A fundamental concept in Oracle Applications is the "Ledger." The Ledger represents an accounting representation for an organization that is accountable in a self-contained way. The ledger replaces the 11i concept of a set of books.

1. A ledger provides balanced ledger accounting for the accounting entity and serves as the repository of financial information.
Ledger balances have meaning - they assert that the balance:
  1. on an account
  2. at a given date
  3. has a specific value in a particular currency and
  4. is properly calculated.

2. The four basic elements of ledger are  Chart of Accounts (COA), Calendar, Currency, and accounting Convention and comibned known as 4C. SOB had 3Cs.
The COA provides the account; Calendar the date; Currency the amount; and Convention the calculation.

3. It represents an accounting representation for one or more legal entities or for a business need such as consolidation or management reporting.

Legal Entities can be mapped to entire Ledgers or if more than one Legal Entity is used within a ledger, each Legal Entity is mapped with the balancing segments within a ledger

Secondary Ledger

• If it is required to represent the primary ledger transactions in another accounting method, chart of accounts, calendar, currency, and/or ledger processing options, secondary ledgers will have to be setup.
• At least one C has to be different to create a secondary ledger
• Primary ledger is the main record keeping ledger
• One or more secondary ledgers are created to retain alternate representations for the different reporting requirements.
• Each secondary ledger can differ from the primary ledger by the chart of accounts, calendar, currency, and accounting method.
• When using a second ledger, either the details or only the balances can be transferred 

Notes : Technically the realtionsip between Legal entity and Ledger is many to many as one legal entity can be reoprted in more than one ledger and similarly, one ledger may contains more than one legal entity.

Reporting Currency
If it is required to maintain ledger transactions in multiple currencies, we can use reporting currencies.  It replaces MRC feature in 11i

Reporting currencies are additional currency representations of primary or secondary ledgers

Unlike secondary ledgers, reporting currencies can only differ by currency from their source ledger and must share the same chart of accounts, accounting calendar/period type combination, subledger accounting method, if used, and ledger processing options

Reporting currencies can be used for supplementary reporting purposes, such as consolidation or management reporting

Ledger Sets
Ledgers can be grouped into "Ledger Sets".

1. A Ledger Set is a collection of ledgers that can be managed as though they were one ledger. “Manage" includes reporting, opening and closing, running allocation calculations, and entries.

2. Ledgers sets achieves processing efficiencies.

• open or close periods for multiple ledgers simultaneously
• translate balances for all ledgers in a ledger set
• run recurring journals that update balances for multiple ledgers
• run consolidated financial reports that summarize balances across multiple ledgers in a ledger set

3. All ledgers in a ledger set must share the same chart of accounts and accounting calendar/period type combination. They do not have to share the same currency

Balancing Segment
Ledgers balance, that is, the sum of the debit and credit balances equal each other and you can prepare an income statement and balance sheet from them. Oracle Financials checks that imported data, subledger posting, and journal entries (adjustments) balance, in order to maintain this integrity. Ledgers in a Ledger Set also balance and are also
used for financial reporting.

Within a ledger, you can nominate a segment of your chart of accounts to be a "balancing segment". The values (Balancing Segment Values or BSV) that you assign in that segment will represent entities in your organization for which you want to measure both income and wealth, that is, to prepare income statements and balance sheets, and to measure return on investment.

You might do this for divisions, plants, externally reportable segments, legal entities sharing a jurisdiction, and for other reasons. Customers frequently combine entities into BSVs and report on groups of them. For example, if you want to track return on investment (ROI) on both "plants" and "divisions", you might create balancing segment values as shown in the following table.