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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
Table in which records exist GL_BC_PACKETS
Action 1. PO is reserved
2. Receive the PO
Accounting entries Budget a/c DR @ PO price (base + NR tax)* Receiving Inventory a/c DR @ PO price (base + NR tax)++
3. Deliver the PO
RRSL/GLI/GL_JE_LINES AP Expense accrual a/c CR @ PO price (base+ NR tax) ^^ Expense Charge a/c DR @ PO price (base + NR tax) Receiving Inventory a/c CR @ PO price (base + NR tax)++ RRSL/GLI/GL_JE_LINES Budget a/c CR @ PO price (base + NR tax)*
Actual
Actual
4. Invoice Validation REC Tax and NR tax DR @ tax amount++ AP Expense accrual a/c DR @ PO price excluding tax and tax DR @ tax rate 5. Create Accounting separately ^^ for Invoice AP Liability a/c CR @ invoice price REC Tax and NR tax CR @ tax amount++
Actual
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
Table in which records exist GL_BC_PACKETS GL_BC_PACKETS
Accounting entries Budget a/c DR @ PO price (base + NR tax) $$ REC Tax and NR tax DR @ tax amount * AP Expense accrual a/c DR @ PO price excluding tax and tax DR @ tax rate separately +++ AP Liability a/c CR @ invoice price REC Tax and NR tax CR @ tax amount * Receiving Inspection a/c DR @ PO price (base + NR tax) ^^^^ AP Expense accrual a/c CR @ PO price (base+ NR tax) +++ Expense Charge a/c DR @ PO price (base + NR tax) Receiving Inspection a/c CR @ PO price (base + NR tax) ^^^^
Actual
Encumbrance
Actual Actual
Encumbrance
Note: Corresponding offsetting accounts have same symbols PO base price refers to received quantity * unit Price in PO lines NR tax refers to Non Recoverable Tax calculated for the (received quantity *PO line unit price) REC tax refers to Recoverable Tax calculated for the (received quantity *PO line unit price) RRSL - RCV_RECEIVING_SUB_LEDGER GLI GL_INTERFACE AOR-Case 3: Assumptions: Accrue on receipt = Y Destination type = Expense Item = expense Item Sequence of actions:
Table in which records exist GL_BC_PACKETS RRSL/GLI/GL_JE_ LINES Flag/nature of entry Encumbrance
Create, Approve, Reserve PO Receive and Deliver PO Create Invoice at higher unit price than PO Invoice Validation Create Accounting
Action 1. PO is reserved
Accounting entries Budget a/c DR @ PO price (base + NR tax) ^^^^ Receiving Inventory a/c DR @ PO price (base + NR tax) $$$ AP Expense accrual a/c CR @ PO price (base+ NR tax) ** Expense Charge a/c DR @ PO price (base + NR tax) Receiving Inventory a/c CR @ PO price (base + NR tax) $$$ Budget a/c CR @ PO price (base + NR tax) ^^^^
2. Receive the PO
Actual
3. Deliver the PO
RRSL/GLI/GL_JE_ LINES
Actual
IPV a/c DB @ difference in price & 5. Create Accounting for AP Expense accrual a/c DR @ PO price excluding Invoice tax and tax DR @ tax rate separately ** AP Liability a/c CR @ invoice price
IPV a/c DR @ difference in price REC Tax and NR tax CR @ tax amount # IPV a/c CR @ difference in price & AP_ENCUMBRANCE Encumbrance _LINES_ALL
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
Table in which records exist Flag/nature of entry Encumbrance Actual
Accounting entries
GL_BC_PACKETS Budget a/c DR @ PO price (base + NR tax) & Receiving Inspection a/c DR @ PO price (base + NR tax) ## RRSL/GLI/GL_JE_ LINES AP Expense accrual a/c CR @ PO price (base+ NR tax) ^^^ Expense Charge a/c DR @ PO price (base + NR tax) Receiving Inspection a/c CR @ PO price (base + NR tax) ## Budget a/c CR @ PO price (base+ NR tax) & RRSL/GLI/GL_JE_ LINES
Actual
3. Deliver the PO
Encumbrance
Encumbrance
AP Expense accrual a/c DR @ invoice price excluding tax and tax DR @ tax rate separately ^^^ 5. Create Accounting for Invoice AP Liability a/c CR @ invoice price
AP_AE_LINES_ALL
Actual
AP_ENCUMBRANCE _LINES_ALL
Encumbrance
Note:
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
Table in which records exist GL_BC_PACKETS Flag/nature of entry Encumbrance
Action 1. PO is reserved
Accounting entries Budget a/c DR @ PO price (base + NR tax) # Receiving Inspection a/c DR @ PO price (base + NR tax) ** AP Inventory accrual a/c CR @ PO price (base+ NR tax) %%% Material Valuation a/c DR @ std cost Receiving Inspection a/c DR @ PO price (base + NR tax) **
RRSL/GLI/GL_JE_LINES
Actual
MTL_TRANSACTION_ Actual (Account line ACCOUNTS type-1) Actual (Account line type-5)
PPV a/c CR/DR @ difference in price Budget a/c CR @ PO price (base+ NR tax) # 4. Invoice Validation REC Tax and NR tax DR @ tax amount $$$$ AP Inventory accrual a/c DR @ PO price excluding tax and tax DR @ tax rate 5. Create Accounting separately %%% for Invoice AP Liability a/c CR @ invoice price REC Tax and NR tax CR @ tax amount $$$$ AP_ENCUMBRANCE_ LINES_ALL GL_BC_PACKETS
AP_AE_LINES_ALL
Actual
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
Table in which records exist GL_BC_PACKETS GL_BC_PACKETS AP_AE_LINES_ALL
Accounting entries Budget a/c DR @ PO price (base + NR 1. PO is reserved tax) #### 2. Invoice Validation REC Tax and NR tax DR @ tax amount* 3. Create Accounting AP Inventory accrual a/c DR @ PO price for invoice excluding tax and tax DR @ tax rate separately @@@
Action
AP Liability a/c CR @ invoice price REC Tax and NR tax CR @ tax amount* Receiving Inspection a/c DR @ PO price (base + NR tax) ^^^^ AP Inventory accrual a/c CR @ PO price (base+ NR tax) @@@ Material Valuation a/c DR @ std cost 5. Deliver the PO AP_ENCUMBRANCE_ LINES_ALL RRSL/GLI/GL_JE_ LINES Encumbrance
4. Receive the PO
Actual
Actual (Account line type-1) Actual (Account line Receiving Inspection a/c CR @ PO price type-5) MTL_TRANSACTION_ (base + NR tax) ^^^^ 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: 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 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
Accounting entries Budget a/c DR @ PO price (base + NR tax) * No Accounting Transactions No Accounting Transactions
4. Invoice Validation
Budget a/c CR @ PO price (base + NR tax) * REC Tax and NR tax DR @ tax 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 Liability a/c CR @ invoice price including NR tax REC Tax and NR tax CR @ tax amount ^^ Budget a/c CR @ invoice price excluding NR tax &&& No Accounting Transactions Not Required since there are no accrual entries
GL_BC_PACKETS
Encumbrance
AP_AE_LINES_ALL
Actual
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
Table in which records exist GL_BC_PACKETS GL_BC_PACKETS
Accounting entries Budget a/c DR @ PO price (base + NR tax) #### Budget a/c CR @ PO price (base + NR tax) #### REC Tax and NR tax DR @ tax
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 Liability a/c CR @ invoice price including NR tax Budget a/c CR @ invoice price excluding NR tax %% REC Tax and NR tax CR @ tax amount*** No Accounting Transactions No Accounting Transactions No Accounting Transactions Not Required since there are no accrual entries
AP_AE_LINES_ALL
Actual
Encumbrance
4.Receive the PO 5. Deliver the PO 6.Run the Period end program 7. Manual Reversal of journal entry
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 Sequence of actions: Destination type = Expense Create, Approve, Reserve PO 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
Action 1.PO is reserved 2.Receive the PO 3.Deliver the PO 4.Run the Period end program Accounting entries Budget a/c DR @ PO price (base + NR tax) $ No Accounting Transactions No Accounting Transactions Expense Charge a/c DR @ PO Price (base + NR tax) # AP Expense accrual a/c CR @ PO Price (base + NR tax) & Table in which records exist GL_BC_ PACKETS N/A N/A RRSL/GLI Flag/nature of entry Encumbrance N/A N/A Actual
5.Manual Reversal of journal entry (Both actual and encumbrance) 6.Invoice Validation
Budget a/c CR @ PO price (base + NR tax) $ Expense Charge a/c CR @ PO Price (base + NR tax) # AP Expense accrual a/c DR @ PO Price (base + NR GL_JE_LINES 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 tax GL_BC_ INV Enc ** PACKETS REC Tax and NR tax DR @ tax amount ^^ AP_AE_LINES_ ALL AP_ENCUMBR ANCE_LINES_ ALL
Encumbrance Actual
Encumbrance
Expense charge a/c DR @ invoice price excluding tax and tax DR @ tax rate separately 7.Create Accounting for AP Liability a/c CR @ invoice price including NR tax invoice REC Tax and NR tax CR @ tax amount ^^ Budget a/c CR @ invoice price excluding NR tax **
Actual
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:
Action 1.PO is reserved 2.Receive the PO 3.Run the Period end program Accounting entries Budget a/c DR @ PO price (base + NR tax) ^ No Accounting Transactions Expense Charge a/c DR @ PO Price (base + NR tax) + Table in which records exist GL_BC_PACKETS N/A RRSL/GLI Flag/nature of entry Encumbrance N/A Actual
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
AP Expense accrual a/c CR @ PO Price (base + NR tax) & Budget a/c CR @ PO price (base + NR tax) ^ Expense Charge a/c CR @ PO Price (base + NR tax) + 4.Manual Reversal of journal entry (Both actual AP Expense accrual a/c DR @ PO Price (base + NR tax) & and encumbrance) Budget a/c DR @ PO price (base + NR tax) * 5. Deliver the PO No Accounting Transactions
Encumbrance
GL_JE_LINES
Actual
N/A
Expense Charge a/c DR @ PO Price (base + NR tax) + 6. Run the Period end RRSL/GLI AP Expense accrual a/c CR @ PO Price (base + program NR tax) & Budget a/c CR @ PO price (base + NR tax) * Expense Charge a/c CR @ PO Price (base + NR tax) + 7.Manual Reversal of journal entry (Both actual AP Expense accrual a/c DR @ PO Price (base + GL_JE_LINES NR tax) & and 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 8.Invoice Validation GL_BC_PACKETS tax- INV Enc ///// 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_ALL 9.Create Accounting for AP Liability a/c CR @ invoice price including NR tax invoice REC Tax and NR tax CR @ tax amount \\\\ AP_ENCUMBRANCE_ Budget a/c CR @ invoice price excluding NR LINES_ALL tax /////
Actual
Encumbrance
Actual
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
Flag/nature of entry
GL_BC_PACKETS
Encumbrance
N/A N/A No Accounting Transactions 3. Deliver the PO N/A N/A No Accounting Transactions Budget a/c CR @ PO price (base + NR tax) $$ Budget a/c DR @ PO price excluding NR 4. Invoice Validation at tax *** GL_BC_PACKETS Encumbrance higher price Budget a/c DR @ difference in invoice price *** 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_ALL Actual 5. Create Accounting AP Liability a/c CR @ invoice price including NR tax for invoice REC Tax and NR tax CR @ tax amount & AP_ENCUMBRANCE_LINES Encumbrance Budget a/c CR @ invoice price excluding _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: 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
Accounting entries Budget a/c DR @ PO price (base + NR tax) ## No Accounting Transactions No Accounting Transactions Budget a/c CR @ PO price (base + NR tax) ##
GL_BC_PACKETS
Encumbrance
Budget a/c DR @ additional invoice price -INV enc $$ 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_ALL AP Liability a/c CR @ invoice price including NR tax REC Tax and NR tax CR @ tax amount //// Budget a/c CR @ PO price excluding NR tax AP_ENCUMBRANCE_LI ^^^^ NES_ALL Budget a/c CR @ additional invoice price with encumbrance line type as QV ^^^^ No Accounting Transactions Not Required since there are no accrual entries N/A N/A
Actual
Encumbrance
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.
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 oracle.com Copyright 2006, Oracle. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle, JD Edwards, PeopleSoft, and Siebel are registered trademarks of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.