Oracle P2P Accounting entries


In Oracle purchasing 3 different events occur
1. Enter Purchase Order:
    No accounting takes place

2. Enter a Receipt:
    For Inventory, Asset and Expense Items:
        Dr: Inventory Receiving A/c
        Cr: Accrual A/c

3.Receiving Transaction:
   Based on type of item here accounting entry differs
   Inventory Item:
        Dr: Inventory Valuation A/c
        Cr: Inventory Receiving A/c
   Expense Item:
        Dr: Expense A/c
        Cr: Inventory Receiving A/c
  Asset Item:
        Dr: Asset Clearing A/c
        Cr: Inventory Receiving A/c

 Oracle Payable:
 In payable 3 events occur
1. Enter Invoice:
        Dr: Accrual A/c
        Cr: Liability A/c

2.Payment against Invoice:
        Dr: Liability A/c
        Cr: Bank clearing A/c

3.Clearing (Cash Management):
        Dr: Bank clearing A/c
        Cr: Bank A/c

Oracle P2P Accounting entries

Incase below type of items one more accouting entry happens in Oracle
Inventory Item: Item issued to Dept.
       Dr: Expense A/c
       Cr: Inventory valuation

Asset Item: Asset is capitalized
       Dr: Asset A/c
       Cr: Asset clearing A/c


2 Comments

I have one interview question related to entries..Why in all 3 types of purchases inventory account is getting hit even for expense items in receiving transaction of receipt. It will help me if you can explain..Thank you in advance.

Reply

Inventory account is getting offset in expense and asset related transactions. Only in actual inventory transaction the item value is transferred to an Inventory account. Hope I was able to clarify

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