Accrual Transactions
When an organization purchases the same items for resale and internal consumption, the purchase order line type you select will determine how the purchase is accounted for. Purchase order lines of type Description, Capital Equipment, and Category are used for purchases that will be used for internal consumption. Purchase order lines of type Item are used for resale items.
When a receipt is recorded for a purchase order line of type Item, Description, Capital Equipment, or Category, an inventory transaction perpetual record is generated together with two associated inventory transaction financial records. These transactions will be used to produce a journal in Accounting.
- The debit is made to the General Ledger account entered on the purchase order line.
- The credit is made to the AP Liability account.
The table below shows the fields for the Inventory Transaction Financial Records ITFRs
Allow you to track the financial transactions arising from acquiring, managing and selling inventory items. You can track information such as who was involved in the transaction, what the transaction was for, when and where it took place and why. This information can be sent to financial systems such as Accounting. You can also view Inventory Transaction Financial Records from the Perpetual with Financial report.. It also shows examples of the values that are expected for each of the new financial transactions created when a line of type Item, Description, Capital Equipment, or Category is received. The values used on the purchase order line for this example are as follows:
- Quantity: 5
- Quantity received: 4
- Unit Cost : 10
- Total Cost: 50
The currency of the Inventory Control Point (ICP) the purchase order was shipped to is USD.
| Field | Description |
Financial Transaction 1 |
Financial Transaction 2 |
|---|---|---|---|
| GL Account | General Ledger Account | Expenses | AP Liability |
| ICP Currency | Currency of the Inventory Control Point (ICP) if used | USD | USD |
| ICP Unit Cost | Unit cost using currency of ICP | 10 | -10 |
| ICP Value Amount | Unit cost using currency of ICP X Quantity | 40 | - 40 |
| Quantity | Receipt Quantity | 4 | 4 |
| Trade Currency | Purchase Order Currency | USD | USD |
| Trade Unit Cost | Purchase Order line Unit Cost | 10 | -10 |
| Trade Value Amount | Purchase Order line Unit cost x Quantity | 40 | -40 |
The data for the Inventory Transaction Financial Records is populated from the purchase order lines.
Accrual Journals
Purchase order lines of type Description and type Capital Equipment can be created with or without an item master. The following table shows which general ledger account is used when the purchase order line is received.
| Item Master on Purchase Order Line? | General Ledger Account on Purchase Order Line? | ITFR - Expenses | ITFR - Accrued Purchases |
|---|---|---|---|
| No | Yes | GL account on purchase order line. | Accounting GL account mapping |
| No | No | Accounting GL account mapping. | Accounting GL account mapping |
| Yes | Yes | GL account on purchase order line. | Accounting GL account mapping |
| Yes | No |
GL account on the Purchase Analysis GLA for Product field. This is a field on the product group associated with the item master on the purchase order line. |
Accounting GL account mapping |
For purchase order lines of type Category, any specified item master will be ignored in the transaction generation process . The following table shows which general ledger account is used for this line type when it is received:
|
General Ledger Account on Purchase Order Line? |
ITFR - Expenses | ITFR - Accrued Purchases |
|---|---|---|
| Yes | GL account on purchase order line. | Accounting GL account mapping |
| No |
GL account on the Purchase Analysis GLA for Product field. This is a field on the product group associated with the item master on the purchase order line. |
Accounting GL account mapping |
Accrual Transactions for Intangible Items
To allow accrual transactions for intangible items in a purchase order:
- Select the line with an intangible item. To check that the item is intangible, navigate to the item’s page and ensure that the Intangible? checkbox is selected.
- On the item’s page click the product group in the Product Group field. On the Product Group record page, select the Allow Accruals for Intangible checkbox and click Save. For more information, see Creating Product Groups.
- On the Purchase Order Line Items page, click Create Receipt. The Create Receipt window displays. Enter a value in the Receiving Quantity field and click Save. The receipt is generated with receipt lines, ITPR records are related to receipt lines, and ITFR records are related to ITPR records. For more information on creating receipts, see Creating a Purchase Order Receipt.
- On the Inventory Transaction Perpetual Records page, click the ITPR record in the Inventory Transaction Record field.
- In the Related tab, click the created ITFR records in the Inventory Transaction Financial Records. The GLA field in one record must be Expenses and in the other Accrued Purchases.
Disabling Accrual Transactions
When an AP voucher associated with a purchase order line is fully matched, accrual transactions are disabled so there are no unnecessary accrual ITPR Inventory Transaction Perpetual Record. Historical records that allow you to track transaction history arising from acquiring, managing and selling inventory items. You can track information such as who was involved in the transaction, what the transaction was for, when, where it took place and why. You can also view Inventory Transaction Perpetual Records from the Perpetual with Financial report./ITFR Allow you to track the financial transactions arising from acquiring, managing and selling inventory items. You can track information such as who was involved in the transaction, what the transaction was for, when and where it took place and why. This information can be sent to financial systems such as Accounting. You can also view Inventory Transaction Financial Records from the Perpetual with Financial report. entries logged when purchases have been paid for and received. When a purchase order line is partially matched, accrual transactions will be created only for the unmatched quantity. This ensures the accounting entries are an accurate reflection of the purchases.
The system only creates new transactions for AP vouchers that have not yet been matched.
For example, if 5 purchase order lines are received but only 3 are matched, 2 ITPRs and 4 ITFRs are created for the 2 lines that are not matched. The quantity of items assigned to each line will not influence the number of transactions created for items that are not serial number or lot number controlled.
Serial number controlled and lot controlled quantities are split into different receipt lines during the receipt phase. How the quantities are split will determine the number of transactions created for the receipt lines remaining unmatched.
Serial Number Control
A separate receipt line is created for each serial controlled item that is received. The quantity of transactions created is therefore different for serial number controlled items, unless the original purchase order has only 1 line and a line item quantity of 1. 1 ITPR and 2 ITFRs are created for each item that is subject to serial number control to reflect the number of unmatched AP voucher lines.
Lot Number Control
The quantity of transactions created for lot number controlled items also varies depending on how the total quantity of lot number controlled items is divided between the lots created when lot controlled items are received.
A new Receipt Line is created for each lot number when the purchase order is received. The lot number split is configured for each purchase order line immediately after the purchase order receipt is saved. The lot numbers and associated quantity details are always required when a purchase order line item is lot number controlled.
For example, a purchase order line with 12 lot controlled items divided into 3 lots will generate 3 ITPRs and 6 ITFRs if the associated AP voucher is not matched.
More than one AP voucher can be created for a single purchase order. Subsequent AP vouchers will display the remaining quantities to voucher.
Serial and Lot Number Controlled Tracking
To enable accurate tracking, the following fields display on each of the ITPRs created:
- Inventory transaction type
- Inventory Transaction Record Number
- Associated Purchase Order Line Item
- Receipt Line
- Lot Number
- Serial Number
- AP Voucher
The functionality ensures continued item tracking is available for serial number and lot number controlled items.
Crediting or Voiding AP vouchers
When an AP voucher with purchase order lines of type Description, Capital Equipment, or Category is credited or voided, financial transactions are created to reflect this to ensure the credit and void actions are accounted for correctly.
How Transactions Are Recorded
The following tables show how the financial transactions are recorded between the receipt of a purchase order line of type Description, Capital Equipment, or Category and the credit or void action of the associated AP voucher.
Receive Purchase Order
Perpetual With Financial transaction
| ITPR |
ITFR 1 |
ITFR 2 |
|---|---|---|
|
Inventory Transactions = Receive Purchased Material Quantity = Receipt Line Quantity Receipt Line = associated receipt line Purchase Order Line Item = associated PO line |
GL Account = Expenses Quantity = Quantity of receipt line associated with PO line (POSITIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Unit cost of PO line converted to ICP Currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade Unit Cost = Unit cost of PO line Trade Value Amount = Unit cost x Quantity |
GL Account = Accrued Purchases Quantity = Quantity of receipt line associated with PO line(NEGATIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Unit cost of PO line converted to ICP currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade Unit Cost = Unit cost of PO line Trade Value Amount = Unit cost x Quantity |
Reverse Receipt Line
Perpetual With Financial transaction
| ITPR |
ITFR 1 |
ITFR 2 |
|---|---|---|
|
Inventory Transactions = Reverse Receive Purchased Material Quantity = Receipt Line Quantity Receipt Line = associated receipt line Purchase Order Line Item = associated PO line |
GL Account = Expenses Quantity = Quantity of receipt line associated with PO line (NEGATIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Unit cost of PO line converted to ICP currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade Unit Cost = Unit cost of PO line Trade Value Amount = Unit cost x Quantity |
GL Account = Accrued Purchases Quantity = Quantity of receipt line associated with PO line (POSITIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Unit cost of PO line converted to ICP currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade Unit Cost = Unit cost of PO line Trade Value Amount = Unit cost x Quantity |
Match AP Voucher Line
Perpetual With Financial transaction
| ITPR |
ITFR 1 |
ITFR 2 |
|---|---|---|
|
Inventory Transactions = Accrual Reversal Quantity = Quantity on AP voucher line Receipt Line = associated receipt line Purchase Order Line Item = associated PO line |
GL Account = Accrued Purchases Quantity = Quantity matched (POSITIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Unit cost of PO line converted to ICP Currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade Unit Cost = Unit cost of PO line Trade Value Amount = Unit cost x Quantity matched |
GL Account = Expenses Quantity = Quantity matched (NEGATIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Unit cost of PO line converted to ICP currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade Unit Cost = Unit cost of PO line Trade Value Amount = Unit cost x Quantity matched |
Void AP Voucher Line
Perpetual With Financial transaction
| ITPR |
ITFR 1 |
ITFR 2 |
|---|---|---|
|
Inventory Transactions = AP Voucher Credit Quantity = 1 Receipt Line = associated receipt line Purchase Order Line Item = associated PO line |
GL Account = Accrued Purchases Quantity = Quantity = 1 (NEGATIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Amount of AP voucher that's been voided in ICP currency ICP value amount = Amount of AP voucher that's been voided in ICP currency Trade Currency = Currency of PO Trade unit cost = Amount of AP voucher that's been voided in PO currency Trade value amount = Amount of AP voucher that's been voided in PO currency |
GL Account = Accounts Payable Quantity = 1 (POSITIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Amount of AP voucher that's been voided in ICP currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade unit cost = Amount of AP voucher that's been voided in PO currency Trade unit cost = Amount of AP voucher that's been voided in PO currency |
Credit AP Voucher Line
Perpetual With Financial transaction
| ITPR |
ITFR 1 |
ITFR 2 |
|---|---|---|
|
Inventory Transactions = AP Voucher Credit Quantity = 1 Receipt Line = associated receipt line Purchase Order Line Item = associated PO line |
GL Account = Accrued Purchases Quantity = Quantity = 1 (NEGATIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Amount of AP voucher that's been voided in ICP currency ICP value amount = Amount of AP voucher that's been voided in ICP currency Trade Currency = Currency of PO Trade unit cost = Amount of AP voucher that's been credited in PO currency Trade value amount = Amount of AP voucher that's been credited in PO currency |
GL Account = Accounts Payable Quantity = 1 (POSITIVE) ICP Currency = Currency of ICP related to warehouse of PO line ICP Unit Cost = Amount of AP voucher that's been voided in ICP currency ICP Value Amount = Unit cost of PO line x Quantity Trade Currency = Currency of PO Trade unit cost = Amount of AP voucher that's been voided in PO currency Trade unit cost = Amount of AP voucher that's been credited in PO currency |