Before we progress, some terminologies of R12 must be revisited. In 11i we had set of books, and in R12 we call them Ledgers. Likewise in R12 we also have secondary ledgers and reporting ledgers. Hence from 11i perspective think of Ledger as Set of Books. As for Subledger, a Subledger is nothing but a module like AP/AR/PO/Inventory etc.
In the diagram below, the second scenario is explained whereby let's say that payables module generates a charge account segment combination for an invoice distribution line as A.B.C.D. In such case, if SLA module is not customized, then the very same A.B.C.D combination will be passed to Oracle General Ledger via the SLA. And before you wonder... Yes, SLA module has its own set of tables to capture these accounting entries.
In the image above, SLA passes to GL whatever value is fed by the Subledger, in this case A.B.C.D
There are cases where SLA module can alter or massage the CCID or code combination that is generated in Subledger before transferring the same to Oracle General Leger. This scenario is explained whereby let's say that payables module generates a charge account segment combination for an invoice distribution line as A.B.C.D. In such case, if SLA module is customized, then the A.B.C.D code combination of Payables can be passed to Oracle General Ledger via the SLA as A.B1.C1.D instead.
The most important application however of the SLA is its ability to create shadow journals that contain different values or differing credit/debit entries for the transactions. This is the main reason why SLA module was invented/designed. Let us take an example. For company "Apps2Fusion UK", it might have operations in France, which is "Apps2Fusion France". With UK being the parent company, the French company has to do accounting journals in formats that can be reported as per French legislation and also as per UK legislation. For example, in France an inventory item is accounted as expense, whereas in UK the inventory item is accounted as an asset. In the example below, A.B.C.D is never passed to the GL. Instead to GL A.B1.C1.D is passed to the Primary Ledger FRANCE and A2.B2.C.D is passed to the Secondary Ledger UK. The picture below shows the role that SLA plays in such scenario.