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.

Note: To generate inventory transaction perpetual and financial records for purchase order lines of type Description, Capital Equipment, and Category, the Indirect Procurement Feature Console feature must be enabled. Otherwise no transactions will be generated for these line types when they are received.

The table below shows the fields for the Inventory Transaction Financial Records ITFRs Closed 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.

How Fields Are Populated For Inventory Transaction Financial Records
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.

General Ledger Account Used For Received Purchase Order Lines of Type Description and Capital Equipment
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 when selecting the GL account for the transaction, but the Item Master field will be populated in the transaction record. The following table shows which general ledger account is used for this line type when it is received:

General Ledger Account Used For Purchase Order Lines of Type Category
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 Closed 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 Closed 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.