Accounting Concepts And Accounting Entries In Oracle V1.0
Upcoming SlideShare
Loading in...5
×
 

Accounting Concepts And Accounting Entries In Oracle V1.0

on

  • 9,542 views

Oracle ABS Accounting Concepts

Oracle ABS Accounting Concepts

Statistics

Views

Total Views
9,542
Views on SlideShare
8,706
Embed Views
836

Actions

Likes
12
Downloads
1,006
Comments
9

6 Embeds 836

http://knoworacle.wordpress.com 813
http://iparinay.blogspot.com 10
http://www.slideshare.net 10
http://translate.googleusercontent.com 1
http://www.google.co.in 1
https://knoworacle.wordpress.com 1

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

15 of 9 Post a comment

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • ITS GOOD BUT PLEASE ADD PRACTICAL PART FOR ACCOUNTING SUBJECTS..
    Are you sure you want to
    Your message goes here
    Processing…
  • Well done! Good stuff
    Are you sure you want to
    Your message goes here
    Processing…
  • Have not see anything like this,... best one
    Are you sure you want to
    Your message goes here
    Processing…
  • fine
    Are you sure you want to
    Your message goes here
    Processing…

  • hi
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Accounting Concepts And Accounting Entries In Oracle V1.0 Accounting Concepts And Accounting Entries In Oracle V1.0 Document Transcript

  • Version – 1 Sikandar Hayat Awan Pakistan - www.erpstuff.com
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com SEND US YOUR COMMENTS The contents are revised many times in order to produce quality document but if still you find any discrepancies then please give share your finding. It will help us in improving the quality of document. You can post your feedback directly on the web site www.erpstuff.com or email to admin@erpstuff.com. If both options are not working due to any reason then please email directly to sikandar_h@hotmail.com. Your comments and feedback will be really appreciated. Thanks All Rights Reserved 2007 2/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com P re f a c e This document is for those who are interested to learn Financial Accounting Basics which will help them in Oracle Applications (e-Business Suite) accounting entries. In the document after accounting entries of Oracle different modules are also provided for guidance. Pre Requisites o Oracle Applications 11i instance access References: o Accounting by Meigs & Meigs o Oracle Applications Instance Document Change Log Date Version Description 12-Sep-07 1 Accounting Basics and Accounting Entries of AP All Rights Reserved 2007 3/26 View slide
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com Contents CONTENTS...................................................................................................................................................... 4 1 - ACCOUNTING ........................................................................................................................................... 6 1. ACCOUNTING ...............................................................................................................................................6 2. ACCRUAL BASIS OF ACCOUNTING ......................................................................................................................6 3. CASH BASIS OF ACCOUNTING ...........................................................................................................................6 4. TYPES OF ACCOUNTING INFORMATION ................................................................................................................7 4.1. FINANCIAL ACCOUNTING .............................................................................................................................7 4.2. MANAGEMENT ACCOUNTING (MANAGERIAL ACCOUNTING) ....................................................................................7 4.3. TAX ACCOUNTING .....................................................................................................................................7 5. FINANCIAL REPORTING ...................................................................................................................................7 6. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)........................................................................................7 7. ACCOUNTING EQUATION .................................................................................................................................8 2 - DOUBLE ENTRY SYSTEM .......................................................................................................................... 9 1. DOUBLE ENTRY ............................................................................................................................................9 3 - DEBIT & CREDIT RULES......................................................................................................................... 10 1. DEBIT & CREDIT RULES ............................................................................................................................... 10 1.1. PAID CASH RS. 500 FOR TELEPHONE BILL...................................................................................................... 10 1.2. PURCHASED FURNITURE OF RS. 2,000 ON CREDIT FROM MUHAMMAD HAYAT........................................................... 11 4 - EXAMPLE TRANSACTIONS ..................................................................................................................... 12 1. ACCOUNTING TRANSACTIONS EXAMPLES ........................................................................................................... 12 5 - TRIAL BALANCE ..................................................................................................................................... 15 1. TRIAL BALANCE .......................................................................................................................................... 15 6 - BALANCE SHEET..................................................................................................................................... 16 1. BALANCE SHEET FINANCIAL STATEMENT............................................................................................................ 16 1.1. ASSETS ................................................................................................................................................ 17 1.2. LIABILITIES (DEBTS) ............................................................................................................................... 17 1.3. OWNER’S EQUITY ................................................................................................................................... 17 7 - INVOICES (AP) ...................................................................................................................................... 18 1. INVOICE (PURCHASE / OTHER DEBIT) .............................................................................................................. 18 2. PREPAYMENT INVOICES ................................................................................................................................ 18 3. PAYMENT ENTRY ........................................................................................................................................ 18 4. PURCHASE RETURN / OTHER CREDIT ............................................................................................................... 19 5. FIXED ASSET(S) PURCHASES .......................................................................................................................... 19 6. PAYMENT OF SALARY (WITHOUT PAYROLL SETUP) ............................................................................................... 20 6.1. RECORDING OF LIABILITY ......................................................................................................................... 20 6.2. RECORDING INVOICE AT THE TIME OF PAYMENT .............................................................................................. 20 6.3. PROCESSING PAYMENT ............................................................................................................................. 20 7. ADVANCES TO SUPPLIERS, EMPLOYEES AND PREPAID EXPENSES ............................................................................... 21 8. PROCESSING OF PREPAYMENT ........................................................................................................................ 21 8.1. PREPAYMENT INVOICE .............................................................................................................................. 21 All Rights Reserved 2007 4/26 View slide
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 8.2. PROCESSING PAYMENT ............................................................................................................................. 21 9. ADJUSTMENT OF PREPAYMENT AGAINST INVOICE ................................................................................................. 22 9.1. PROCESSING OF INVOICE FOR EXPENSES ....................................................................................................... 22 9.2. ADJUSTING PREPAYMENT AGAINST INVOICE.................................................................................................... 22 10. PROCESSING PETTY CASH PAYMENTS ........................................................................................................... 22 10.1. RECORDING OF INVOICES (FOR DAILY CASH PAYMENTS).................................................................................... 23 10.2. PROCESSING OF PAYMENT FROM PETTY CASH ACCOUNT .................................................................................... 23 8 - IMPORTS................................................................................................................................................ 24 1. LETTER OF CREDIT ...................................................................................................................................... 24 1.1. SIGHT L/C............................................................................................................................................ 24 1.1.1. ENTERING PREPAYMENT INVOICE ............................................................................................................ 24 1.1.2. RECORDING INVOICE FOR GOODS RECEIVED AGAINST IMPORT ........................................................................ 24 1.1.3. APPLYING PREPAYMENT AGAINST PURCHASE INVOICE .................................................................................... 25 2. USANCE L/C ............................................................................................................................................. 25 2.1. PROCESSING INVOICE .............................................................................................................................. 25 2.2. PROCESSING PAYMENT ............................................................................................................................. 25 All Rights Reserved 2007 5/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 1 - Accounting 1. Accounting Accounting is to provide information to decision makers and this will help them in making economic decisions. Managers, investors, and other internal groups want the answers to two important questions, 1.1. How well did the organization perform? 1.2. Where does the organization stand? The accounts answer these questions with two major financial statements, 1. Income Statement 2. Balance Sheet There are two basis of accounting Accrual and Cash. 2. Accrual Basis of Accounting The accrual basis of accounting recognizes revenues and expenses when they occur instead of when cash is received or disbursed. For example we consumed electricity in the month of January while the bill will be received and paid in the month of February. If we will not record the electricity expense in January then there will be no expense of electricity in January and the February will bear the burden of January and so on. In accrual the effect should be in the period in which the expense occurred not when the payment is made. 3. Cash Basis of Accounting The cash basis of accounting recognizes revenue and expense when cash is received and disbursed. Now as in the above example demonstrated in the accrual basis the expense will be recorded in the month of February in cash basis accounting. So when we will generate January reports there will be no effect of expense which are occurred but no payment is yet made. All Rights Reserved 2007 6/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 4. Types of Accounting Information 4.1. Financial Accounting It deals with financial resources, obligations and activities of an economic entity. The Financial Accounting assists investors and creditors in deciding where to place their scarce investment resources. 4.2. Management Accounting (Managerial Accounting) Management Accounting is the development and interpretation of accounting information to aid management in running the business. 4.3. Tax Accounting The preparation of income tax returns is a specialized field within accounting. The tax returns are based upon financial accounting information. However the information often is adjusted or reorganized to conform to income tax reporting requirements. 5. Financial Reporting Now as the information is available so the next step is to arrange the information in presentable and analyzable so the management should be able to analyze their business position and should take decisions on the basis of that information. To provide financial reporting financial statements are generated. Here is a complete set of financial statements, o Balance Sheet: It shows the financial position/status of the business on a specific date. o Income Statement: The purpose of this statement is to view the profitability of the business. o Owner’s Equity Statement: To show the changes in the amount of owner’s equity the statement of owner’s equity is used. In corporations it is called as statement of retained earnings. o Cash Flow Statement: To summarize the cash receipts (inflows) and cash payments (outflows) of the business over the same time period covered by the income statement. In addition to these statements several notes are also included which contain additional information useful for the interpretation of financial statements. 6. Generally Accepted Accounting Principles (GAAP) All Rights Reserved 2007 7/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com Different people or companies have different ways of presenting information. So if we have statements of two different companies and both are formatted on different standards and we have to compare. May be with certain effort we would be able to make comparison but that would be time consuming and not much informative. It is also not easy when there is a need to compare statements of multiple companies on frequent basis. To overcome this problem few rules are developed which are called as “generally accepted accounting principles”. The GAAP ensures two concepts comparability and reliability. 7. Accounting Equation The accounting equation shows that how much assets business owns and who provided these resources to the business. This accounting equation will always be balanced means left hand side and right hand side always equal. Assets = Liabilities + Owner’s Equity 1,000,000 = 300,000 + 700,000 If any two of the above are known then the third one can be calculated very easily. Assets = Liabilities + Owner’s Equity 1,000,000 = ? + 700,000 Like for example if we know total assets and owner’s equity then we can calculate liabilities as below, Assets - Owner’s Equity = Liabilities 1,000,000 - 700,000 = 300,000 All Rights Reserved 2007 8/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 2 - Double Entry System 1. Double Entry Each accounting transaction will always affect at least two accounts where one will be debit and the other will be credit. This will make sure that the accounting equation will always be balanced. In double entry transactions are recorded as debit and credit where debit is the left hand side while the credit is the right hand side. The following is the T-Account. Debit (Dr) Credit (Cr) 0 0 All Rights Reserved 2007 9/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 3 - D e b i t & C re d i t R u l e s 1. Debit & Credit Rules In order to decide which account is debit and which is credit after a transaction you need to remember few rules. Accounts Increase Decrease Assets Debit Credit Liabilities Credit Debit Owner’s Equity Credit Debit Revenue Credit Debit Expenses Debit Credit Revenue: The revenue is the price of goods sold and services rendered during a given accounting period. The revenue increases owner’s equity and expenses decreases the same so rules for revenue and expenses are extension of Owner’s equity. With increase in revenue there will be increase in Owner’s equity and increase in Owner’s equity is always credit so revenue will also be credited. Expenses: The expenses are the costs of the goods and services used up in the process of earning revenue. The increase in expenses decreases Owner’s equity and decrease in Owner’s equity is always debit so expense will also be debited if increased. Now as we know the rules of debit and credit so we will pass few entries for practice. 1.1. Paid Cash Rs. 500 for telephone bill. All Rights Reserved 2007 10/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com In this transaction two accounts are involved the first is cash and other is telephone expense. As the cash is an asset and we have paid cash so our cash is decreased means our assets are decreased. We know that decrease in assets is always Credit so here our cash account is credit. For the 2nd account simple way is that if the 1st account is credit then the 2nd will always be debit and vice versa. But here we will evaluate as that it is an expense and increase in expense is always debit so our telephone expense will also be debit. Account Description Debit Credit Telephone Expense 500 Cash 500 1.2. Purchased furniture of Rs. 2,000 on credit from Muhammad Hayat. In this transaction there is no involvement of cash but it is a credit transaction which is a liability and the supplier name is Muhammad Hayat. So the two accounts in this transaction are furniture which is an asset account and increase in asset is always debit so furniture is debit by 2,000 while the second is supplier account named Muhammad Hayat which is a liability and increase in liability is always credit. Account Description Debit Credit Furniture 2,000 Muhammad Hayat (Supplier) 2,000 With the help of rules we can easily decide which account will be debited and which will be credited. All Rights Reserved 2007 11/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 4 - E x a m p l e T ra n s a c t i o n s Transaction: A transaction represents the movement of money from one account to another account. Whenever you spend or receive money, or transfer money between accounts is called a transaction or a transaction is any event that affects the financial position of an organization and requires recording. Transactions always involve at least two accounts. Examples of transactions are: paying a bill, transferring money from savings to checking, buying a pizza, withdrawing money, and depositing a paycheck etc. 1. Accounting Transactions Examples Now we will discuss in detail few accounting transactions. # Transactions Accounts Account 1 Account 2 1 Owner of the Business Capital As owner provided capital Owner investment is a invested Cash 500,000 to the business as cash so liability on the business Cash in business. the cash of business and business has to increased and cash is an payback that amount to asset. As we know the owner. And as we increase in asset will know increase in liability always be debit. is always credit. 2 Purchased Land for Land Land is an asset and As the cash is paid so the Cash 100,000. increase in asset is always cash is decreased. Cash is Cash debit. an asset and decrease in asset is always credit. 3 Purchased stationary Stationary Purchasing of stationary is As we purchased on on credit for 2,500. an expense and increase in credit which means we Accounts expense is always debit. have not paid any cash Payables and will make payment on a future date. So this is a liability and increase in liability is always credit. All Rights Reserved 2007 12/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 4 Purchased furniture Furniture Furniture is an asset and We made this purchase for Cash 20,000. as this is an addition in our on cash that is we Cash assets so assets are immediately paid cash so increased. As we know this is a cash transaction that increase in assets is and cash is our asset and always debit. on decrease on cash/asset we will record it as credit. 5 Sold unused stationary Accounts As we sold stationary to Stationary was our & equipments of 500 Receivable Mr. Liaquat Ali who is our expense and we recorded to Mr. Liaquat Ali. customer and we have not it as debit as it was Stationary received any cash yet and increased. But here we will receive in future so are reducing our expense this is our Accounts by selling stationary. So Receivables. As we know now expense is decreased that accounts receivables and decrease in expense is an asset and increase in is always credit. asset is always debit. 6 Purchased Office Building We purchased Building and As this is not a cash Building for 100,000 increased our assets. Here transaction and here Mr. Account from Mr. Imran building account will be Imran Nawaz is our Payables Nawaz. debited. supplier from whom we purchased building. As we have to pay in future so this is liability and increase in liability is always credit. 7 Received cash 5,000 Cash Cash is received from our Accounts receivables is an from Mr. Liaquat Ali customer Mr. Liaquat Ali asset and as our accounts Accounts hence our asset which is receivables are decreased Receivables cash is increased so it is a and decrease in assets is debit account. always debit. # Accounts Debit Credit 1 Cash 500,000 Capital 500,000 All Rights Reserved 2007 13/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 2 Land 100,000 Cash 100,000 3 Stationary 2,500 Accounts Payables 2,500 4 Furniture 20,000 Cash 20,000 5 Accounts Receivables 500 Stationary 500 6 Building 100,000 Accounts Payables 100,000 7 Cash 5,000 Accounts 5,000 Receivables All Rights Reserved 2007 14/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 5 - T ri a l B a l a n c e 1. Trial Balance In the double entry each transaction always have double sided equal effect so the debit side must be equal to credit side. So before preparing balance sheet it is better to verify your entries balance which should be equal that is debit balance = credit balance. Keep in mind that trial balance will only find numeric mistakes like user entered 75 on debit side while 57 on credit side or vice versa. So here the debit and credit balance is not equal. So what we will do is that we will take balances of each ledger and will update it in the trial balance. A sample trial balance is as below, ERPSTUFF COMPANY Trial Balance June 31, 2006 Cash 200,000 Accounts Receivables 20,00 Land 100,000 Building 50,000 Office Equipment 30,000 Accounts Payables 150,000 Salaries Payable 75,000 Capital 175,000 400,000 400,000 All Rights Reserved 2007 15/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 6 - Ba la n c e S h e e t 1. Balance Sheet Financial Statement It shows the financial position of the business on a specific date. The balance sheet will have a header with company name (legal entity), title as Balance Sheet and the balance sheet date. In the body there are 3 major sections Assets, Liabilities and Owner’s Equity. ERPSTUFF COMPANY Balance Sheet June 31, 2006 Assets Cash 200,000 Accounts Receivables 20,00 Land 100,000 Building 50,000 Office Equipment 30,000 Total 400,000 Liabilities and Owner’s Equity Liabilities Accounts Payable 150,000 Salaries Payable 75,00 Total 225,000 Owner’s Equity Capital 175,000 Total 400,000 Now we will discuss each section of Balance Sheet separately. All Rights Reserved 2007 16/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 1.1. Assets These are economic resources that are owned by a business and are expected to benefit future operations. The assets can be further divided into two categories tangible and intangible. Tangible: Tangible assets are those assets which you can touch or which have physical existence like building, land and cash. Intangible: The intangible assets are those assets which you can not touch. Like good will, accounts receivables etc. Here is a question that what will be the value of assets like land and building. So there the concept of Cost Principle will be used. Cost Principle-Historical Cost: The cost principle says that show such assets in the balance sheet at their cost. This cost will be historical cost. The historical cost is the purchase price of that asset. 1.2. Liabilities (Debts) Liabilities are also called as debts. These are payables to the suppliers and to whom we have to pay are our creditors. The creditor’s claims have high priority than owner’s claim. That is the business first have to pay to the creditors and then to the owner. The liabilities are further divided into two categories Short Term and Long Term liabilities. Short Term: Those liabilities which are due within one year. Long Term: These liabilities are not due within one year. 1.3. Owner’s Equity Owner’s Equity is the owner’s claim to the assets of the business. As creditor’s claims have priority over owner’s claim so the Owner’s Equity is the residual value that is, Assets – Liabilities = Owner’s Equity The withdrawals by the owner are called as drawings. All Rights Reserved 2007 17/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 7 - Invoices (AP) 1. Invoice (Purchase / Other Debit) Account Description Debit Credit Relevant Charge / Expense Account *** Creditors Control Account *** 2. Prepayment Invoices Account Description Debit Credit Advance to Creditors Control Account *** Creditors Control Account *** 3. Payment Entry Account Description Debit Credit Creditor Control Account *** Bank/Cash Account *** All Rights Reserved 2007 18/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 4. Purchase Return / Other Credit Account Description Debit Credit Creditor Control Account *** AP Accrual / Expense Account *** 5. Fixed Asset(s) Purchases For all Assets related invoices, ‘CWIP Clearing Account’ will be selected at the invoice distribution level. Upon selection of ‘CWIP Clearing Account’ the field ‘Track as Asset’ will be automatically activated (activation of this field is mandatory for data to be transferred to Oracle Assets). Account Description Debit Credit Asset / CWIP Clearing Account *** Supplier Control Account *** After running quot;Mass Addition Programquot; in Oracle Payables, system will transfer all invoices distributions containing quot;CWIP Clearing Accountquot; to Oracle Assets which will then be matched to purchase orders. All Rights Reserved 2007 19/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 6. Payment of Salary (Without Payroll Setup) 6.1. Recording of Liability In order to record liability, you will have to process a Journal Voucher in the General Ledger. The relevant Liability Account will be debited. Account Description Debit Credit Salary Expense Account *** Salary Payable Account *** 6.2. Recording Invoice at the time of Payment Now as we have created a liability in the General Ledger now in order to process payment we need to create an invoice in the Oracle Accounts Payable module. To this we need a dummy supplier to process an invoice of type Other Debits. Account Description Debit Credit Salary Payable Account *** Creditors Control Account *** 6.3. Processing Payment After creation of invoice in the AP module now we can process payment. Account Description Debit Credit All Rights Reserved 2007 20/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com Creditors Control Account *** Bank Account/Cash *** 7. Advances to Suppliers, Employees and Prepaid Expenses To record advances to Suppliers and Employees and to process prepaid expenses such as prepaid rent, prepaid insurance etc. a Prepayment type invoice will be created in the system. For this purpose, employees will be opened in the system as suppliers. 8. Processing of Prepayment 8.1. Prepayment Invoice Create a Prepayment Type invoice. Account Description Debit Credit Advances to Creditors / Advances to *** Employees / Prepaid Expenses Account Creditors Control Account *** 8.2. Processing payment The user will then process payment in the normal manner for this Prepayment Invoice. Following accounting entry will be created: Account Description Debit Credit Creditors Control Account *** All Rights Reserved 2007 21/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com Withholding Tax Payable Account* *** Bank / Cash Account *** * Withholding Tax will only be deducted at time of payment and if applicable. 9. Adjustment of Prepayment against Invoice 9.1. Processing of Invoice for Expenses The user will then process a ‘Purchase Invoice’ or ‘Other Debit’ type invoice depending upon the type of expense. Following accounting entry will be created: Account Description Debit Credit Expense Account *** Creditors Control Account *** 9.2. Adjusting Prepayment against Invoice The ‘Purchase Invoice’ or ‘Other Debit’ type invoice entered above will then be matched with the relevant Prepayment Invoice. Account Description Debit Credit Creditors Control Account *** Advance to Creditors Control Account *** 10. Processing Petty Cash Payments All Rights Reserved 2007 22/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 10.1. Recording of Invoices (for Daily Cash Payments) For the purpose of booking daily cash payments user will process Purchase Invoices / Other Debits (depending on the type of expenses / payment) for these expenses in the system in the name of the either ‘Petty Cash’ Supplier or original supplier as the case might be. The relevant Expense / Charge Account will be captured in the invoice distributions window. Following accounting entry will be created: Account Description Debit Credit Relevant Expense Account *** Creditor Control Account *** 10.2. Processing of Payment from Petty Cash Account Payment will then be processed for these expenses using the relevant Bank Account (Petty Cash Account) set up in the system for cash payments. Following accounting entry will be created in the system: Account Description Debit Credit Creditor Control Account *** Cash in Hand Account *** All Rights Reserved 2007 23/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com 8 - Imports 1. Letter of Credit Letter of Credit (L/C) is used while importing goods from other country and there are two types of L/C’s. 1.1. Sight L/C In Sight L/C you will have to pay full payment in advance and for this we will record a Prepayment Invoice. 1.1.1. Entering Prepayment Invoice On receipt of Bank Debit Advice, the user will process a Prepayment Invoice in L/C currency with the amount of Debit Advice. User will enter exchange rate as appearing on Debit advice. Account Description Debit Credit Advance to Supplier (Imports) Account *** Creditors Control Account *** To generate L/C cost sheet and L/C Register you will have to capture L/C related information by using Descriptive Flexfield (DFF). 1.1.2. Recording Invoice for Goods Received Against Import After receipt of goods, a Purchase invoice will be processed for the invoice value of goods received in the name of the relevant Supplier. All Rights Reserved 2007 24/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com Account Description Debit Credit Stock Account *** Creditor Control Account *** 1.1.3. Applying Prepayment against Purchase Invoice This invoice will then be matched with the prepayment invoice entered above. Account Description Debit Credit Creditor Control Account *** Advance to Supplier (Imports) Account *** 2. Usance L/C In Usance L/C the payment is made after receipt of goods so there will be no prepayment in case of Usance L/C. 2.1. Processing Invoice In case of Usance LC, invoice for value of goods will be processed after the receipt of goods. The Invoice will be processed in foreign currency and Exchange rate on Invoice will be manually entered. Invoice type ‘Purchase Invoice’ will be used for this purpose. Account Description Debit Credit Stock Account *** Creditor Control Account *** 2.2. Processing payment All Rights Reserved 2007 25/26
  • Accounting Concepts & Accounting Entries in Oracle www.erpstuff.com Then process payment for the invoice. Account Description Debit Credit Creditor Control Account *** Bank Account *** All Rights Reserved 2007 26/26