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Hi Murthy,

To make Sivakumar's excellent solutions more clear:

Option 'a' doesn't not involve AP at all. It is a JV involving an Expense (or conceivably an Asset Account) and the Bank Account. The supplier liability account is not involved at all.
The entry is the recording of the Manual cheque issued. <b>There is no entry in Payables for the issue of the manual cheque</b>

Probably if the sequence of events is made clear with an example, the understanding will be easier.

You incur an expense of INR 125/- for cleaning the office. Your accounting policy states that all payments above INR 100/- have to be made by cheque. The person who cleans the office does not have a bank account but is willing to accept a bearer cheque made out in his name.
You do not want to create a supplier in AP for payments of this nature.

In the above scenario, you will make the cheque manually <b>(This is what Sivakumar means by manual cheque and this not not to be confused with "Manual" type of payment in AP.)</b> Then instead of making a payment in AP, you will pass a JV directly debiting the expense in this case and crediting Bank Account.

A JV can be reconciled in bank reconciliation.

I hope the explanation is clear.

[quote]Hi Folks,

a valueble discussion against on most common point and Mr. Siva Kumar has given some good probable solutions.

but still i am having doubts as follows On points a&C.

a) Create a JV in GL debiting the Expense Account and crediting the Bank account and issue manual cheque and you can reconcile this transaction.

c) In Payables, Create one Dummy Supplier and use it for all one time
Payments and in Description of the Invoice mention the Nature of Payment and the person to whom it is paid and issue Manual Check

As per the explanation in Point a, we have entered in JE in GL manually, how the trial balance will be satisfied as the GL Trail Balance will be higher than the AP Trail Balance. How can we make eqully balancing.

Next , as per point C explnation, when i am trying to make payment by selecting Manual method in Payment window , i am getting error message,"THE PAYMENT DOCUMENT HAS NO ASSOCIATED INVOICE PAYMENTS".

My doubt is How can we make eqully balancing the AP&GL Traial balances as far Oracle ERP point of view, when you make transactions by entering the JE in GL manually and payment given through manaul chenck
.

Let me know.

thanks and regards,
Murthyoracle


<i><div align="right">Originally posted by Murthyoracle

HI Folks,

Continue of this issue..i faced requirement like client does not make any invoices for prepayment in AP and deposits inAR...as per this scenario i have provided solution in AR..Like Create receipt against ON ACCOUNT then when trax will come again re-apply for that....
I also feel better to get only payment for advances with out invoices.


Thanks
Swamy

Hi ramsabi,

Thanks for your clear explanation. I found this question from old searching. Very interesting .

Is it good practice to enter transactions in GL Directly? Still my doubt is how can u satisfy the trial balance of Rs.100/- or Rs. 125/- paid towards clearing charges. I understood the entry concept upto the extent of GL. How can u adjust the said amount in trail balances and Income & Expenditure& Balance Sheet accounts. Can u show the process . This is very good concept and so many times we have to face or facing this question from Business.

I hope you will give celar picture.

Thanks in advance .
Murthyoracle.

Hi ramsabi,

In continuation my earlier querry, what about point C of Siva kumar explanation. How it works. How can u make reconciliation in Bank and ERP point of view all the above transactions.


I hope you will give celar picture.

Thanks in advance .
Murthyoracle.

Hi Murthy,

In my opinion (and this is my opinion only, there can be different views) theree are no good practices and bad practices. There are only business requirements and solutions to meet business requirements. As Sivakumar says we are consultants and our job is to meet business requirements with adequate controls.

As an organisation, you may not be using AP at all !! In which case you will be passing all procurement related entries in GL !!

The point is that we need to ensure that we highlight the risks involved and the controls needed.

I do not understand the second part of your question.

As I said in my response the entry is a simple JV debiting expense and crediting bank account. GL Trial Balance will therefore tally. There is no need to adjust anything.

AP is not at all involved.



[quote]Hi ramsabi,

Thanks for your clear explanation. I found this question from old searching. Very interesting .

Is it good practice to enter transactions in GL Directly? Still my doubt is how can u satisfy the trial balance of Rs.100/- or Rs. 125/- paid towards clearing charges. I understood the entry concept upto the extent of GL. How can u adjust the said amount in trail balances and Income & Expenditure& Balance Sheet accounts. Can u show the process . This is very good concept and so many times we have to face or facing this question from Business.

I hope you will give celar picture.

Thanks in advance .
Murthyoracle.

<i><div align="right">Originally posted by Murthyoracle

ramsabi,

I totally agree with your view, what ever it may be , we have to fullfil the Business requirement with the probable solution. I should not ask like this. As per my earlier opinion no manual entries will be done in GL. That 's why i have asked and also i have totally forgotten and not even thinking there are chances for not implementing subledgers.

Great. Now i understood the concept , if any subledger will not implemented by the business, then we can make it through GL and through manually. It means Reconcialition also will be taken manually.

Anyhow thanks for u and Siva Kumar for knowing me Concept in a different way.

Keep sharing information.

Thanks and regards,
Murthyoracle

Hai,



Normally in the context of accounts invoice means it is an invoice from supplier. If you consider this only as an invoice, then definitely it is very much possible to make payment without any invoice of vendor/supplier( we can say advance payment).


First we talk about AP Module :::

But if you consider AP module ..., AP module doesn?t allow you to make payment if you are not liable to pay. Through AP module if you want to make a payment to a vendor without invoice , you should be liable to pay (which i.e. the liability is not existing in this context ) . But to make payment possible , we create a notional liability through PREPAYMENT INVOICE. Actually it is not an invoice and the entries in this invoice are notional entries , which creates liability and create feeling of liability , we can say for our comfort a notional or pseudo invoice. PREPAYMENT INVOICE creates liability, payment can be made after this.

But if you consider the definition of Accounting ?Accounting involves recording of transactions ? . Transaction is an event (happening) of financial nature. With PREPAYMENT INVOICE nothing is happening , but still we are recording , that is why in this PREPAYMENT INVOICE, I say is a notional invoice.

From GL Module :::

Cut a cheque (pay Cash) debit prepaid expenses and credit bank/cash . If it is an advance payment you should remember the vendor , which is not advisable .And also if the payment is associated with TDS it needs too much of manual remembering , then things will be person driven not system driven.
If the vendor is one-time vendor , then debit expenses account and credit bank/cash . The matter is over and no need of maintaining vendor data in AP.


vvrsankar