Accounting Flow

for

Purchase Orders, Receipts and Matched Invoices in an Encumbrance Environment

This document details the accounting entries that are expected for purchase orders with Expense or Inventory destinations, receipts and matched invoices. It also considers the two choices of accrual available for Expense items in an encumbrance-enabled environment.

Expense items can be accrued at

a) Period-end

b) On Receipt

Inventory Items can ONLY be accrued at

a) Receipt

This document consists of the following case studies/scenarios.

Accrue on receipt: (APO)

Case 1: Expense Destination/Create, Approve, Reserve/Receive/Invoice

Case 2: Expense Destination/Create, Approve, Reserve/Invoice/Receive

Case 3: Expense Destination/Create, Approve, Reserve/Receive/Invoice at a price greater than PO price

Case 4: Expense Destination/Create, Approve, Reserve/Receive/Invoice at a quantity greater than PO quantity

Case 5: Inventory Destination/ Create, Approve, Reserve/Receive/Invoice

Case 6: Inventory Destination/ Create, Approve, Reserve/Invoice/Receive

Accrue at Period-end: (APE)

Case 1: Create PO /Receive PO /Deliver PO /Invoice/Run the period end program

Case 2: Create PO /Invoice/Receive PO/Deliver PO/Run the period end program

Case 3: Create PO/Receive PO/Deliver PO/Run the period end program/Invoice

Case 4: Create PO/Receive PO/Run the Period end program/Deliver PO/Run the

period end program/Invoice

Case 5: Create PO /Receive PO /Deliver PO /Invoice at a price greater than PO

Price/Run the period end program

Case 6: Create PO /Receive PO /Deliver PO /Invoice at a quantity greater than PO

Quantity/Run the period end Program

The following Pages will explain each case in detail:

LEGEND: AOR= Accrue On Receipt, APE= Accrue at Period-End

AOR-Case 1:

Assumptions:

Accrue on receipt = Y

Destination type = Expense

Item = expense Item

Sequence of actions:

· Create, Approve, Reserve PO

· Receive and Deliver the PO

· Invoice Validation after matching

· Create Accounting for invoice

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax)*	GL_BC_PACKETS	Encumbrance
2. Receive the PO	Receiving Inventory a/c DR @ PO price (base + NR tax)++	RRSL/GLI/GL_JE_LINES	Actual
2. Receive the PO	AP Expense accrual a/c CR @ PO price (base+ NR tax) ^^	RRSL/GLI/GL_JE_LINES	Actual
3. Deliver the PO	Expense Charge a/c DR @ PO price (base + NR tax)	RRSL/GLI/GL_JE_LINES	Actual
	Receiving Inventory a/c CR @ PO price (base + NR tax)++		Actual
	Budget a/c CR @ PO price (base + NR tax)*		Encumbrance
	Budget a/c CR @ PO price (base + NR tax)*		Encumbrance
4. Invoice Validation	REC Tax and NR tax DR @ tax amount++	GL_BC_PACKETS	Encumbrance
5. Create Accounting for Invoice	AP Expense accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately ^^	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price	AP_AE_LINES_ALL	Actual
	REC Tax and NR tax CR @ tax amount++	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance

Note:

· The corresponding offsetting records have the same symbol in order to more easily identify which debits and credits offset each other. (^, +, *)

· PO base price refers to received quantity * unit price in PO Lines.

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * PO line unit price)

· REC tax refers to Recoverable Tax calculated for the (received quantity * PO line unit price)

· RRSL - RCV_RECEIVING_SUB_LEDGER

GLI – GL_INTERFACE

AOR-Case 2:

Assumptions:

Accrue on receipt = Y

Destination type = Expense

Item = expense Item

Sequence of actions:

· Create, Approve, Reserve PO

· Invoice Validation after matching

· Create Accounting for invoice

Receive and Deliver the PO

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) $$	GL_BC_PACKETS	Encumbrance
2. Invoice Validation	REC Tax and NR tax DR @ tax amount *	GL_BC_PACKETS	Encumbrance
3. Create Accounting for invoice	AP Expense accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately +++	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price	AP_AE_LINES_ALL	Actual
	REC Tax and NR tax CR @ tax amount *	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
4. Receive the PO	Receiving Inspection a/c DR @ PO price (base + NR tax) ^^^^	RRSL/GLI/GL_JE_ LINES	Actual
4. Receive the PO	AP Expense accrual a/c CR @ PO price (base+ NR tax) +++	RRSL/GLI/GL_JE_ LINES	Actual
5. Deliver the PO	Expense Charge a/c DR @ PO price (base + NR tax)	RRSL/GLI/GL_JE_ LINES	Actual
	Receiving Inspection a/c CR @ PO price (base + NR tax) ^^^^
	Receiving Inspection a/c CR @ PO price (base + NR tax) ^^^^
	Budget a/c CR @ PO price (base + NR tax) $$		Encumbrance

Note:

· Corresponding offsetting accounts have same symbols

· PO base price refers to received quantity * unit Price in PO lines

· NR tax refers to Non Recoverable Tax calculated for the (received quantity *PO line unit price)

· REC tax refers to Recoverable Tax calculated for the (received quantity *PO line unit price)

· RRSL - RCV_RECEIVING_SUB_LEDGER

GLI – GL_INTERFACE

AOR-Case 3:

Assumptions:

Accrue on receipt = Y

Destination type = Expense

Item = expense Item

Sequence of actions:

Create, Approve, Reserve PO

Receive and Deliver PO

Create Invoice at higher unit price than PO

Invoice Validation

Create Accounting

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) ^^^^	GL_BC_PACKETS	Encumbrance
2. Receive the PO	Receiving Inventory a/c DR @ PO price (base + NR tax) $$$	RRSL/GLI/GL_JE_ LINES	Actual
	AP Expense accrual a/c CR @ PO price (base+ NR tax) **
3. Deliver the PO	Expense Charge a/c DR @ PO price (base + NR tax)	RRSL/GLI/GL_JE_ LINES	Actual
	Receiving Inventory a/c CR @ PO price (base + NR tax) $$$
	Budget a/c CR @ PO price (base + NR tax) ^^^^		Encumbrance

4. Invoice Validation at higher price	REC Tax and NR tax DR @ tax amount #	GL_BC_PACKETS	Encumbrance
	IPV a/c DB @ difference in price &
5. Create Accounting for Invoice	AP Expense accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately **	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price
	IPV a/c DR @ difference in price
	REC Tax and NR tax CR @ tax amount #	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
	IPV a/c CR @ difference in price &

Note:

· Corresponding offsetting accounts have same symbols

· PO base price refers to received quantity * unit Price in PO lines

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * PO line unit price)

· REC tax refers to Recoverable Tax calculated for the (received quantity * PO line unit price)

RRSL - RCV_RECEIVING_SUB_LEDGER
GLI – GL_INTERFACE

AOR-Case 4:

Assumptions:

Accrue on receipt = Y

Destination type = Expense

Item = expense Item

Sequence of actions:

· Create, Approve, Reserve PO

· Receive and Deliver PO

· Create Invoice at higher quantity than PO

· Invoice Validation

Create Accounting

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) &	GL_BC_PACKETS	Encumbrance
2. Receive the PO	Receiving Inspection a/c DR @ PO price (base + NR tax) ##	RRSL/GLI/GL_JE_ LINES	Actual
	AP Expense accrual a/c CR @ PO price (base+ NR tax) ^^^
3. Deliver the PO	Expense Charge a/c DR @ PO price (base + NR tax)	RRSL/GLI/GL_JE_ LINES	Actual
	Receiving Inspection a/c CR @ PO price (base + NR tax) ##

	Budget a/c CR @ PO price (base+ NR tax) &		Encumbrance
4. Invoice Validation for higher quantity *See additional info below	REC Tax and NR tax DR @ tax amount ****	GL_BC_PACKETS	Encumbrance

5. Create Accounting for Invoice	AP Expense accrual a/c DR @ invoice price excluding tax and tax DR @ tax rate separately ^^^	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price
	REC Tax and NR tax CR @ tax amount ****	AP_ENCUMBRANCE_LINES_ALL	Encumbrance

Note:

Corresponding offsetting accounts have same symbols

PO base price refers to received quantity * unit Price in PO line
NR tax refers to Non Recoverable Tax calculated for the (received quantity * PO line unit price)
REC tax refers to Recoverable Tax calculated for the (received quantity * PO line unit price)

RRSL - RCV_RECEIVING_SUB_LEDGER
GLI – GL_INTERFACE
No separate accounting entry for Quantity Variation (#4) will be seen here

AOR-Case 5:

Assumptions:

Accrue on receipt = Y

Destination type = Inventory

Item = Inventory Item

Sequence of actions:

· Create, Approve, Reserve PO

· Receive and Deliver the PO

· Invoice Validation after matching

· Create Accounting for invoice

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) #	GL_BC_PACKETS	Encumbrance
2. Receive the PO	Receiving Inspection a/c DR @ PO price (base + NR tax) **	RRSL/GLI/GL_JE_LINES	Actual
2. Receive the PO	AP Inventory accrual a/c CR @ PO price (base+ NR tax) %%%	RRSL/GLI/GL_JE_LINES	Actual
3. Deliver the PO	Material Valuation a/c DR @ std cost	MTL_TRANSACTION_ ACCOUNTS	Actual (Account line type-1)
	Receiving Inspection a/c DR @ PO price (base + NR tax) **		Actual (Account line type-5)
	PPV a/c CR/DR @ difference in price		Actual (Account line type-6)
	Budget a/c CR @ PO price (base+ NR tax) #		Encumbrance (Account line type- 15)
4. Invoice Validation	REC Tax and NR tax DR @ tax amount $$$$	GL_BC_PACKETS	Encumbrance
5. Create Accounting for Invoice	AP Inventory accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately %%%	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price	AP_AE_LINES_ALL	Actual
	REC Tax and NR tax CR @ tax amount $$$$	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance

Note:

· Corresponding offsetting accounts have same symbols

· PO base price refers to received quantity * unit Price in PO line

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * PO line unit price)

· REC tax refers to Recoverable Tax calculated for the (received quantity * PO line unit price)

· RRSL - RCV_RECEIVING_SUB_LEDGER

GLI – GL_INTERFACE

AOR-Case 6:

Assumptions:

Accrue on receipt = Y

Destination type = Inventory

Item = Inventory Item

Sequence of actions:

· Create, Approve, Reserve PO

· Invoice Validation after matching

· Create Accounting for invoice

Receive and Deliver the PO

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) ####	GL_BC_PACKETS	Encumbrance
2. Invoice Validation	REC Tax and NR tax DR @ tax amount*	GL_BC_PACKETS	Encumbrance
3. Create Accounting for invoice	AP Inventory accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately @@@	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price	AP_AE_LINES_ALL	Actual
	REC Tax and NR tax CR @ tax amount*	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
4. Receive the PO	Receiving Inspection a/c DR @ PO price (base + NR tax) ^^^^	RRSL/GLI/GL_JE_ LINES	Actual
4. Receive the PO	AP Inventory accrual a/c CR @ PO price (base+ NR tax) @@@	RRSL/GLI/GL_JE_ LINES	Actual
5. Deliver the PO	Material Valuation a/c DR @ std cost	MTL_TRANSACTION_ACCOUNTS	Actual (Account line type-1)
	Receiving Inspection a/c CR @ PO price (base + NR tax) ^^^^		Actual (Account line type-5)
	Receiving Inspection a/c CR @ PO price (base + NR tax) ^^^^		Actual (Account line type-5)
	PPV a/c CR/DR @ difference in price		Actual (Account line type-6)
	Budget a/c CR @ PO price (base + NR tax) ####		Encumbrance (Account line type- 15)

Note:

· Corresponding offsetting accounts have same symbols

· PO base price refers to received quantity * unit Price in PO line

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * PO line unit price)

· REC tax refers to Recoverable Tax calculated for the (received quantity * PO line unit price)

· RRSL - RCV_RECEIVING_SUB_LEDGER

GLI – GL_INTERFACE

Accrue at Period End

APE-Case 1:

Assumptions:

Accrue on receipt = N

Destination type = Expense

Item = expense Item

Purchase Encumbrance type and Invoice Encumbrance type are different

Sequence of actions:

Create, Approve, Reserve PO

Receive and Deliver the PO

Invoice Validation after matching

Create Accounting for invoice

Run the Period End Program

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) *	GL_BC_PACKETS	Encumbrance
2. Receive the PO	No Accounting Transactions	N/A	N/A
2. Receive the PO	No Accounting Transactions	N/A	N/A
3. Deliver the PO	No Accounting Transactions	N/A	N/A
4. Invoice Validation	Budget a/c CR @ PO price (base + NR tax) *	GL_BC_PACKETS	Encumbrance
	REC Tax and NR tax DR @ tax amount ^^
	Budget a/c DR @ invoice price excluding NR tax-INV Enc &&&
5. Create Accounting for invoice	Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price including NR tax
	AP Liability a/c CR @ invoice price including NR tax
	REC Tax and NR tax CR @ tax amount ^^	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance
	Budget a/c CR @ invoice price excluding NR tax &&&	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance
6. Run the Period end program	No Accounting Transactions	N/A	N/A
7. Manual Reversal of journal entry	Not Required since there are no accrual entries	N/A	N/A

Note:

· Corresponding offsetting accounts have same symbols

· PO base price refers to received quantity * unit Price in PO line

NR tax refers to Non Recoverable Tax calculated for the (received quantity * po line unit price)
REC tax refers to Recoverable Tax calculated for the (received quantity * po line unit price)

APE-Case 2:

Assumptions:

Accrue on receipt = N

Destination type = Expense

Item = expense Item

Purchase Encumbrance type and Invoice Encumbrance type are different

Sequence of actions:

Create, Approve, Reserve PO

Invoice Validation after matching

Create Accounting for invoice

Receive and Deliver the PO

Run the Period end Program

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1.PO is reserved	Budget a/c DR @ PO price (base + NR tax) ####	GL_BC_PACKETS	Encumbrance
2.Invoice Validation	Budget a/c CR @ PO price (base + NR tax) ####	GL_BC_PACKETS	Encumbrance
	REC Tax and NR tax DR @ tax amount***
	Budget a/c DR @ invoice price excluding NR tax- INV Enc %%
3.Create Accounting for invoice	Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately	AP_AE_LINES_ALL	Actual

	AP Liability a/c CR @ invoice price including NR tax
	Budget a/c CR @ invoice price excluding NR tax %%	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance
	REC Tax and NR tax CR @ tax amount***	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance
4.Receive the PO	No Accounting Transactions	N/A	N/A
4.Receive the PO	No Accounting Transactions	N/A	N/A
5. Deliver the PO	No Accounting Transactions	N/A	N/A
6.Run the Period end program	No Accounting Transactions	N/A	N/A
7. Manual Reversal of journal entry	Not Required since there are no accrual entries	N/A	N/A

Note:

· Corresponding offsetting accounts have same symbols.

· PO base price refers to received quantity * unit Price in PO line

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * po line unit price)

REC tax refers to Recoverable Tax calculated for the (received quantity * po line unit price)

APE-Case 3:

Assumptions:

Accrue on receipt = N

Destination type = Expense

Item = expense Item

Purchase Encumbrance type and Invoice Encumbrance type are different

Sequence of actions:

Create, Approve, Reserve PO

Receive and Deliver the PO

Run the Period End Program

Invoice Validation after matching

Create Accounting for invoice

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1.PO is reserved	Budget a/c DR @ PO price (base + NR tax) $	GL_BC_ PACKETS	Encumbrance
2.Receive the PO	No Accounting Transactions	N/A	N/A

3.Deliver the PO	No Accounting Transactions	N/A	N/A
4.Run the Period end program	Expense Charge a/c DR @ PO Price (base + NR tax) #	RRSL/GLI	Actual
	AP Expense accrual a/c CR @ PO Price (base + NR tax) &		Actual
	Budget a/c CR @ PO price (base + NR tax) $		Encumbrance
5.Manual Reversal of journal entry (Both actual and encumbrance)	Expense Charge a/c CR @ PO Price (base + NR tax) #	GL_JE_LINES	Actual
	AP Expense accrual a/c DR @ PO Price (base + NR tax) &
	Budget a/c DR @ PO price (base + NR tax) ++
6.Invoice Validation	Budget a/c CR @ PO price (base + NR tax) ++	GL_BC_ PACKETS	Encumbrance
	Budget a/c DR @ invoice price excluding NR tax - INV Enc **
	REC Tax and NR tax DR @ tax amount ^^
7.Create Accounting for invoice	Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately	AP_AE_LINES_ALL	Actual

	AP Liability a/c CR @ invoice price including NR tax
	REC Tax and NR tax CR @ tax amount ^^	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
	Budget a/c CR @ invoice price excluding NR tax **	AP_ENCUMBRANCE_LINES_ALL	Encumbrance

Note:

· Corresponding offsetting accounts have same symbols.

· PO base price refers to received quantity * unit Price in PO line

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * po line unit price)

· REC tax refers to Recoverable Tax calculated for the (received quantity * po line unit price)

· RRSL – RCV_RECEIVING_SUB_LEDGER

· GLI – GL_INTERFACE

APE-Case 4:

Assumptions:

Accrue on receipt = N

Destination type = Expense

Purchase Encumbrance type and Invoice Encumbrance type are different

Sequence of Actions:

Create, Approve, Reserve PO/Receive the PO and Run the Period End Program

Deliver the PO and Run the Period End Program

Invoice Validation and Create Accounting

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1.PO is reserved	Budget a/c DR @ PO price (base + NR tax) ^	GL_BC_PACKETS	Encumbrance
2.Receive the PO	No Accounting Transactions	N/A	N/A
3.Run the Period end program	Expense Charge a/c DR @ PO Price (base + NR tax) +	RRSL/GLI	Actual
	AP Expense accrual a/c CR @ PO Price (base + NR tax) &		Actual
	Budget a/c CR @ PO price (base + NR tax) ^		Encumbrance
4.Manual Reversal of journal entry (Both actual and encumbrance)	Expense Charge a/c CR @ PO Price (base + NR tax) +	GL_JE_LINES	Actual
	AP Expense accrual a/c DR @ PO Price (base + NR tax) &
	Budget a/c DR @ PO price (base + NR tax) *
5.Deliver the PO	No Accounting Transactions	N/A	N/A
5. Deliver the PO	No Accounting Transactions	N/A	N/A
6. Run the Period end program	Expense Charge a/c DR @ PO Price (base + NR tax) +	RRSL/GLI	Actual
	AP Expense accrual a/c CR @ PO Price (base + NR tax) &		Actual
	Budget a/c CR @ PO price (base + NR tax) *		Encumbrance
7.Manual Reversal of journal entry (Both actual and encumbrance)	Expense Charge a/c CR @ PO Price (base + NR tax) +	GL_JE_LINES	Actual
	AP Expense accrual a/c DR @ PO Price (base + NR tax) &
	Budget a/c DR @ PO price (base + NR tax) #
8.Invoice Validation	Budget a/c CR @ PO price (base + NR tax) #	GL_BC_PACKETS	Encumbrance
	Budget a/c DR @ invoice price excluding NR tax- INV Enc /////
	REC Tax and NR tax DR @ tax amount \\\\
9.Create Accounting for invoice	Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately	AP_AE_LINES_ALL	Actual

	AP Liability a/c CR @ invoice price including NR tax
	REC Tax and NR tax CR @ tax amount \\\\	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance
	Budget a/c CR @ invoice price excluding NR tax /////	AP_ENCUMBRANCE_ LINES_ALL	Encumbrance

APE-Case 5:

Assumptions:

Accrue on receipt = N

Destination type = Expense

Item = expense Item

Purchase Encumbrance type and Invoice Encumbrance type are different

Sequence of actions:

Create, Approve, Reserve PO

Receive and Deliver the PO

Create Invoice at higher price than PO

Invoice Validation after matching

Create Accounting for invoice

Run the Period End Program

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) $$	GL_BC_PACKETS	Encumbrance
2. Receive the PO	No Accounting Transactions	N/A	N/A
3. Deliver the PO	No Accounting Transactions	N/A	N/A
4. Invoice Validation at higher price	Budget a/c CR @ PO price (base + NR tax) $$	GL_BC_PACKETS	Encumbrance
	Budget a/c DR @ PO price excluding NR tax ***
	Budget a/c DR @ difference in invoice price ***
	REC Tax and NR tax DR @ tax amount &
5. Create Accounting for invoice	Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price including NR tax	AP_AE_LINES_ALL	Actual
	REC Tax and NR tax CR @ tax amount &	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
	Budget a/c CR @ invoice price excluding NR tax	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
6. Run the Period end program	No Accounting Transactions	N/A	N/A
7. Manual Reversal of journal entry	Not Required since there are no accrual entries	N/A	N/A

Note:

· Corresponding offsetting accounts have same symbols.

· PO base price refers to received quantity * unit Price in PO line

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * po line unit price)

REC tax refers to Recoverable Tax calculated for the (received quantity * po line unit price)

APE-Case 6:

Assumptions:

Accrue on receipt = N

Destination type = Expense

Item = expense Item

Purchase Encumbrance type and Invoice Encumbrance type are different

Sequence of actions:

Create, Approve, Reserve PO

Receive and Deliver the PO

Create Invoice at higher quantity than PO

Invoice Validation after matching

Create Accounting for invoice

Run the Period End Program

Action	Accounting entries	Table in which records exist	Flag/nature of entry
1. PO is reserved	Budget a/c DR @ PO price (base + NR tax) ##	GL_BC_PACKETS	Encumbrance
2. Receive the PO	No Accounting Transactions	N/A	N/A
3. Deliver the PO	No Accounting Transactions	N/A	N/A
4. Invoice Validation at higher quantity	Budget a/c CR @ PO price (base + NR tax) ##	GL_BC_PACKETS	Encumbrance
	Budget a/c DR @ PO price excluding NR tax $$
	Budget a/c DR @ additional invoice price -INV enc $$
	REC Tax and NR tax DR @ tax amount ////
5. Create Accounting for invoice	Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately	AP_AE_LINES_ALL	Actual
	AP Liability a/c CR @ invoice price including NR tax	AP_AE_LINES_ALL	Actual
	REC Tax and NR tax CR @ tax amount ////	AP_ENCUMBRANCE_LINES_ALL	Encumbrance
	Budget a/c CR @ PO price excluding NR tax ^^^^
	Budget a/c CR @ additional invoice price with encumbrance line type as QV ^^^^
6. Run the Period end program	No Accounting Transactions	N/A	N/A
7. Manual Reversal of journal entry	Not Required since there are no accrual entries	N/A	N/A

Note:

· Corresponding offsetting accounts have same symbols.

· PO base price refers to received quantity * unit Price in PO line

· NR tax refers to Non Recoverable Tax calculated for the (received quantity * po line unit price)

REC tax refers to Recoverable Tax calculated for the (received quantity * po line unit price)

Important Notes:

1. Accrual entries will be generated /created ONLY when the Received quantity > Billed quantity at the time of running Receipt Accruals-Period end program.

2. Under the cases mentioned above under the Period-end Section, manual reversal of journal entries are not required except for Case 3 and Case 4 since there are NO accrual entries created /generated.

3. For all these cases the account records from receiving will also be inserted into GL_BC_PACKETS, along with the other subledger tables mentioned above. These records in GL_BC_PACKETS can be viewed by querying the max(packet_id), as there are no REFERENCE fields populated for receiving records.

4. Liability a/c which is recorded at invoice price will also include the recoverable and non-recoverable tax rates.

sharingmylearnings

Saturday, 17 July 2021

GL: Accounting Flow of Purchase Orders/Receipts/Invoices P2P process

Accounting Flow

for

Purchase Orders, Receipts and Matched Invoices in an Encumbrance Environment

Action

Accounting entries

Flag/nature of entry

Action

Accounting entries

Action

Accounting entries

Action

Accounting entries

Flag/nature of entry

Action

Accounting entries

Accrue at Period End

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