ERP Account Sequence

Accounting Flow for Purchase Orders, Receipts and Matched Invoices

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

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 + NRtax)*
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