3C's of Accounting in Oracle EBS

In Release 12, "Set of Books" have been Substituted by "Ledgers".
In previous versions, set of books consists of,
C = Chart of Accounts
C = Calendar
C = Currency

In Release 12, ledgers Consists of
C = Chart of Accounts
C = Calendar
C = Currency
C = Accounting Method or Convention

Selection of Accounting method is nothing new for people using earlier versions of Oracle Applications, it is carried out at the Subledger level. The available methods were Accrual and Cash in previous versions.

In Release 12, the selection of Accounting method is done at the ledger creation level itself. And this is the only place where the accounting method is selected and not in any other place. Accounting method can be changed any time, it will not affect the existing transactions.

The (Seeded) Accounting methods in Release 12,
1) Accrual with Encumbrance Accounting
2) Cash with Encumbrance Accounting
3) Standard Accrual
4) Standard Cash
5) US Federal Accounting

The basis of Selection of Accounting methods:
All upgraded, non-public-sector ledgers will have a Subledger accounting method assigned called Standard Accrual or Standard Cash. This is same as the Cash and Accrual Accounting in 11i.

All upgraded public sector ledgers will have a subledger accounting method assigned called Encumbrance Accrual or Encumbrance Cash. This come in to place when we use purchasing modules, and transfer of encumbrance journals becomes necessary.

For Federal customers, all upgraded ledgers will have the US Federal Accounting subledger accounting method assigned.

Note: You cannot delete the Subledger accounting method but you can change the Subledger accounting method and Subledger accounting options at any time. And also you can create a new Subledger method and attach it to your ledger.