Accounting entries[1]

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Accounting entries[1]

  1. 1. 1) When sales order is entered, the status of sales order will be ‘entered’ and no accounting entries will be created. 2) When sales order is booked, and then status will be ‘booked’ and no accounting entries will be created. 3) When item is picked from inventory then status will be ‘picked’. 4) When item is shipped then status will be ‘shipped’ and accounting entries will be created like : Cost of goods sold A/C TO Inventory Material A/C 5) We need to run ‘Workflow Back Ground process’ to update the status of sales order from ‘shipped’ to ‘close’. 6) From Receivable run ‘Auto Invoice Master Program’. This will create Invoice for the sales order in Receivable in Transaction window with status of ‘Complete’. 7) When Invoice is created in Receivable , the accounting entries will be: Receivable A/C To Revenue A/C To Tax A/C To Freight A/C 8) When receipt is entered : Cash A/C To Unidentified A/C Unidentified A/C To Unapplied A/C Unapplied A/C To Applied A/C Applied A/C To Receivable A/C Accounting entries transferred to GL are: Cash A/C To Revenue A/C To Tax A/C To Freight A/C Note: - In R12 from ‘View Accounting’ page we can drill-down to transaction level. 9) Transfer to GL
  2. 2. Accounting Entries for Invoicing Rules/ Accounting Rules When Bills in Advance Accounting entries are as follow: Accounting entries for Bills in Advance: Receivable A/C To Unearned Revenue A/C Unearned Revenue A/C To Revenue A/C Final Entries are: Receivable A/C To Revenue A/C When Bills in Arrear Accounting entries are as follow: Unbilled Receivable A/C To Revenue A/C Receivable A/C TO Unbilled Receivable A/C Final Entries are: Receivable A/C To Revenue A/C Accounting entries in Receivables A quick re-cap of accounting entries generated in Oracle Receivables: Invoices: When you enter a regular invoice through the Transactions window, Receivables
  3. 3. creates the following journal entry: DR Receivables CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) If you enter an invoice with a Bill in Arrears invoicing rule with a three month fixed duration accounting rule, Receivables creates the following journal entries: In the first period of the rule: DR Unbilled Receivables CR Revenue In the second period of the rule: DR Unbilled Receivables CR Revenue In the third and final period of the rule: DR Unbilled Receivables CR Revenue DR Receivables CR Unbilled Receivables CR Tax (if you charge tax) CR Freight (if you charge freight) If you enter an invoice with a Bill in Advance invoicing rule, Receivables creates the following journal entries: In the first period of the rule: DR Receivables CR Unearned Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Unearned Revenue CR Revenue In all periods of the rule for the portion that is recognized. DR Unearned Revenue CR Revenue Credit Memos: When you credit an invoice, debit memo, or chargeback through the Credit Transactions window, Receivables creates the following journal entry: DR Revenue DR Tax (if you credit tax)
  4. 4. DR Freight (if you credit freight) CR Receivables (Credit Memo) DR Receivables (Credit Memo) CR Receivables (Invoice) When you credit a commitment, Receivables creates the following journal entries: DR Revenue CR Receivables When you enter a credit memo against an installment, Receivables lets you choose between the following methods: LIFO, FIFO, and Prorate. When you enter a credit memo against an invoice with invoicing and accounting rules, Receivables lets you choose between the following methods: LIFO, Prorate, and Unit. If the profile option AR: Use Invoice Accounting for Credit Memos is set to Yes, Receivables credits the accounts of the original transaction. If this profile option is set to No, Receivables uses AutoAccounting to determine the Freight, Receivables, Revenue, and Tax accounts. Receivables uses the account information for on-account credits that you specified in your AutoAccounting structure to create your journal entries. Receivables lets you update accounting information for your credit memo after it has posted to your general ledger. Receivables keeps the original accounting information as an audit trail while it creates an offsetting entry and the new entry. Commitments: When you enter a deposit, Receivables creates the following journal entry: DR Receivables (Deposit) CR Offset Account Use the AR: Deposit Offset Account Source profile option to determine how Receivables derives the Offset Account to credit for this deposit. When you enter an invoice against this deposit, Receivables creates the following journal entries: DR Receivables (Invoice) CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Offset Account (such as Unearned Revenue) CR Receivables (Invoice) When you apply an invoice to a deposit, Receivables creates a receivable adjustment against the invoice. Receivables uses the account information that you specified in
  5. 5. your AutoAccounting structure to create these entries. When cash is received against this deposit, Receivables creates the following journal entry: DR Cash CR Receivables (Deposit) When you enter a guarantee, Receivables creates the following journal entry: DR Receivables CR Revenue Receivables uses the Receivable Account and Revenue Account fields on this guarantee's transaction type to obtain the accounting flexfields for the Unbilled Receivables and Unearned Revenue accounts, respectively. When you enter an invoice against this guarantee, Receivables creates the following journal entry: DR Receivables (Invoice) CR Revenue CR Tax (if you charge tax) CR Freight (if you charge freight) DR Revenue CR Receivables When you apply an invoice to a guarantee, Receivables creates a receivable adjustment against the guarantee. Receivables uses the account information you specified in your AutoAccounting structure to create these entries. When cash is received against this guarantee, Receivables creates the following journal entry: DR Cash CR Receivables (Invoice) Receipts: When you enter a receipt, Receivables creates the following journal entries: DR Cash CR Receivables When you fully apply a receipt to an invoice, Receivables creates the following journal entry: DR Cash DR Unapplied Cash CR Unapplied Cash CR Receivables
  6. 6. Note: These examples assume that the receipt has a Remittance Method of No Remittance and a Clearance Method of Directly. When you enter an unidentified receipt, Receivables creates the following journal entry: DR Cash CR Unidentified When you enter an on-account receipt, Receivables creates the following journal entry: DR Cash CR Unapplied DR Unapplied CR On-Account When your receipt includes a discount, Receivables creates the following journal entry: DR Receivables CR Revenue DR Cash CR Receivables DR Earned/Unearned Discount CR Receivables Receivables uses the default Cash, Unapplied, Unidentified, On-Account, Unearned, and Earned accounts that you specified in the Remittance Banks window for this receipt class. When you enter a receipt and combine it with an on-account credit (which increases the balance of the receipt), Receivables creates the following journal entry: DR Cash CR Unapplied Cash To close the receivable on the credit memo and increase the unapplied cash balance, Receivables creates the following journal entry: DR Receivables CR Unapplied Cash When you enter a receipt and combine it with a negative adjustment, Receivables creates the following journal entries: DR Cash CR Receivables (Invoice)
  7. 7. DR Write-Off CR Receivables (Invoice) You set up a Write-Off account when defining your Receivables Activity. When you enter a receipt and combine it with a positive adjustment, Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Receivables (Invoice) CR Write-Off When you enter a receipt and combine it with a Chargeback, Receivables creates the following journal entries: DR Cash CR Receivables (Invoice) DR Receivables (Chargeback) CR Chargeback (Activity) DR Chargeback (Activity) CR Receivables (Invoice) You set up a Chargeback account when defining your Receivables Activity. Remittances: When you create a receipt that requires remittance to your bank, Receivables debits the Confirmation account instead of Cash. An example of a receipt requiring remittance would be a check before it was cashed. Receivables creates the following journal entry when you enter such a receipt: DR Confirmation CR Receivables You can then remit the receipt to your remittance bank using one of the two remittance methods: Standard or Factoring. If you remit your receipt using the standard method of remittance, Receivables creates the following journal entry: DR Remittance CR Confirmation When you clear the receipt, Receivables creates the following journal entry: DR Cash DR Bank Charges CR Remittance If you remit your receipt using the factoring remittance method, Receivables creates
  8. 8. the following journal entry: DR Factor CR Confirmation When you clear the receipt, Receivables creates a short-term liability for receipts that mature at a future date. The factoring process let you receive cash before the maturity date, and assumes that you are liable for the receipt amount until the customer pays the balance on the maturity date. When you receive payment, Receivables creates the following journal entry: DR Cash DR Bank Charges CR Short-Term Debt On the maturity date, Receivables reverses the short term liability and creates the following journal entry: DR Short-Term Debt CR Factor Adjustments: When you enter a negative adjustment against an invoice, Receivables creates the following journal entry: DR Write-Off CR Receivables (Invoice) When you enter a positive adjustment against an invoice, Receivables creates the following journal entry: DR Receivables (Invoice) CR Write-Off Debit Memos: When you enter a debit memo in the Transactions window, Receivables creates the following journal entries: DR Receivables CR Revenue (if you enter line amounts) CR Tax (if you charge tax) CR Freight (if you charge freight) DR Receivables CR Finance Charges On-Account Credits: When you enter an on-account credit in the Applications window, Receivables creates the following journal entry: DR Revenue (if you credit line amounts) DR Tax (if you credit tax) DR Freight (if you credit freight)
  9. 9. CR Receivables (On-account Credit) Receivables uses the Freight, Receivable, Revenue, and Tax accounts that you specified in your AutoAccounting structure to create these entries. Once the on-account credit is applied to an invoice, the following journal entry is created: DR Receivables (On-account Credit) CR Receivables (Invoice) P2P Cycle SR. NO PARTICULARS DR CR SPL NOTES ACCOUNT IS PULLED FROM SPECIFIC 1 Creation of Requisition No Accounting 2 Creation of Purchase Order No Accounting 3 Receipt Receiving A/c 100 At PO Price Receiving Option Setup ORG AP Accrual A/c 100 At PO Price Inventory Org Setup ORG 4 Devlivery Raw Material Sub Inventory A/c 80 At Standard Cost Sub-inventory Material A/c Setup SUB-INV PPV A/c 20 Diff between PO - Stnd Inventory Org Setup ORG Receiving A/c 100 At PO Price Receiving Option Setup ORG 5 Invoice matching with PO AP Accrual Liability A/c 100 At PO Price Receiving Option Setup ORG Invoice Price Variance A/c 10 Diff between Invoice - PO Inventory Org Setup ORG
  10. 10. AP Liability A/c 110 AT INV Price Financial Options/Supplier Site 6 On making Payment Liability A/c 110 At Invoice Price Financial Options/Supplier Site Cash 110 At Invoice Price Bank A/c Setup If we have reconcilation with Cash Management then we have one more entry as follows: Step 6: Dr Liability A/C Cr . Cash Clearing A/c ( Receipt Method) Step 7: DR Cash Clearing A/C CR Cash STANDARD INVOICE: DEBIT CREDIT Expense / Item Expense / Misc. Expense 100 Supplier / Liability 100 PAYMENT: Supplier / Liability 100 Bank / Cash / Cash Clearing 100 TOTAL 200 200 PREPAYMENTS / ADVANCES: DEBIT CREDIT Prepaid Expense / Advance Paid 70 Supplier / Liability 70 PAYMENT: Supplier / Liability 70 Bank / Cash / Cash Clearing 70 STANDARD INVOICE:
  11. 11. Expense / Item Expense / Misc. Expense 100 Supplier / Liability 100 PREPAYMENT APPLIED TO STANDARD INVOICE: Supplier / Liability 70 Prepaid Expense / Advance Paid 70 TOTAL 310 310 INVOICE with WITHHOLDING TAX (say 6%): DEBIT CREDIT Expense / Item Expense / Misc. Expense 100 Supplier / Liability 100 Payment with Withholding Tax : Supplier / Liability 100 Bank / Cash / Cash Clearing 94 Withhodling Tax 6 WITHHOLDING TAX INVOICE (Usually Auto Generated) WHT Expense 6 WHT Payables (NBP or SBP) 6 TOTAL 106 106 Expense Item Accounting Entries 1) In PO module there is no Accounting Entries 2) When Invoice is generated accounting entries are Expense Item A/C To Expense AP Accrual Expense AP Accrual A/C To Cash Clearing Cash Clearing A/C To Cash/Bank Final Entry: Expense Item A/C
  12. 12. To Cash/ Bank Foreign Invoice Accounting Entries 1) When Invoice is created for 1000/- (1$ = 40/-) and while doing invoice payment 1$ = 42/-. For this accounting entries are: Foreign Functional Charge A/C 1000 1000 * 40 To AP Liability 1000 1000 * 40 AP Liability A/C 1000 1000 * 42 Realized Loss A/C 1000 * 2 To Cash Clearing 1000 42000 2) When Invoice is created for 1000/- (1$ = 40/-) and while doing invoice payment 1$ = 38/-. For this accounting entries are: Charge A/C 1000 1000 * 40 To AP Liability 1000 1000 * 40 AP Liability 1000 1000 * 40 To Realized Gain 2000 To Cash Clearing 1000 * 38 P 2 P Cycle Accounting Entries 1) Requisition 2) RFQ 3) Receiving Requisition 4) Analyzing Requisition 5) Purchase Order 6) Receiving Goods (Direct Receiving) Inventory Material A/C
  13. 13. To Inventory AP Accrual Standard Receiving Receiving Control A/C To Inventory AP Accrual Inventory Material A/C To AP Liability AP Liability A/C To Cash Clearing Cash Clearing A/C To Cash / Bank Future Dated Payment When Payment is in issue status, accounting entries are: AP Liability A/C To Future Dated Payment Future dated Payment A/C To Cash/ Bank When advance is applied to invoice then accounting entries are: AP Liability A/C To Prepayment
  14. 14. What is the difference between Manual Payment and Quick Payment? manual payments are meant to record manual check payments. quick payment are computer generated payments. we can stop quick payments only once they are formatted. for quick payments even though a check is voided we can reissue the same check since it is a computer generated payment. for quick payments only interest invoices are generated, but not for manual payments The FA accounting entries are as below. 1. when asset has been added Asset a/c Dr. To Asset clearing a/c 2. For depreciation Depreciation a/c Dr. To accumulated depreciation a/c 3. When asset retired Accumulated Depreciation a/c Dr. Cost of removal of asset a/c Dr. Loss or gain on sale of asset Dr. (if loss) Proceeds of sale a/c Dr. To asset a/c To Loss or gain on sale of asset (if gain)

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