Top 50 Oracle Apps Functional Interview Questions and Answers by IT Trainings Institute

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Introduction

Preparing for an Oracle Apps Functional interview? This Top 50 Oracle Apps Functional Interview Questions and Answers guide by IT Trainings Institute is your go-to resource for Oracle Apps Functional interview preparationโ€”featuring commonly asked questions and answers to help both beginners and experienced candidates succeed. If you’re looking to strengthen your fundamentals, check out our comprehensive Oracle Apps Functional course to boost your knowledge and confidence.

So, letโ€™s dive into this comprehensive collection of Oracle Apps Functional Interview Questions and Answers, carefully categorized by IT Trainings Institute to support your interview preparation journey:

Oracle Apps Functional Interview Questions and Answers for Freshers

1. What is Oracle E-Business Suite (EBS)?

Answer:
Oracle E-Business Suite (EBS) is an integrated set of business applications that help companies manage:

  • Finance (Oracle Financials)

  • Human Resources (HRMS)

  • Supply Chain Management (SCM)

  • Manufacturing, Projects, Procurement, CRM, and more

It provides a centralized and modular ERP solution.

2. What is the role of a Functional Consultant in Oracle Apps?

Answer:
A Functional Consultant:

  • Understands business requirements

  • Maps them to Oracle ERP features

  • Configures modules (like AP, AR, GL, PO, OM)

  • Provides support for testing, training, and documentation

  • Coordinates with technical teams for custom solutions

3. What are the major modules in Oracle EBS?

Answer:

  • Oracle Financials: GL, AP, AR, FA, CM

  • Supply Chain Management (SCM): PO, OM, INV, WIP

  • Human Resource Management (HRMS)

  • Customer Relationship Management (CRM)

  • Project Accounting

  • Manufacturing

4. What is a Set of Books / Ledger in Oracle Financials?

Answer:

A Set of Books (in R12, it is called a Ledger) defines the accounting setup:

  • Chart of Accounts
  • Currency
  • Calendar
  • Accounting Method

Each ledger maintains its own financial records.

5. What is Multi-Org in Oracle Apps?

Answer:
Multi-Org allows a business to manage data across multiple organizations (legal entities, operating units, inventory orgs) in one installation. It includes:

  • Business Group

  • Legal Entity

  • Operating Unit

  • Inventory Org

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6. What is a Chart of Accounts (COA)?

Answer:
A Chart of Accounts is a list of accounts used to define a companyโ€™s financial structure. It includes multiple segments like:

  • Company

  • Department

  • Account

  • Product

Each segment helps classify and report transactions accurately.

7. What is a Payable Invoice and its types?

Answer:
A Payable Invoice is a document to record what the company owes to suppliers. Types:

  • Standard Invoice

  • Credit Memo

  • Debit Memo

  • Prepayment

  • Expense Report

8. What is the Procure to Pay (P2P) Cycle?

Answer:
The P2P cycle is the process of buying and paying for goods/services:

  1. Requisition

  2. Purchase Order (PO)

  3. Receipt

  4. Invoice

  5. Payment

9. What is the Order to Cash (O2C) Cycle?

Answer:
The O2C cycle is the process from receiving a sales order to collecting payment:

  1. Sales Order

  2. Shipping

  3. Invoice

  4. Receipt

  5. Revenue Recognition

10. What is Subledger Accounting (SLA)?

Answer:
SLA in R12 is a rules-based engine that determines how accounting entries are created from subledgers like AP, AR, PO, etc.
It provides more flexibility and audit tracking.

11. What is a Responsibility in Oracle Apps?

Answer:

A Responsibility in Oracle Apps defines a user’s access privileges. It determines:

  • Which menus and functions a user can access.
  • Which data they can view and modify.
  • Which reports and concurrent programs they can run.

Example: A “Payables Manager” responsibility would allow a user to create invoices, make payments, and view payable reports, but likely not access General Ledger functions.

12. What are Flexfields in Oracle Apps? What are the two main types?

Answer:

Flexfields are highly customizable fields within Oracle Applications that allow organizations to capture additional, user-defined information to meet specific business needs without modifying standard Oracle code. The two main types are:

  • Key Flexfields (KFF): Used to build intelligent keys (e.g., Chart of Accounts, Item Flexfield) that represent unique identifiers with a structured format.
    • Example: In the Chart of Accounts, segments like Company, Department, and Account combine to form a unique account code.
  • Descriptive Flexfields (DFF): Used to capture additional descriptive information that is not part of the standard Oracle data model. They provide “extra” fields for forms and tables.
    • Example: On a Purchase Order line, you might add a DFF to capture “Project Code” or “Customer Reference Number” if those aren’t standard fields.

13. What is a Value Set in Oracle Apps?

Answer:

A Value Set is a list of predefined values that can be associated with a Flexfield segment or a report parameter. It ensures data integrity and helps enforce data validation rules by restricting user input to a controlled list.

14. Explain the concept of Profile Options in Oracle Apps.

Answer:

Profile Options are user-definable parameters that control the behavior and appearance of Oracle Applications at various levels (Site, Application, Responsibility, User). They allow administrators to customize the system without code changes.

Example:

The “MO: Operating Unit” profile option determines which operating unit’s data a user can access when logged in with a specific responsibility.

15. What is Concurrent Program in Oracle Apps?

Answer:

A Concurrent Program is an executable program (e.g., SQL*Plus, SQL Loader, PL/SQL, Java) that runs in the background. They are used for long-running tasks, data processing, and generating reports.

Example:

The “AutoInvoice Import Program” is a concurrent program used to import and create AR invoices from external systems.

16. What is the significance of the GL (General Ledger) module?

Answer:

The General Ledger (GL) module is the core of Oracle Financials. It is responsible for:

  • Recording and summarizing all financial transactions from various subledgers (AP, AR, FA, etc.).
  • Maintaining the Chart of Accounts.
  • Generating financial statements like the Income Statement and Balance Sheet.
  • Performing period-end closing activities.

17. Differentiate between a Primary Ledger and a Secondary Ledger in Oracle Financials.

Answer:

  • Primary Ledger: The main accounting record for a legal entity, defined with its primary Chart of Accounts, Calendar, Currency, and Accounting Method.
  • Secondary Ledger: An optional, supplementary ledger that maintains accounting data for the same legal entity as the primary ledger but uses a different accounting convention (e.g., different Chart of Accounts, currency, or accounting method) for statutory reporting or management analysis purposes.

Example: A company might have a Primary Ledger in USD using US GAAP, and a Secondary Ledger in EUR using IFRS for European reporting.

18. What is the purpose of AutoAccounting in Oracle Apps?

Answer:

AutoAccounting is a feature primarily used in modules like Oracle Receivables (AR) and Project Accounting. It automatically generates account code combinations for transactions based on predefined rules. This simplifies data entry and ensures consistent accounting.

 

Example: In AR, AutoAccounting can derive the revenue account based on the sales item, customer, or sales representative.

19. Explain the concept of Approvals in Oracle Purchasing (PO).

Answer:

Approvals in Oracle Purchasing allow organizations to define and enforce a hierarchy for approving purchase requisitions and purchase orders. This ensures that spending is controlled and authorized by appropriate personnel.

 

Example: A purchase order for a large amount might require approval from the department manager, followed by a finance manager, and finally the procurement head.

20. What is an Inventory Organization?

Answer:

An Inventory Organization in Oracle EBS represents an entity that tracks and transacts items. It can be a manufacturing plant, a warehouse, or a distribution center. It defines the physical location where items are stored and managed.

Example: A company might have an “East Coast Warehouse” inventory organization and a “West Coast Manufacturing Plant” inventory organization.

21. What is the difference between a Standard Purchase Order (PO) and a Blanket Purchase Agreement (BPA)?

Answer:

  • Standard Purchase Order (PO): A legally binding document that specifies the details (items, quantities, prices, delivery dates) for a one-time purchase from a supplier.
  • Blanket Purchase Agreement (BPA): A long-term agreement with a supplier for specific items or services, with agreed-upon terms and conditions, but no specific delivery dates or quantities specified upfront. Releases (mini-POs) are created against a BPA as items are needed.

22. What is a Requisition in Oracle Purchasing?

Answer:

A Requisition is an internal document used to request goods or services within an organization. It’s the first step in the Procure-to-Pay cycle, signaling a need for procurement. Requisitions can be internal (for stock) or external (from a supplier).

23. What is the role of an Item Master in Oracle Inventory?

Answer:

The Item Master (or Master Item Organization) is a central repository for defining and maintaining all items that a company buys, sells, manufactures, or stocks. It stores common attributes for items, ensuring consistency across all inventory organizations.

Example: An item like “Laptop Model X” is defined once in the Item Master, and its attributes (e.g., unit of measure, purchasing category) are inherited by specific inventory organizations where it is stocked.

24. What is a Sales Order in Oracle Order Management?

Answer:

A Sales Order is a document that records a customer’s request for goods or services. It captures details like customer information, items ordered, quantities, prices, shipping details, and payment terms. It initiates the Order-to-Cash cycle.

25. Explain the purpose of Item Categories in Oracle Inventory.

Answer:

Item Categories are used to group items that share similar characteristics. This helps in:

  • Reporting and analysis.
  • Defaulting accounting information.
  • Defining purchasing and inventory controls.

Example: All “Electronics” could be in one category, while “Office Supplies” are in another.

26. What is the purpose of Fixed Assets (FA) module?

Answer:

The Fixed Assets (FA) module in Oracle Financials manages the entire lifecycle of a company’s fixed assets (e.g., buildings, machinery, vehicles). This includes:

  • Asset acquisition.
  • Depreciation calculation and accounting.
  • Asset revaluation.
  • Asset retirement/disposal.

27. What is a Journal Entry in Oracle GL?

Answer:

A Journal Entry is a record of a financial transaction in the General Ledger. It typically consists of at least two lines, with a debit to one or more accounts and an equal credit to one or more other accounts, maintaining the accounting equation.

Example: To record a cash payment for rent:

  • Debit: Rent Expense Account
  • Credit: Cash Account

28. What are the key elements of a Payable Invoice?

Answer:

Key elements of a Payable Invoice include:

  • Supplier Name: The vendor from whom the goods/services were purchased.
  • Invoice Number: Unique identifier from the supplier.
  • Invoice Date: Date of the invoice.
  • Invoice Amount: Total amount due to the supplier.
  • Currency: Currency of the invoice.
  • Line Items: Details of goods/services purchased (description, quantity, unit price).
  • Distribution Accounts: The GL accounts to which the invoice amount will be expensed or capitalized.
  • Payment Terms: Agreed-upon terms for payment (e.g., Net 30, 2% 10 Net 30).

29. What is a Debit Memo in Oracle Payables and Receivables?

Answer:

  • Payables Debit Memo: A document created by the buyer (your company) to reduce the amount owed to a supplier, often due to returned goods, damaged goods, or overcharges. It effectively requests a credit from the supplier.
  • Receivables Debit Memo: A document created by the seller (your company) to increase the amount a customer owes, typically for additional charges, interest, or corrections.

30. What is a Credit Memo in Oracle Payables and Receivables?

Answer:

  • Payables Credit Memo: A document received from a supplier reducing the amount your company owes them. This is typically issued when goods are returned, or there’s an overcharge.
  • Receivables Credit Memo: A document issued by your company to a customer, reducing the amount they owe, often due to returned goods, service issues, or billing errors.

Oracle Apps Functional Interview Questions and Answers for Experienced

31.Explain the core components of the Oracle E-Business Suite architecture from a functional perspective. How does understanding this architecture benefit a functional consultant?

Answer : 

While not a technical deep dive, a functional consultant should understand:

    • Multi-Tier Concept: Client (user interface), Application (where processes run), Database (where data resides).
    • Module Interdependencies: How different modules (e.g., PO to AP, OM to AR to GL) are linked and pass data.
    • Key Functionality within Tiers: E.g., Forms/OAF for user interaction, Concurrent Managers for batch processing/reports, Workflow for approvals, Flexfields for extensibility.
    • Benefit: Enables troubleshooting (knowing where to check for issues), understanding data flow, designing effective solutions, and communicating effectively with technical teams.

32. Describe the concept of "Multi-Org" (Multiple Organizations) in Oracle EBS. What are the key organizational units and their significance?

  • Answer 
  • Explain Multi-Org as the ability to manage multiple legal entities, operating units, or business groups within a single EBS instance.
  • Key Organizational Units:
  • Business Group: Highest level, represents an enterprise or a major division. Primarily for HR/Payroll.
  • Legal Entity: Represents a legal company that reports to government agencies. Responsible for taxes, legal reporting.
  • Operating Unit: Represents a division that performs business operations (sales, purchasing). Linked to a Legal Entity. Transactions occur at this level.
  • Inventory Organization: Stores and transacts items. Linked to an Operating Unit.
  • Ledger (Set of Books in R11i/Primary Ledger in R12): Defines the accounting structure (Chart of Accounts, Calendar, Currency, Accounting Method). Linked to Legal Entities.
  • Significance: Enables centralized management with decentralized operations, supports diverse business models, and ensures compliance with legal and regulatory requirements.

33. Differentiate between a Key Flexfield (KFF) and a Descriptive Flexfield (DFF). Provide a functional example for each in a module you're familiar with.

Answer :

  • Key Flexfield (KFF): Defines the structure for unique identifiers (intelligent keys). Segments combine to form a unique code.
  • Functional Example (General Ledger): The Accounting Flexfield (Chart of Accounts) with segments like Company, Department, Account, Cost Center. This uniquely identifies an accounting combination.
  • Descriptive Flexfield (DFF): Provides extensible fields to capture additional, context-sensitive information without modifying standard tables.
  • Functional Example (Purchasing – Suppliers): Adding DFFs to the Supplier form to capture “Supplier Rating,” “Primary Industry,” or “Certification Date” for a specific supplier type (e.g., ‘Manufacturer’)

34. Explain the role of Profile Options in Oracle EBS. How do they influence application behavior, and what are the different levels at which they can be set?

  • Answer :
  • Profile options are user-definable parameters that control the behavior of Oracle Applications.
  • Influence: Control defaults, enable/disable features, set security parameters, determine display formats, etc. (e.g., “MO: Operating Unit” defaults the OU for a responsibility).
  • Levels (Hierarchy from highest precedence to lowest):
    1. User: Specific to a single user.
    2. Responsibility: Applies to all users assigned to that responsibility.
    3. Application: Applies to all users of a specific application (e.g., Payables).
    4. Site: Applies to all users across the entire EBS instance.
  • Significance: Allows for flexible configuration without code changes, catering to diverse business needs and user roles.

35. Describe the critical components of a Primary Ledger in Oracle R12. How do these components ensure financial integrity and reporting accuracy?

  • Answer :
    1. Chart of Accounts (COA): Structure of accounts used to record transactions. Ensures consistent classification.
    2. Calendar: Defines accounting periods (e.g., fiscal year, quarters, months). Ensures transactions are posted to correct periods.
    3. Currency: Functional currency of the ledger. Ensures all transactions are converted and reported consistently.
    4. Accounting Method: Rules for generating accounting entries (e.g., Standard Accrual). Ensures compliance with accounting standards.
  • Integrity/Accuracy: These four C’s define the fundamental rules for financial recording and reporting, ensuring consistency, compliance, and accurate aggregation of financial data.

36. Walk through the journal entry lifecycle in Oracle GL, from creation to posting. What are the key statuses and potential functional issues at each stage?

Answer :

  • Creation: Manual, Recurring, Mass Allocation, Journal Import (from subledgers or external systems).
  • Validation: Checks for balanced entries, valid accounts, open periods.
    • Issues: Unbalanced journals, invalid accounts (e.g., non-posting segments), closed periods.
  • Approval (Optional): Workflow-driven approval process.
    • Issues: Workflow stuck, incorrect approver, approval rules not met.

37. Explain the end-to-end Procure-to-Pay (P2P) cycle in Oracle EBS, highlighting the key integration points between Purchasing and Payables.

Answer :

  1. Requisition Creation: Internal user request for goods/services.
  2. Purchase Order (PO) Creation: Based on requisition, sent to supplier.
    • Integration: PO linked to Requisition.
  3. Receiving: Goods/services received against a PO.
    • Integration: Receipt data (RCV_TRANSACTIONS) flows to AP for Invoice Match. Inventory updated.
  4. Invoice Creation: Supplier sends invoice, matched against PO/Receipt.
    • Integration: Invoice Workbench matches against PO and Receipts (3-way matching). Accounting entries generated.
  5. Payment: Invoice paid to supplier.
    • Integration: Payment details update AP and GL cash accounts.

38. Describe the different types of Invoice Matching (2-way, 3-way, 4-way) in Oracle Payables. When would a functional consultant recommend each?

Answer :

2-Way Match: Invoice matched to Purchase Order only (PO quantity/amount vs. Invoice quantity/amount).

Recommendation: For services or items not tracked in inventory where receipt is not necessary or practical.

3-Way Match: Invoice matched to Purchase Order AND Receipt. (PO vs. Receipt vs. Invoice).

Recommendation: Standard for physical goods where receiving inspection is important, ensuring goods are received before payment.

4-Way Match: Invoice matched to Purchase Order, Receipt, AND Inspection.

Recommendation: For critical items requiring quality checks, ensuring goods are not just received but also passed inspection before payment.

Functional Configuration: Matching options set at Supplier Site, PO Header/Line, or Item level.

39. Walk through the Order-to-Cash (O2C) cycle in Oracle EBS, emphasizing the handoffs between Order Management, Inventory, Shipping, Accounts Receivable, and General Ledger.?

Answer :

  1. Sales Order Creation: Customer order in Order Management.
  2. Order Booking/Scheduling: Checks availability, reserves inventory.
  3. Pick Release: Inventory module picks items from warehouse.
  4. Shipping: Items shipped, delivery confirmed.
    • Handoff: Shipping confirmation triggers interface to AR.
  5. Invoice Generation (AutoInvoice): AR creates invoice based on shipping data. 6. Payment Receipt: Customer pays invoice.
    • Handoff: Payment applied in AR, cash accounted in GL.
  6. Revenue Recognition: Accounting entries generated in GL.

40. Explain Revenue Recognition in Oracle Accounts Receivable. How does Oracle handle scenarios like deferred revenue or multi-element arrangements?

Answer :

  • Standard Revenue Recognition: Revenue recognized upon invoice creation or shipment, based on defined rules.
  • Deferred Revenue: Explain how revenue can be deferred (e.g., for subscriptions, services delivered over time). AR uses accounting rules/auto-accounting to create deferred revenue entries.
  • Multi-Element Arrangements (PPR – Project Party Revenue / ASC 606): Discuss how Oracle Financials for Contracts/Service Contracts/Project Billing or a custom solution handles complex revenue allocation across multiple deliverables in a single contract.

41.What is Oracle Workflow, and what are its functional applications in Oracle EBS? Provide examples from a module you're familiar with.

Answer:

    • Functional Implication: A single responsibility can access data from multiple operating units without switching responsibilities. Reduces responsibility proliferation, streamlines operations.
    • Configuration Steps:
      1. Define Security Profiles (assign operating units).
      2. Assign Security Profile to “MO: Security Profile” profile option at Responsibility or User level.
      3. Set “MO: Default Operating Unit” profile option (optional) for default transactional OU.
      4. Run “Security List Controller” concurrent program.

42. Describe the functional implications and configuration steps for implementing Multi-Org Access Control (MOAC) in Oracle R12.

Answer:

  • Payables Credit Memo: A document received from a supplier reducing the amount your company owes them. This is typically issued when goods are returned, or there’s an overcharge.
  • Receivables Credit Memo: A document issued by your company to a customer, reducing the amount they owe, often due to returned goods, service issues, or billing errors.

43. How does Oracle Subledger Accounting (SLA) work in R12? What are its benefits, and how do you configure it to meet specific accounting requirements?

Answer :

Explain SLA as the centralized accounting engine for all subledgers (AP, AR, PO, OM, etc.) before posting to GL.

  • Benefits:
  • Centralized Accounting: All subledgers generate accounting through a consistent framework.
  • Flexible Accounting Rules: Highly configurable to meet specific accounting policies (GAAP, IFRS, local statutory).
  • Detailed Traceability: Ability to drill down from GL to original subledger transactions.
  • Multiple Accounting Representations: Can generate accounting for multiple ledgers (e.g., Primary and Secondary).

44. Discuss the functional flow of the AutoInvoice process in Oracle Accounts Receivable. What are the common issues faced and how do you troubleshoot them functionally?

Answer:

    • Interface Errors: Data validation failures (e.g., invalid customer, missing GL accounts, wrong dates).
    • Setup Errors: Invalid AutoAccounting rules, missing conversion rates, incomplete transaction types.
    • Performance: Large volumes causing long run times. 

45. Describe your approach to gathering business requirements for a new Oracle EBS implementation or a major enhancement project.

Answer :

  • Discovery & As-Is Analysis: Understand current processes, pain points, and current systems.
  • To-Be Design: Define future state processes, identify gaps.
  • Stakeholder Engagement: Conduct workshops, interviews (functional users, managers).
  • Documentation: Use tools like BRD (Business Requirements Document), MD50 (Functional Design Document), use cases, flowcharts.

46. How do you approach the Fit-Gap Analysis phase in an Oracle EBS implementation? What are the key deliverables from this phase?

Answer Focus:

  • Purpose: Identify how well standard EBS functionality meets business requirements and where customizations or workarounds are needed.
  • Approach: Map “To-Be” business processes to standard EBS functionality. Document “Fits” (standard solution), “Gaps” (where standard doesn’t meet needs), and “Workarounds” (process changes to fit standard).
  • Key Deliverables:
  • Fit-Gap Document: Lists all requirements, identifies fits/gaps, proposes solutions (customization, workaround, RICEW).

47. What is a RICEW (Reports, Interfaces, Conversions, Enhancements, Workflows) object? How do you work with technical teams to define and deliver these?

Answer :

RICEW is a categorization of technical deliverables needed when standard EBS functionality doesn’t meet a requirement.

  • Reports: Custom reports for specific business needs.
  • Interfaces: Integration with external systems (inbound/outbound).
  • Conversions: Data migration from legacy systems into EBS.
  • Enhancements (Extensions): Custom screens, fields, or logic to extend standard functionality.

48.How do you prepare for and conduct User Acceptance Testing (UAT) for an Oracle EBS project? What are the critical success factors for UAT?

Answer :

  • Preparation:
    • Develop clear UAT test scripts based on business processes.
    • Identify and train UAT testers (end-users).
    • Prepare test data (realistic, covering all scenarios).
    • Set up a dedicated UAT environment.
    • Define defect logging and tracking process.
  • Conducting:
    • Facilitate testing sessions.
    • Provide support to testers.
    • Review and triage defects.
    • Ensure re-testing of fixes.

49. What are the key considerations when planning and executing data conversion (migration) from a legacy system to Oracle EBS?

Answer :

  • Data Scoping: Identify what data needs to be converted (master data, open transactions, historical data).
  • Data Cleansing: Address data quality issues in the legacy system before migration.
  • Data Mapping: Map legacy data fields to Oracle EBS fields.
  • Extraction, Transformation, Loading (ETL): Define the process and tools (e.g., SQL*Loader, custom PL/SQL, external ETL tools).
  • Validation: Thoroughly validate converted data in EBS against legacy reports.
  • Error Handling: Plan for managing and correcting conversion errors.
  • Timing/Downtime: Plan cutover strategy, minimize downtime.
  • Iteration: Expect multiple mock conversions.

50. Describe a challenging functional issue you faced in Oracle EBS. How did you diagnose it, what steps did you take to resolve it, and what was the ultimate outcome?

Answer:

 This is a behavioral question, but it assesses functional troubleshooting.

  • STAR Method: Situation, Task, Action, Result.
  • Diagnosis: How did you identify the problem? (e.g., user complaint, error message, report discrepancy). Did you check setups, data, logs?
  • Steps: What specific functional screens, reports, or queries did you use? Did you involve technical teams, users, or Oracle Support?
  • Resolution: How was it fixed? (e.g., configuration change, data correction, new patch, process change).
  • Outcome: What was the impact of your resolution? (e.g., issue resolved, business process improved, lessons learned).

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