As you know "procure to pay" Business Flow start Purchasing requisition till paying to vendors and most important,

in all the case the purchase is made for basic element called Items. As you know there are three types of items:

Inventory Expense Item Inventory Asset Item Expense item

Definition of above Items used in Purchasing can be best understood as:

Asset flag means means it is an asset and the items value will show in your inventory valuation. Inventory Item

Expense Item These are one which is used for consumable items purchase for your organization. More importantly , for creating an expense item you have to perform following setup doing in the Master Item form.Go to same path in oracle inventory Oracle Inventory -> Items -> Master Items When master items form open Go to Inventory Menu you need to tick followings 1. Inventory item

2. Stock able 3. Transactble 4. Resolvable And you can also setup in Costing and purchasing menu account code as per your requirement.

Asset Item As discussed above , the following attributes need to be enabled for such an item.

Inventory item Stock able transact able Costing flag Inventory asset value

For entering on purchase orders It should have purchased and purchasable flags enabled and you have to make sure you are assigning this item to the Purchasing org which you have defined at Oracle Purchasing > Setup > Organizations > Financial Options > 'Supplier-Purchasing' alternate region 'Inventory Organization' field. The accounting can be best described for such kind of items is;

Is there any effect on Step 5 in all three cases, that mean do matching have different accounting entry? The answer is no; as per my understanding purpose of setting the PO to a 2way, 3 way or 4 way match is to ensure that the corresponding hold is generated on the invoice.
==================================================================================== 1. Enter Purchase Order: No accounting takes place 2. Enter a Receipt: For Inventory, Asset and Expense Items: Dr: Inventory Receiving A/c Cr: Accrual A/c 3.Receiving Transaction: Based on type of item here accounting entry differs Inventory Item: Dr: Inventory Valuation A/c Cr: Inventory Receiving A/c Expense Item: Dr: Expense A/c Cr: Inventory Receiving A/c Asset Item: Dr: Asset Clearing A/c Cr: Inventory Receiving A/c Oracle Payable: In payable 3 events occur 1. Enter Invoice: Dr: Accrual A/c Cr: Liability A/c 2.Payment against Invoice: Dr: Liability A/c Cr: Bank clearing A/c 3.Clearing (Cash Management): Dr: Bank clearing A/c Cr: Bank A/c Oracle P2P Accounting entries

Incase below type of items one more accouting entry happens in Oracle Inventory Item: Item issued to Dept. Dr: Expense A/c Cr: Inventory valuation Asset Item: Asset is capitalized Dr: Asset A/c Cr: Asset clearing A/c

O2C
Accounting Entries for AR Once the Order is shipped then Material account will be credit and COGS Account will be debit. At the time of Invoice creation Revenue account will be credit and receivable account will be debit. At the time of receipt creation. Receivable account will be credit and Bank payment account will be debit OR Step 1: Sales order creation - No entries

Step 2: Pick release : Inventory Stage A/c Dr To Inventory Finished goods a/c Step 3: Ship confirm : Cogs A/c Dr Inventory Organization A/c.

Step 4: In Receviable : Receviable A/c dr To Revenue A/c To Tax To Freight Step 5: Cash : Cash A/c Dr Receivable A/c cr