Accounting Entries P-P

Accounting EntriesA). 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 thePOprice to update the following accounts.

Accounting Entry Debit Credit SourceReceiving inspection account @ PO pricexxAt Define Organization/ Receiving Options

Inventory A/P Accrual account @ PO pricexxAt Organization Parameters

(for receiving Inventory Items)

Receiving inspection account @ PO pricexxAt Define Organizations

Expense A/P Accrual account @ PO pricexxAt Define Purchasing Options

(for receiving expense items)

B). Delivery from Receiving Inspection to Inventory underStandard 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 SourceSub-inventory accounts @ Std. CostxxAt Define Sub-inventory

Receiving Inspection account @ PO pricexxAt Define Organization

Purchase Price Variance Account (Negative Expense)xxAt Define Organization Parameters

Case#2: If the standard cost is less than thePOprice then the variance is unfavourable and Apps record this as a debit (positive expense)

Accounting Entry Debit Credit SourceSub-inventory accounts @ Std. CostxxAt Define Sub-inventory

Purchase Price Variance Account (Positive Expense)xxAt Define Organization Parameters

Receiving Inspection account @ PO pricexxAt Define Organization/ Define Receiving Options

(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 thePOand hence you do not have any PPV.

Accounting Entry Debit Credit SourceReceiving inspection account @ PO pricexxAt Define Organization/ Define Receiving Options

Inventory A/P Accrual account @ PO pricexxAt Organization Parameters


(D). Delivery from Receiving Inspection to Inventory underAverage 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 SourceSub-inventory accounts @ PO pricexxAt Define Sub-inventory

Receiving Inspection account @ PO pricexxAt Define Organisation/ Define Receiving Options

(for delivering to the inventory at actualPOcost)

To record the actual Landed cost (Average Cost)

The goods are received into Landed Organisation first and then are transferred to actual organisations with the addition of landed cost recorded as the transfer charges. This step is performed in Inventory as Inter-organisations transfers and the accounting impact is:

Accounting Entry Debit Credit SourceInter-Org Receivable account@ Purchase order cost + actual Landed costxxAt Define Inter-Org transfers Networks

Sub-inventory Material account @ Purchase order CostxxAt Define Sub-inventories / Define Organisation

Inter-Org transfer charges account @ Amount of actual Landed costxxAt Define Inter-Org transfers Networks

E). Delivery from Receiving Inspection to Expense. Recorder at the time, when the goods are transferred from Receiving Inspection to Expense Destination

With Enter Receiving form, you can also move material from receiving inspection to expense destinations.

Oracle Purchasing uses the transaction quantity and thePOprice of the delivered item to update the receiving inspection and expense charge account.

Accounting Entry Debit Credit SourcePOdistribution charge accounts @ PO pricexxAt individual item level

Receiving inspection account @ PO pricexxAt Define Receiving Options

(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 andPOprice 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 SourceReceiving inspection account @ PO pricexxAt Define Organisation/ Receiving Options

Inventory A/P Accrual account @ PO pricexxAt Organisation Parameters


Case # 1

Sub-inventory accounts @ Std. CostxxAt Define Sub-inventory

Receiving Inspection account @ PO pricexxAt Define Organisation

Purchase Price Variance Account (Negative Expense)xxAt Define Organisation Parameters

(Delivered into inventory when the Std.cost is more than thePOprice)

Case # 2

Sub-inventory accounts @ Std. CostxxAt Define Sub-inventory

Purchase Price Variance Account (Positive Expense)xxAt Define Organisation Parameters


(Delivered into inventory when the Std.cost is less than thePOprice)

(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 thePOand 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 SourceReceiving inspection account @ PO pricexxAt Define Organisation/ Receiving Options



Sub-inventory accounts @ PO pricexxAt Define Sub-inventory


(for delivering to the inventory at actualPOcost)

(H). Purchase Order receipt to the Expense destinations without inspection. When the goods are received into Inspection Location at the Enter Receipts form and delivered to inventory directly in one step.

Accounting Entry Debit Credit SourceReceiving inspection account @ PO pricexxAt Define Organisation/ Define Receiving Options

Expense account @POpricexxAt Define Items

(for receiving expense items)

POdistribution charge account @ PO pricexxFrom Purchase Order

Receiving inspection account @ PO pricexxAt Define Organisation/ Define Receiving Options

(for delivering to the expense destinations directly)

Return to Vendor from Receiving Inspection at Standard Cost.

For a return from inspection, Purchasing decreases the receiving inspection balance, and reverses the accounting entry created for the original receipt.

Accounting Entry Debit Credit SourceInventory A/P Accrual account @ PO pricexxAt Organisation Parameters

Receiving inspection account @ PO pricexxAt Define Organisation/ Receiving Options

(for returning Inventory Items)

Expense A/P Accrual account @ PO pricexxAt Define Purchasing Options

Receiving inspection account @ PO priceXxAt Define Organizations

(for returning expense items)

Return to Vendor from Inventory(to Receiving Inspection) at Standard Cost.

If you use receiving inspection and delivered material into inventory and if you want to return material from the same inventory, you must first return the material to Receiving Inspection from inventory before you can return to your vendor. For a return from inspection, Purchasing decreases the receiving inspection balance, and reverses the accounting entry created for the original receipt. This is two step process.Case # 1:Incase of Std.cost is less thanPOprice of the returned item when it was received into the inventory.

Accounting Entry Debit Credit SourceStep#1:When you return goods from inventory to receiving location

Receiving Inspection account @ PO pricexxAt Define Organisation/ Define Receiving parameters

Sub inventory accounts @ Std. PricexxAt Define Sub-inventory

Purchase Price VariancexxAt Define Org. Parameters

(for reversing the entry when the items is returned from SI to Receiving Inspection)

Step#2:When you return goods from receiving inspection location to the supplier


Receiving inspection account @ PO pricexxAt Define Organisation/ Receiving Options

(for returning Inventory Items from Receiving inspection to the vendor)

Case # 2:Incase of Std.cost is more thanPOprice of the returned item when it was received into the inventory. Accounting Entry Debit Credit SourceStep#1:When you return goods from inventory to receiving location

Receiving Inspection account @ PO pricexxAt Define Organisation/ Define Receiving parameters


Sub inventory accounts @ Std. PriceXxAt Define Sub-inventory

(for reversing the entry when the items is returned from SI to Receiving Inspection)

Case #2:When you return goods from the receiving inspection location to the supplier

Inventory A/P Accrual account @ PO priceXxAt Organisation Parameters

Receiving inspection account @ PO priceXxAt Define Organisation/ Receiving Options


(I). Return to Vendor from Inventory when the items are received throughDirect Receipt without inspectionat Standard Cost.

The accounting impact is the same as in the previous inspection case, except all the accounting is done in one step.Case # 1:Incase of Std.cost is less thanPOprice of the returned item when it was received into the inventory. Accounting Entry Debit Credit SourceReceiving Inspection account @ PO pricexxAt Define Organisation/ Define Receiving parameters

Sub inventory accounts @ Std. PricexxAt Define Sub-inventory


(for reversing the entry that is made when the items is received & delivered directly)


Receiving inspection account @ PO priceXxAt Define Organisation/ Receiving Options


Case # 2:Incase of Standard cost is more thanPOprice of the returned item when it was received into the inventory. Accounting Entry Debit Credit SourceReceiving Inspection account @ PO pricexxAt Define Organization/ Define Receiving parameters


Sub inventory accounts @ Std. PriceXxAt Define Sub-inventory

(for reversing the entry that is made when the items are received & delivered directly)

Inventory A/P Accrual account @ PO priceXxAt Organization Parameters

Receiving inspection account @ PO priceXxAt Define Organization/ Receiving Options


Same Procedure has to be followed for returning the expense items also.

Accounts Payable

Invoice Booking at Standard Costing at Algorithm

For Actual Supplier Invoice

When matched with thePOboth Inventory AP Accrual account and Liability accounts come from the related Purchase order. If it s an unmatched invoice, you have to give the Inventory AP Accrual account and the liability account is defaulted from the supplier definitionWhen the Invoice Price is more than the Purchase order Price

Accounting Entry Debit Credit SourceInventory AP Accrual account @ PO priceXxComes from Purchase Order / and Entered in the Distributions

Invoice Price Variance account@ Invoice quantity * (Invoice price -POprice)XxAt Define Org. Parameters

AP liability account @ Invoice price * Invoice qtyxxAt individual Define Suppliers

When the Invoice Price is less than the Purchase order Price

Accounting Entry Debit Credit SourceInventory AP Accrual account @ PO pricexxComes from Purchase Order / and Entered in the Distributions

AP liability account @ Invoice price * Invoice qtyXxAt individual Define Suppliers

Invoice Price Variance account @ Invoice quantity * (Invoice price -POprice)XxAt Define Org. Parameters

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 SourceInventory AP Accrual account @ Actual costsxxComes from Purchase Order / and Entered in the Distributions

AP liability account @ Invoice priceXxAt individual Define Suppliers

Invoice Booking at Average Costing at DU

While making the inter-organization transfer (to record the landed cost) from Landed cost organization to Pharma or Non Pharma organizations, the Landed cost Clearing Account is credited with the landed costs as the Transfer Charges. The same account is debited at the time of invoice booking as an expense account.


Landed Cost Clearing Account@ the actual landed cost xx

AP liability account @ Invoice price * Invoice qtyXxAt individual Define Suppliers

Payment of the Invoices booked

As mentioned above payment is done separately for each invoice.

Accounting Entry Debit Credit SourceAP liability account @ Amount paidxxComes from Purchase Order / and Entered in the Distributions

Bank account @ Amount paidxxAt individual Define Banks

Incase of Debit and Credit Memo

When you enter a credit note and match it with a purchase order the following entry is created.

Accounting Entry Debit Credit SourceAP liability account @ Amount of credit notexxAt individual Define Banks/ and comes from the related invoice

Inventory AP Accrual account @ Amount of credit notexxComes from Purchase Order / and Entered in the Distributions

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 SourceAP liability account@ (Invoice Amount Credit/Debit note amount)xxAt individual Define Banks/ and comes from the related invoice

Inventory AP Accrual account @ (Invoice Amount Credit/Debit note amount)xxComes from Purchase Order / and Entered in the Distributions

Prepayment Advance to Suppliers

The complete cycle of transaction relating to Prepayment to suppliers and their accounting impact is detailed under.

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 SourcePrepayment to Suppliers account@ Amount of Prepayment paidxxAt individual Define Suppliers

Bank account @ Amount of credit notexxAt individual Define Banks

Step-2:When you receive invoice from the supplier and booked. Invoice Price Variance account @ Invoice quantity * (Invoice price -POprice) is debited or credited by Payables according the invoice price variances.


AP liability account @ Invoice price * Invoice qtyxxAt 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 SourceAP liability account@ (Prepayment amount applied)xxAt individual Define Banks/ and comes from the related invoice

Prepayment to Suppliers account @ (Prepayment amount applied)xxComes from Define suppliers / Entered in the related Invoices

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 SourceAP liability account@ (Invoice amount Prepayment amount)xxComes from Purchase Order / and Entered in the Distributions

Bank account @ Amount paidxxAt individual Define Banks

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 SourceAdvances to Employee account@ Amount of advance paidxxAt individual Define Employees as Suppliers

Bank account @ Amount of advancexxAt individual Define Banks

Step-2:When you receive Expense report from the employee, an invoice is booked from it.

Accounting Entry Debit Credit SourceExpense account @ Expense costxxComes from Define Expense Reports

AP liability account @ Expense costxxAt 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 Debit Credit SourceAP liability account@ (Advance amount applied)xxComes from the invoice to which the advance is applied

Advances to Employees account @ (Advance amount applied)xxComes from Define suppliers / Entered in the related Invoices

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 SourceAdvances to Employees account@ (Amount to be paid by the employee)xxHas to be given manually

AP liability account @ (Amount to be paid by the employee)xxComes from Define suppliers / Entered in the related Invoices

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 SourceAP liability account@ (Remaining advance amount applied)xxComes from the invoice to which the advance is applied

Advances to Employees account @ (Remaining advance amount applied)xxComes from Define suppliers / Entered in the related Invoices

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 SourceBank account@ (Amount to be paid by the employee)xxComes from Payment methods

Advances to Employees account@ (Amount to be paid by the employee)xxAt Define Receivables Activities

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 SourceAP liability account@ (Amount to be paid to employee)xxAt individual Define Employees defined as Suppliers

Bank account@ (Amount to be paid by the employee)xxComes from Payment methods

Accounting Entries P-P

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