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Accounting in Oracle Inventory
1. Accounting in Inventory
Accounts Definition
You choose a default valuation account when you define organization parameters. Under
standard costing, these accounts are defaulted when you define subinventories and can be
overridden. Under average costing, these accounts (except for Expense) are used for
subinventory transactions and cannot be updated. For a detailed discussion of cost elements.
Following are the accounts that are defined in organization parameters and used in inventory.
Account Type Description
Material
This is an asset type account that tracks material cost. Under standard
costing, these accounts are defaulted when you define subinventories and
can be overridden. For average costing, this account holds your inventory
and intransit values. Once you perform transactions, you cannot change this
account.
Material Overhead An asset account that tracks material overhead cost.
Resource
An asset account that tracks resource cost.
Overhead
An asset account that tracks resource and outside processing overheads.
Outside processing An asset account that tracks outside processing cost.
Expense The expense account used when tracking a non-asset item.
2. Accounting for Material Transactions
Accounting Entries
Transaction
Accounts Value
Average Cost
Recalculated?
DB Receiving Inspection PO price
PO Receipt
CR A/P Accrual PO price
No, same as
current.
DB Subinventory Valuation PO price +MOH
CR Receiving Inspection PO price
PO Delivery to
subinventory
CR Material OH Absorption calc’d MOH
Yes.
DB Receiving Inspection PO price
DB Material OH Absorption
MOHReturn to Receiving
from subinventory
CR Subinventory Valuation PO price +MOH
Yes, if MOH had
changed since
receipt, must
use original
rate—
DOCUMENT.
DB A/P Accrual PO price
Return to Vendor from
Receiving Inspection
CR Receiving Inspection PO price
No.
DB Subinventory Valuation— receiver Current averageSubinventory
Transfer—asset
subinventory to asset
subinventory CR Subinventory Valuation—sender Current average
No
Subinventory
Transfer—expense
subinventory to
expense subinventory
No Entries Not Applicable
DB
Subinventory Valuation or
Expense—receiver
Current averageSubinventory
Transfer—asset to
expense or vice verse CR
Subinventory. Valuation or
Expense—sender
Current average
No
DB Subinventory Valuation
Current average or
U.S.
Miscellaneous Receipt
CR User-specified Account
Current average or
user-specified
(U.S.)
Yes, if user
overrides, new
average is
calculated.
3. DB User-specified Account
Current average or
U.S.
Miscellaneous Issue
CR Subinventory Valuation
Current average or
U.S.
Yes, if user
overrides, new
average is
calculated.
DB Subinventory Valuation
Average cost of
original shipments
on sales order line
RMA Receipt
CR Cost of Goods Sold
Average cost of
original shipments
on sales order line
Y es, if reference
to sales order
line exists.
DB Cost of Goods Sold Current average
RMA Return
CR Subinventory Valuation Current average
No.
DB No entries
Direct Interorg
Transfer—expense to
expense CR
Average Cost
Recalculated?
Not applicable.
Applies to both
standard and
average
organizations.
DB
Subinventory Valuation—receiver
Standard
Current average
CR Subinventory Valuation—sender
DB Interorg Receivable
Direct Interorg Transfer—
Std org to Average org
except expense to
expense
CR Interorg Payable
Yes
DB Subinventory Valuation—receiver Current average
CR Subinventory Valuation—sender
DB Interorg Payable
Direct Interorg Transfer—
Average org to Average
org excluding exp to
expense
CR Interorg Receivable (sending org)
Yes, (receiving
org) recalculation
of average
cost is
not applicable if
receiving
subinventory is
expense.
DB Subinventory Valuation—receiver
CR
Interorg Payable
(sending org)
Direct Interorg
Transfer—
Average org to
Standard org excluding
expense to expense
DB Interorg Receivable
No. there is no
PPV if receiving
subinventory is
expense.
4. DB PPV—receiving org
CR Subinventory Val—sender
DB Subinventory Valuation—receiver
CR Interorg Payable
DB Interorg Receivable
Receipt from Intransit
(Standard org) into
Average org— FOB
Receipt
CR Intransit Inventory
Standard
No, same as
standard asset to
average
(intransit is an
asset
subinventory).
DB Subinventory Valuation—receiver
CR Interorg Payable Current average
DB Interorg Receivable
Receipt from Intransit
(Average org) into
Average org— FOB
Receipt
CR Intransit Inventory
Yes,
recalculation of
average cost is
not applicable if
receiving
subinventory is
expense.
DB Intransit Inventory Current averageShipment to Intransit
from Average org—
FOB Receipt CR
Subinventory Valuation or
Expense
No, intransit is
booked
elementally,
asset to intransit
washes.
DB
Subinventory Valuation or
Expense
Current averageReceipt from Intransit
into Average org—FOB
Shipment CR Intransit Inventory Current average
No, intransit to
asset in and out
of the same
accounts.
DB Intransit Inventory
CR Interorg Payable Standard
DB Interorg Receivable
Shipment to Intransit
(Average org ) from
Standard org asset
subinv—FOB Shipment
CR Subinventory Valuation—sender
Yes.
DB Intransit Inventory Standard Yes.
CR Interorg Payable
DB Interorg Receivable
Shipment to Intransit
(Avg org) from Std org
expense
subinventory—FOB
Shipment
CR Subinventory Valuation—sender
5. DB Intransit Inventory Current average
CR
Interorg Payable(sending
organization)
DB Interorg Receivable
Shipment to Intransit
(Avg) from Avg org—
FOB Shipment
CR Subinventory Valuation—sender
Yes, unit cost
recalculated in
receiving
organization.
DB Inventory Adjustments Current average
Inventory Adj— cycle
count or physical inv
CR Subinventory Valuation
No, same as
current
DB Cost of Goods Sold Current average
Sales Order Shipment
CR Subinventory Valuation
No.
DB A/P Accrual PO Price
CR Accounts Payable Invoice
Receipt of Vendor
Invoice
DB IPV
Not applicable.
DB Work in Process Inv Current average
Issue to Job from
subinventory
CR Subinventory Valuation
No, expense
subinventory to
expense job
carries no cost.
DB Subinventory Valuation Current average
Component Return to
subinventory
CR Work in Process Inv
No.
DB Work in Process Inv Actual
Charge Labor Resource
to WIP job
CR Resource Absorption
Not applicable.
standard rate =
No;
charge
type = Manual;
actual employee
rate.
DB Work in Process Inv User-defined
Charge Non-Labor
Resource to WIP job
CR Resource Absorption
Not applicable.
Pre-defined rate
or actual rate.
Charge Overhead to
WIP job
DB Work in Process Inv Calculated OH Not applicable
6. CR Overhead Absorption
DB Work in Process Inv PO price
Charge Outside
Processing to WIP job
CR OSP Resource Absorption
No
DB Subinventory Valuation Calc avg +MOH
CR Work in Process Inv calc avgComplete Assemblies
CR Material OH Absorption calc’d MOH
Yes, completion
algorithm
calculations
based on job
charges.
DB Work in Process Inv
Average cost of
job completions
DB Material OH Absorption
Return Assemblies to
WIP
CR Subinventory Valuation
Yes.
DB Scrap Calculated
Scrap Assemblies from
WIP
CR Work in Process Inv
Not applicable. If
checkbox
Require Scrap
Account is
checked, scrap
calcs are based
on job charges
DB Work in Process Inv
Reverse Scrap
CR Scrap
Average cost of job
scrap
No.
DB Variance
Close WIP Jobs
CR Work in Process Inv
Not applicable.
Entries only if job
has a
residual
DB Subinventory Valuation User-specified
Average Cost Update
CR Inventory Adjustment
Yes, enter % or
amount of
change, or new
unit
cost.