Escolar Documentos
Profissional Documentos
Cultura Documentos
This document gives in detail different accounts used and the accounting impact of
various transactions that take place in Oracle Purchasing and Oracle Payables. Both
Standard costing and Average costing methods are considered. The accounts are
Oracle Applications specific and might differ from the conventional accounting names.
Examples are given wherever required for better understanding of the concept. The
sources of these accounts are given.
On Receipt and is usually a part of your accounts payable liabilities in the balance
sheet. Payable relieves this account when the invoice is matched and approved.
Where to define in Apps: Define Purchasing Options
ACCOUNTING ENTRIES
A). Purchase Order receipt to the Receiving Inspection Location. When the goods are received into
Inspection Location.
When you receive material from a vendor into receiving inspection, Apps uses the quantity received
and the PO price to update the following accounts.
Accounting Entry
Debit
xx
Credit
xx
xx
xx
Source
At Define Organization/
Receiving Options
At Organization
Parameters
At Define Organizations
At Define Purchasing
Options
B). Delivery from Receiving Inspection to Inventory under Standard Costing. Recorded at the time,
when the goods are transferred from Receiving Inspection to Inventory
With Enter Receiving form, you can move material from receiving inspection to inventory.
Case#1: If the standard cost is greater than purchase order price then the PPV is favourable and
Apps records this expense as a credit (negative expense).
Accounting
Entry
Debit
Credit
Source
xx
At Define Sub-inventory
xx
nt (Negative Expense)
At Define Organization
Define Organization
Parameters
Case#2: If the standard cost is less than the PO price then the variance is unfavourable and Apps
record this as a debit (positive expense)
Accounting Entry
Sub-inventory accounts @ Std. Cost
nt (Positive Expense)
Receiving Inspection account @ PO price
xx
Debit
Credit
Source
xx
At Define Sub-inventory
xx
Define Organization
Parameters
At Define Organization/ Define
Receiving Options
xx
(C). Purchase Order receipt to the Receiving Inspection at Average Cost. When the goods are
received into Inspection Location at the Enter Receipts form.
If you use average costing, the actual cost is picked from the PO and hence you do not have any
PPV.
Accounting
Entry
Debit
Credit
Source
xx
At Organization Parameters
(D). Delivery from Receiving Inspection to Inventory under Average Costing. Recorded at the time,
when the goods are transferred from Receiving Inspection to Inventory
After inspection, you deliver the inventory items to the inventory at the Enter Receiving Transactions
form.
Accounting
Entry
Debit
Credit
Source
xx
At Define Sub-inventory
xx
Debit
Credit
Source
xx
With Enter Receiving form, you can also move material from receiving inspection to expense
destinations.
Oracle Purchasing uses the transaction quantity and the PO price of the delivered item to update the
receiving inspection and expense charge account.
Accounting
Entry
Debit
Credit
Source
xx
@ PO price
(F). Purchase Order receipt to the Inventory without inspection at Standard Cost. When the goods
are received into Inspection Location at the Enter Receipts form and delivered to inventory directly in
one step.
In this case, Apps performs both receipt and delivery in one step. Purchasing uses quantity ordered
and PO price to update the following accounts. At the same time, Oracle Inventory uses the quantity
and the standard cost of the received item to update the receiving inspection and the sub-inventory
balances (The accounting impact is the same except as the case of inspection & deliver, except this
one is arrived with one operation/step).
Accounting
Entry
Debit
Credit
Source
xx
At Define Organisation/
Receiving Options
xx
At Organisation Parameters
xx
At Define Sub-inventory
xx
At Define Organisation
xx
Define Organisation
Parameters
xx
At Define Sub-inventory
xx
Define Organisation
Parameters
At Define Organisation/ Define
Receiving Options
xx
(G). Purchase Order receipt to the Inventory without inspection at Average Cost. When the goods
are received into Inspection Location at the Enter Receipts form and delivered directly in one step.
If you use average costing, the actual cost is picked from the PO and hence you do not have any
PPV (The accounting impact is the same except as the case of inspection & deliver, except this one
is arrived with one operation/step).
Accounting
Entry
Debit
Credit
Source
xx
At Define Organisation/
Receiving Options
xx
At Organisation Parameters
xx
At Define Sub-inventory
xx
Debit
Credit
Source
xx
At Define Items
xx
Debit
Credit
Source
xx
At Organisation Parameters
xx
At Define Organisation/
Receiving Options
xx
At Define Organizations
Debit
Credit
Source
xx
xx
xx
xx
At Organisation Parameters
xx
At Define Organisation/
Receiving Options
Case # 2: Incase of Std.cost is more than PO price of the returned item when it was received into
the inventory.
Accounting
Entry
Debit Credit
Source
xx
xx
Xx
At Define Sub-inventory
At Organisation Parameters
Xx
At Define Organisation/
Receiving Options
xx
xx
xx
xx
At Organisation Parameters
Xx
At Define Organisation/
Receiving Options
Case # 2: Incase of Standard cost is more than PO price of the returned item when it was received
into the inventory.
Accounting
Entry
Debit
Credit
Source
xx
xx
Xx
At Define Sub-inventory
At Organization Parameters
Xx
At Define Organization/
Receiving Options
ACCOUNTS PAYABLE
Invoice Booking at Standard Costing at Algorithm
When the Invoice Price is more than the Purchase order Price
Accounting Entry
Debit
Xx
Xx
Credit
Source
Comes from Purchase Order /
and Entered in the
Distributions
At Define Org. Parameters
xx
When the Invoice Price is less than the Purchase order Price
Accounting Entry
Debit
Credit
xx
Source
Xx
Xx
For Other Cost Invoices like Clearing Agent payments, Insurance, Freight, etc.
Different invoices are booked for each supplier invoice. 1.Supplier invoice 2.Clearing Agent invoice
3.Insurance invoice 4.Freight invoice. As these are booked as four different invoices this accounting
entry is impacted that many times and the payments are made separately for each invoice.
Accounting
Entry
Debit
Credit
Source
xx
Xx
Debit
Credit
Source
xx
xx
Xx
Debit
Credit
Source
xx
xx
Debit
Credit
Source
xx
xx
When you pay the invoice, applying the credit/debit note, the following entry is created with the
difference in the amounts.
Accounting
Entry
Debit
Credit
AP liability account
@ (Invoice Amount Credit/Debit note amount)
t
Debit note amount)
Source
xx
xx
Step-1: When you pay Prepayment to the supplier (one prepayment account is maintained for all
suppliers and on liability account is maintained for all suppliers in Algorithm). Payables keep track of
individual supplier balances and the individual application of prepayments to the invoices.
Accounting
Entry
Debit
Credit
Source
xx
Step-2: When you receive invoice from the supplier and booked. Invoice Price Variance account @
Invoice quantity * (Invoice price - PO price) is debited or credited by Payables according the invoice
price variances.
Accounting Entry
Debit
Credit
xx
xx
Source
Comes from Purchase Order /
and Entered in the
Distributions
At individual Define Suppliers
Step-3: When you apply the existing prepayment to the invoice booked. The amount of the
application depends on the amount you want to apply from the prepayment to the invoice.
Accounting
Entry
Debit
Credit
AP liability account
@ (Prepayment amount applied)
Source
xx
count
plied)
xx
Step-4: When the Invoice amount is less than the Prepayment amount, you can apply the remaining
amount to the future invoice (the accounting impact is same as above). In other way, If the Invoice
amount is more than the Prepayment amount, then the difference amount has to be paid to the
supplier with the following accounting impact.
Accounting
Entry
Debit
Credit
AP liability account
@ (Invoice amount Prepayment amount)
Bank account @ Amount paid
Source
xx
xx
Employee Advances
The complete cycle of transaction relating to Prepayment to suppliers and their accounting impact is
detailed under.
Step-1: When you pay Advance to the supplier (one Advance/prepayment account is maintained for
all employees and on liability account is maintained for all employees in Algorithm). Payables keep
track of individual employee balances and the individual application of advances/prepayments to the
invoices.
Accounting
Entry
Debit
Credit
Source
xx
xx
At individual Define
Employees as Suppliers
At individual Define Banks
Step-2: When you receive Expense report from the employee, an invoice is booked from it.
Accounting Entry
Debit
Credit
xx
xx
Source
Comes from Define Expense
Reports
At individual Define
Employees defined as
Suppliers
Step-3: When you apply the existing advance to the invoice booked. The amount of the application
depends on the amount you want to apply from the advance to the invoice.
Accounting
Entry
AP liability account
@ (Advance amount applied)
count
d)
Debit
Credit
Source
xx
xx
Step-4: When the Expense report/Invoice amount is less than the Advance amount, the employee
has to return the money back to the company.
For that, create an adjustment invoice against the same employee for the difference amount he/she
has to pay, debiting the Advance to employee account. The accounting impact in Payables is
detailed under.
Accounting
Entry
Debit
Credit
Source
xx
xx
Then you apply the remaining amount of the advance to the new invoice created. In payables you
have the following accounting impact.
Accounting
Entry
Debit
Credit
AP liability account
@ (Remaining advance amount applied)
count
ount applied)
Source
xx
xx
The accounting impact in Receivables receive a miscellaneous receipt crediting the same Advances
to Employee account which was debited while booking the adjustment invoice. The accounting
impact is detailed under.
Accounting
Entry
Debit
Credit
Bank account
mployee)
Advances to Employees account
mployee)
Source
xx
xx
In other way, If the Invoice amount is more than the Prepayment amount, then the difference amount
has to be paid to the employee with the following accounting impact.
(All the remaining entries are same as the above advance application except the Step-4)
Step-4
Accounting
Entry
Debit
Credit
Source
AP liability account
@ (Amount to be paid to employee)
Bank account
mployee)
xx
xx
At individual Define
Employees defined as
Suppliers
Comes from Payment
methods