R12 NuwePO - Accounting - Flow

Accounting Flow
for
Purchase Orders, Receipts and Matched
Invoices in an Encumbrance Environment
An Oracle White Paper
July 2006
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
at a price greater than PO price
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: Sequence of actions:

Assumptions: Create, Approve, Reserve
Accrue on receipt = Y PO
Destination type = Expense Receive and Deliver the PO
Item = expense Item Invoice Validation after
matching
Create Accounting for
invoice
Table in which records

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

tax)*
4. Invoice Validation REC Tax and NR tax DR @ tax amount++ GL_BC_PACKETS Encumbrance
AP Expense accrual a/c DR @ PO price
excluding tax and tax DR @ tax rate
AP_AE_LINES_ALL Actual
5. Create Accounting separately ^^
for Invoice AP Liability a/c CR @ invoice price
AP_ENCUMBRANCE_
Encumbrance
REC Tax and NR tax CR @ tax amount++ LINES_ALL
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
RRSL - RCV_RECEIVING_SUB_LEDGER
GLI GL_INTERFACE
AOR-Case 2:
Destination type = Expense Invoice Validation after
Item = expense Item matching
invoice
Sequence of actions: Receive and Deliver the
PO
Table in which
Action Accounting entries records exist Flag/nature of entry
1. PO is reserved Budget a/c DR @ PO price (base + NR tax) $$ GL_BC_PACKETS Encumbrance
2. Invoice Validation REC Tax and NR tax DR @ tax amount * GL_BC_PACKETS Encumbrance
AP Expense accrual a/c DR @ PO price
excluding tax and tax DR @ tax rate separately
+++ AP_AE_LINES_ALL Actual
3. Create Accounting
for invoice AP Liability a/c CR @ invoice price
AP_ENCUMBRANCE
Encumbrance
REC Tax and NR tax CR @ tax amount * _LINES_ALL
Receiving Inspection a/c DR @ PO price (base
+ NR tax) ^^^^ RRSL/GLI/GL_JE_
4. Receive the PO Actual
AP Expense accrual a/c CR @ PO price (base+ LINES
NR tax) +++
Expense Charge a/c DR @ PO price (base +
NR tax)
Actual
Receiving Inspection a/c CR @ PO price (base RRSL/GLI/GL_JE_
5. Deliver the PO
+ NR tax) ^^^^ LINES
Encumbrance
Budget a/c CR @ PO price (base + NR tax) $$
Note:
Corresponding offsetting accounts have same symbols
PO base price refers to received quantity * unit Price in PO lines
quantity *PO line unit price)
quantity *PO line unit price)
GLI GL_INTERFACE
AOR-Case 3:
Assumptions: Sequence of actions:
Accrue on receipt = Y Create, Approve, Reserve PO
Destination type = Expense Receive and Deliver PO
Item = expense Item Create Invoice at higher unit
price than PO
Invoice Validation
Create Accounting
Table in which Flag/nature of

Action Accounting entries records exist entry
1. PO is reserved Budget a/c DR @ PO price (base + NR tax) ^^^^ GL_BC_PACKETS Encumbrance
Receiving Inventory a/c DR @ PO price (base + NR
tax) $$$ RRSL/GLI/GL_JE_
AP Expense accrual a/c CR @ PO price (base+ NR LINES
tax) **
Expense Charge a/c DR @ PO price (base + NR
tax)
Actual
Receiving Inventory a/c CR @ PO price (base + NR RRSL/GLI/GL_JE_
3. Deliver the PO tax) $$$ LINES
Encumbrance
Budget a/c CR @ PO price (base + NR tax) ^^^^
4. Invoice Validation at REC Tax and NR tax DR @ tax amount #
GL_BC_PACKETS Encumbrance
higher price
IPV a/c DB @ difference in price &
AP Expense accrual a/c DR @ PO price excluding
tax and tax DR @ tax rate separately **
AP Liability a/c CR @ invoice price
5. Create Accounting for
Invoice IPV a/c DR @ difference in price
REC Tax and NR tax CR @ tax amount # AP_ENCUMBRANCE
Encumbrance
_LINES_ALL
IPV a/c CR @ difference in price &
Note:
PO base price refers to received quantity * unit Price in PO lines
GLI GL_INTERFACE
AOR-Case 4:
Accrue on receipt = Y Create, Approve, Reserve
Destination type = Expense PO
Item = expense Item Receive and Deliver PO
Create Invoice at higher
quantity than PO
Invoice Validation
Create Accounting
Table in which
Budget a/c DR @ PO price (base + NR tax) &
Receiving Inspection a/c DR @ PO price
(base + NR tax) ## RRSL/GLI/GL_JE_
AP Expense accrual a/c CR @ PO price LINES
(base+ NR tax) ^^^
Expense Charge a/c DR @ PO price (base +
NR tax)
Actual
RRSL/GLI/GL_JE_
3. Deliver the PO Receiving Inspection a/c CR @ PO price
LINES
(base + NR tax) ##
Encumbrance
Budget a/c CR @ PO price (base+ NR tax) &
4. Invoice Validation
for higher quantity
*See additional info
below REC Tax and NR tax DR @ tax amount ****
AP Expense accrual a/c DR @ invoice price
separately ^^^ AP_AE_LINES_ALL Actual
for Invoice AP Liability a/c CR @ invoice price
AP_ENCUMBRANCE
Encumbrance
_LINES_ALL
REC Tax and NR tax CR @ tax amount ****
Note:
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)
GLI GL_INTERFACE
No separate accounting entry for Quantity Variation (#4) will be seen
here
AOR-Case 5:
Destination type = Inventory Receive and Deliver the PO
Item = Inventory Item Invoice Validation after
matching
Sequence of actions:
invoice

1. PO is reserved Budget a/c DR @ PO price (base + NR tax) # GL_BC_PACKETS Encumbrance
(base + NR tax) **
2. Receive the PO RRSL/GLI/GL_JE_LINES Actual
AP Inventory accrual a/c CR @ PO price
(base+ NR tax) %%%
Actual (Account line
Material Valuation a/c DR @ std cost type-1)
Receiving Inspection a/c DR @ PO price Actual (Account line
(base + NR tax) ** type-5)
MTL_TRANSACTION_
3. Deliver the PO Actual (Account line
ACCOUNTS
PPV a/c CR/DR @ difference in price type-6)
Encumbrance
(Account line type-
Budget a/c CR @ PO price (base+ NR tax) # 15)
4. Invoice Validation REC Tax and NR tax DR @ tax amount $$$$ GL_BC_PACKETS Encumbrance
AP Inventory accrual a/c DR @ PO price
excluding tax and tax DR @ tax rate AP_AE_LINES_ALL Actual
for Invoice
separately %%%
AP_ENCUMBRANCE_
Encumbrance
REC Tax and NR tax CR @ tax amount $$$$ LINES_ALL
Note:
GLI GL_INTERFACE
AOR-Case 6:
Destination type = Inventory Invoice Validation after
Item = Inventory Item matching
invoice
Sequence of actions: Receive and Deliver the PO

1. PO is reserved Budget a/c DR @ PO price (base + NR GL_BC_PACKETS Encumbrance
tax) ####
2. Invoice Validation REC Tax and NR tax DR @ tax amount* GL_BC_PACKETS Encumbrance
AP Inventory accrual a/c DR @ PO price
3. Create Accounting separately @@@
for invoice AP Liability a/c CR @ invoice price
AP_ENCUMBRANCE_
Encumbrance
REC Tax and NR tax CR @ tax amount* LINES_ALL
(base + NR tax) ^^^^ RRSL/GLI/GL_JE_
AP Inventory accrual a/c CR @ PO price LINES
(base+ NR tax) @@@
Actual (Account line
Material Valuation a/c DR @ std cost type-1)
Receiving Inspection a/c CR @ PO price Actual (Account line
(base + NR tax) ^^^^ MTL_TRANSACTION_ type-5)
5. Deliver the PO
ACCOUNTS Actual (Account line
PPV a/c CR/DR @ difference in price type-6)
Budget a/c CR @ PO price (base + NR Encumbrance (Account
tax) #### line type- 15)
Note:
GLI GL_INTERFACE
AccrueatPeriodEnd
APE-Case 1:
Assumptions:
Accrue on receipt = N Sequence of actions:
Destination type = Expense Create, Approve, Reserve PO
Item = expense Item Receive and Deliver the PO
Purchase Encumbrance type and Invoice Validation after matching
Invoice Encumbrance type are Create Accounting for invoice
different Run the Period End Program

1. PO is reserved Budget a/c DR @ PO price (base + NR tax) GL_BC_PACKETS Encumbrance
*
2. Receive the PO N/A N/A

No Accounting Transactions
3. Deliver the PO No Accounting Transactions N/A N/A
Budget a/c CR @ PO price (base + NR tax)
*
4. Invoice Validation REC Tax and NR tax DR @ tax amount ^^ GL_BC_PACKETS Encumbrance
Budget a/c DR @ invoice price excluding
NR tax-INV Enc &&&
Expense charge a/c DR @ invoice price
separately AP_AE_LINES_ALL Actual
5. Create Accounting AP Liability a/c CR @ invoice price
for invoice including NR tax
REC Tax and NR tax CR @ tax amount ^^
AP_ENCUMBRANCE_
Budget a/c CR @ invoice price excluding Encumbrance
LINES_ALL
NR tax &&&
6. Run the Period end
N/A N/A
program No Accounting Transactions
7. Manual Reversal of Not Required since there are no accrual
N/A N/A
journal entry entries
Note:
quantity * po line unit price)
APE-Case 2:
Assumptions:
Item = expense Item Invoice Validation after matching
Purchase Encumbrance type and Create Accounting for invoice
Invoice Encumbrance type are Receive and Deliver the PO
different Run the Period end Program

1.PO is reserved Budget a/c DR @ PO price (base + NR GL_BC_PACKETS Encumbrance
tax) ####
Budget a/c CR @ PO price (base + NR
tax) ####
REC Tax and NR tax DR @ tax
2.Invoice Validation GL_BC_PACKETS Encumbrance
amount***
Budget a/c DR @ invoice price
excluding NR tax- INV Enc %%
Expense charge a/c DR @ invoice
price excluding tax and tax DR @ tax
rate separately AP_AE_LINES_ALL Actual
3.Create Accounting for
including NR tax
invoice
Budget a/c CR @ invoice price
excluding NR tax %% AP_ENCUMBRANCE_
Encumbrance
REC Tax and NR tax CR @ tax LINES_ALL
amount***
4.Receive the PO N/A N/A

No Accounting Transactions
6.Run the Period end
N/A N/A
N/A N/A
Note:
Corresponding offsetting accounts have same symbols.
APE-Case 3:
Assumptions:
Item = expense Item Receive and Deliver the PO
Purchase Encumbrance type and Run the Period End Program
Invoice Encumbrance type are Invoice Validation after matching
different Create Accounting for invoice
Table in which
GL_BC_
1.PO is reserved Encumbrance
Budget a/c DR @ PO price (base + NR tax) $ PACKETS
2.Receive the PO No Accounting Transactions N/A N/A
3.Deliver the PO No Accounting Transactions N/A N/A
Expense Charge a/c DR @ PO Price (base + NR tax) #

4.Run the Period end AP Expense accrual a/c CR @ PO Price (base + NR Actual
RRSL/GLI
program tax) &
Budget a/c CR @ PO price (base + NR tax) $ Encumbrance
5.Manual Reversal of Expense Charge a/c CR @ PO Price (base + NR tax) #
journal entry (Both AP Expense accrual a/c DR @ PO Price (base + NR
GL_JE_LINES Actual
actual and tax) &
encumbrance) Budget a/c DR @ PO price (base + NR tax) ++
Budget a/c CR @ PO price (base + NR tax) ++
Budget a/c DR @ invoice price excluding NR tax - GL_BC_
6.Invoice Validation Encumbrance
INV Enc ** PACKETS
REC Tax and NR tax DR @ tax amount ^^
Expense charge a/c DR @ invoice price excluding
tax and tax DR @ tax rate separately AP_AE_LINES_
Actual
ALL
7.Create Accounting for AP Liability a/c CR @ invoice price including NR
invoice tax
REC Tax and NR tax CR @ tax amount ^^ AP_ENCUMBR
ANCE_LINES_ Encumbrance
Budget a/c CR @ invoice price excluding NR tax ** ALL
Note:
RRSL RCV_RECEIVING_SUB_LEDGER
GLI GL_INTERFACE
APE-Case 4:
Accrue on receipt = N PO/Receive the PO and Run the
Destination type = Expense Period End Program
Purchase Encumbrance type and Deliver the PO and Run the
Invoice Encumbrance type are Period End Program
different Invoice Validation and Create
Accounting
Sequence of Actions:
Table in which records Flag/nature of

Action Accounting entries exist 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
Expense Charge a/c DR @ PO Price (base + NR
tax) +
3.Run the Period end Actual
AP Expense accrual a/c CR @ PO Price (base + RRSL/GLI
program
NR tax) &
Budget a/c CR @ PO price (base + NR tax) ^ Encumbrance
Expense Charge a/c CR @ PO Price (base + NR
4.Manual Reversal of tax) +
journal entry (Both actual AP Expense accrual a/c DR @ PO Price (base + GL_JE_LINES Actual
and encumbrance) NR tax) &
Budget a/c DR @ PO price (base + NR tax) *
Expense Charge a/c DR @ PO Price (base + NR
tax) + Actual
AP Expense accrual a/c CR @ PO Price (base + RRSL/GLI
program
NR tax) &
Budget a/c CR @ PO price (base + NR tax) * Encumbrance
Expense Charge a/c CR @ PO Price (base + NR
7.Manual Reversal of tax) +
journal entry (Both actual AP Expense accrual a/c DR @ PO Price (base + GL_JE_LINES Actual
and encumbrance) NR tax) &
Budget a/c DR @ PO price (base + NR tax) #
Budget a/c CR @ PO price (base + NR tax) #
Budget a/c DR @ invoice price excluding NR
8.Invoice Validation GL_BC_PACKETS Encumbrance
tax- INV Enc /////
REC Tax and NR tax DR @ tax amount \\\\
9.Create Accounting for AP Liability a/c CR @ invoice price including
invoice NR tax
REC Tax and NR tax CR @ tax amount \\\\
AP_ENCUMBRANCE_
Budget a/c CR @ invoice price excluding NR Encumbrance
LINES_ALL
tax /////
APE-Case 5:
Accrue on receipt = N Create, Approve, Reserve PO
Destination type = Expense Receive and Deliver the PO
Item = expense Item Create Invoice at higher price
Purchase Encumbrance type and than PO
Invoice Encumbrance type are Invoice Validation after matching
different Create Accounting for invoice
Run the Period End Program
Flag/nature of
Action Accounting entries Table in which records exist entry
Budget a/c DR @ PO price (base + NR tax)
$$
2. Receive the PO No Accounting Transactions N/A N/A
$$
Budget a/c DR @ PO price excluding NR
4. Invoice Validation at tax ***
higher price
Budget a/c DR @ difference in invoice
price ***
REC Tax and NR tax DR @ tax amount &
5. Create Accounting AP Liability a/c CR @ invoice price
for invoice including NR tax
REC Tax and NR tax CR @ tax amount &
AP_ENCUMBRANCE_LINES
Budget a/c CR @ invoice price excluding Encumbrance
_ALL
NR tax
N/A N/A
N/A N/A
Note:
APE-Case 6:
Assumptions: Purchase Encumbrance type and
Accrue on receipt = N Invoice Encumbrance type are
Destination type = Expense different
Item = expense Item
Sequence of actions:
Create, Approve, Reserve PO Invoice Validation after matching
Receive and Deliver the PO Create Accounting for invoice
Create Invoice at higher quantity Run the Period End Program
than PO

Budget a/c DR @ PO price (base + NR tax)
##
2. Receive the PO No Accounting Transactions N/A N/A
##
Budget a/c DR @ PO price excluding NR tax

4. Invoice Validation at $$
higher quantity
Budget a/c DR @ additional invoice price
-INV enc $$
REC Tax and NR tax DR @ tax amount ////
5. Create Accounting including NR tax
for invoice REC Tax and NR tax CR @ tax amount ////
Budget a/c CR @ PO price excluding NR tax
AP_ENCUMBRANCE_LI
^^^^ Encumbrance
NES_ALL
Budget a/c CR @ additional invoice price
with encumbrance line type as QV ^^^^
N/A N/A
N/A N/A
Note:
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.
Accounting Flow against Purchase Orders, Receipts and Matched Invoices.

JULY 2006
Authors: Manighandan Venkatraman & Asha Ravada
Oracle Corporation
World Headquarters
500 Oracle Parkway
Redwood Shores, CA 94065
U.S.A.
Worldwide Inquiries:
Phone: +1.650.506.7000
Fax: +1.650.506.7200
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Copyright 2006, Oracle. All rights reserved.
This document is provided for information purposes only and the
contents hereof are subject to change without notice.
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R12 NuwePO - Accounting - Flow

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Accounting Flow

Expense items can be accrued at

This document consists of the following case studies/scenarios.

Accrue on receipt: (APO)

Accrue at Period-end: (APE)

The following Pages will explain each case in detail:

AOR-Case 1: Sequence of actions:

Table in which records

Budget a/c CR @ PO price (base + NR Encumbrance

Table in which Flag/nature of

Table in which records

Table in which records

Table in which records

2. Receive the PO N/A N/A

Table in which records

4.Receive the PO N/A N/A

Expense Charge a/c DR @ PO Price (base + NR tax) #

Table in which records Flag/nature of

Table in which records

Budget a/c DR @ PO price excluding NR tax

2. Under the cases mentioned above under the Period-end Section,

Accounting Flow against Purchase Orders, Receipts and Matched Invoices.

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