Purchasing entries

[acsekharspl]

Hi All,

Please can any body send me purchasing accounting entries .

[Velumuthu]

Hi,

When you receive the Material

DR Receiving Material a/c

CR AP Inventory Accrual a/c


After Inspection

DR Inventory a/c

CR Receiving Material a/c

On PO matching

DR AP Inventory Accrual a/c

CR Supplier Liability a/c


Regards,
Velumuthu.S

[liz]

Hi Velumuthu,

Now the above is the case with the inventory items that accrue on receipt. What happens to the expense items which accrue at period end. Can you also eleborate on the reversal of accruals on the next period and the accruals write off.

Thanks

Liz

[Velumuthu]

Hi,

Accounting Entrues for Expenses Items accrue Period End

PO Charge Account DR

Expense AP Accrual CR

No Accounting event takes place on creation,receipt & delivery of items.

Regards,
Velumuthu.S

[SIVAKUMAR_G]

Hi

One Important thing I would like to hightlight and all the Purchasing entries topic miss this aspect. If you are using Encumbrance then system does generate accounting entries at the time of Purchase Requisition approval andnot at the time of receiving inventory. But these will be called as Encumbrance entry and not actual entry

At the time of PR approval

Dr PO Charge A/c
Cr Reserve for Encumbrance (Coming from GL Set of Books)

At the time PR coverted to PO and PO is approved

For PR entry it reverses the above which in turn releases the fund blocked for commitment

Dr Reserve for Encumbrance (Coming from GL Set of Books)
Cr PO Charge A/c

For PO approval it creates an Obligation entry

Dr PO charge A/c
Cr Reserve for Encumbrance A/c

When an Invoice is created and matched in AP

PO Reversal entry
Dr Reserve for Encumbrance A/c
Cr PO charge A/c

Encumbrance invoice entry
Dr PO Charge a/c Dr
Cr Reserve for Encumbrance

When the invoice is approved and Accounted

Encumbrance invoice entry reversal
Dr Reserve for Encumbrance
Cr PO Charge a/c Dr

For actual Invoice
Dr PO Charge A/c
Cr Liability A/c

The Reason for explaining the above is in most of the Interviews the interviewer asks the question does PR or PO creation generates any accounting entry and immediately most of them say "NO" which is not correct. The right approach is to say "if we use Encumbrance accounting then it does generates accounting entry and if encumbrance is not used then NO accounting entries are generated "

Hope this helps

Regards
Sivakumar

[thinktank]

Thanks Siva for sharing this info.

[shaikjohnpasha]

Hi Siva,
Its a great clarification from your side...still i need one more clarification.Apart from this encumbrance accounting,in which module accounting entries are generated on receiving and inspecting the material/inventory. i mean is it in Inventory or Purchasing.

With regards,
John Pasha Shaik

[SIVAKUMAR_G]

Hi

Refer my Document published for Flow of Accounting in oracle Applications

http://oracle.anilpassi.com/flow-of-acc ... ons-3.html

"The Destination Type is showing as receiving for the first line Receive transaction type and Second Line Destination Type is showing as Inventory for deliver transaction type. The Functionality of this is as follows. The First line is created when you receive inventory in main
Inventory Organization and when you do enter Receiving Transactions; it will change it from Main Inventory Organization to Sub Inventory. It depends on the Receipt Routing what you enter in PO Receiving control form. When You set it as Direct delivery both lines will get created simultaneously and when you set it as Standard Receipt, then the first line will get created when you enter Receipt and second line will get created when you do Receiving transaction and choose the Sub inventory.

The Significance of this from Accounting Perspective is the destination type of receiving (i.e.) First line only you can view the accounting in Purchasing Module. The Second line where the Destination type is Inventory, you can view only in Inventory Module. If you Keep the Cursor in second line and click on Tools, the View Accounting is disabled.

Hope this helps

Regards
Sivakumar

[Racle11i]

Thank you very much..most useful doc