials' started by Hyatt, Feb 11, 2016.

  1. Hyatt

    Hyatt Active Member

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    Hi Guys

    Could you please any one explain me What is difference between Encumbrance Accrual and standard Accrual in SLA

    Regards

    sree
     
  2. alibrahim

    alibrahim Active Member

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    Hi,
    Both are SubLedger Accounting Method (SLAM) which generate JE based on
    Event Model (you can see Transaction Event) but,
    Its recommended to use Encumbrance Accrual when Budgetary Control is enabled so,
    SLAM will generate encumbrance JE.
     
  3. Swarnapriyaa

    Swarnapriyaa Active Member

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    Hi,

    In General Ledger, we can record expenses accrued but not incurred known as encumbrances so that one does not over spend the Budget. Budget Available for spending = Budget - Actual expenditure - Encumbrances. When Budgetary Control is enabled in General Ledger we can choose Encumbrance Accrual method as SLAM so we can record the encumbrances created from Purchase Requisitions, Purchase Orders and AP Invoices from Purchasing and Payables module.
    For more info check Overview of Encumbrance Accounting:
    https://docs.oracle.com/cd/A60725_05/html/comnls/us/gl/enccycle.htm#p_enover

    Standard Accrual Method is used when GL bugdets are not used effectively or when encumbrance transactions are not considered while budgeting.