Accounting in Oracle R12

ByKiyasudeen Aliyar, PMP

Oracle Consultant

kiyasudeena@gmail.com

Accounts setup in Oracle from po/inventory side

1. Item

2.

3. Inventory org level

4. During resource definition

System uses this ac during receiving as accrual ac for inventory item type for CR, DR will be inv, valuation ac

5. Suppliers

At PO system options

Finance option: Purchase option Receiving option

Inventory item purchase

Expense item purchaseHow to set expense period end PO accountingPurchasing system option set below (you have a option of period end or at receipt only for expense items for inventory , only one option which is at rct)

Distributions you will see destination type expense and will require charge account when you create PO with no inventory item

At receipt accounting took place as I setup accrue expense at receipt just for testingAt receipt -- Receiving, system only did receiving and below is accounting

At receipt –Deliver

Purchase the raw materials 1.During PO(no accounting,if encombarace enabld then encom entries)

Invoicing POInv. AP Accrual DRAP liability CRInvoice price variance DR/CR(if any difference between PO price and invoice price)

Payment (when we do create ac before cash recon)AP liability DRCash clearing CRCash management recon(Do create accounting of same payment after matching and clearing trx in cash mgmt)Cash clearing DRCash CR(System will create additional entries to the same payment entry

Receipt of raw materials 1.During Receipt Receive Material inspection Ac DR Inv. AP Accrual ac CR2.During Deliver Inv. Valuation Ac DR PO price variance ac DR/CR(if there is any difference in po unit price and cost of item)

Material inspection Ac CR

*Receive accounting , you can see in po

*Deliver acc

Entered during po creation at

destination type

System uses this ac during receiving for accrual ac for expense non inventory items

So basically, for non-inv item, inventory valuation ac gets cleared and expense is finally booked to charge ac at po dist.At the time of invoicing ( I reduced the unit price just to see the invoice price variation )

Accounting

Inventory Item PO with expense destination type:When I entered the item po, and in the distribution window, it defaulted as inventory and got charge ac as 1410 (inv. Valuation ac) but I was able to change the type to Expense and then system allowed me to change the charge ac,interestingly it defaulted expense ac setup at item setup (see above)

Let us receive and see what happens (if destination=Exp, then system is hitting accrual ac set at purchase expense accrual)

Deliver ( item expense ac got dr)

And whenever the expense type =Inv. ,system picks accrual from org level

Expense item invoice without PO ( system dr expense ac ( entered in the invoice line distribution) instead of accrual acs)

*Also in AP invoice window, if you say item, you can’t give inventory item id instead can select po line or leave blank

**** will test this tomorrow

Purchase the raw materials 1.During PO(no accounting,if encombarace enabld then encom entries)

Invoicing POInv. AP Accrual

Receipt of raw materials 1.During Receipt Receive Material inspection Ac DR Inv. AP Accrual ac CR2.During Deliver Inv. Valuation Ac DR PO price variance ac DR/CR Material inspection Ac CR

Accounts setup in WIP ( you define for each type of job)

Scrap account is required then you need to provide during materials movement to scrap operationItem Cost setup (setup from inv. Resp. item cost screen)

Resource cost ( Bill of Materials resp. Routing screen-> resource setup screen)From overhead button enter the type of costs ( initially, you enter cost for pending, then from bill of materials, do tools-> rollup,it will delete the old costing then from inv. Do cost update,it will roll all the new pending cost to frozen cost)

Enter rate from rates button

No overhead cost for packing

Department overhead cost

You define all the cost for pending or any type then run rollup from bill and cost update from inv.Bill of materials

Routing

Coffie Bite is finished item and so cost will roll up from bill & routing

WIP JOB 9009 completed and below are the accountingResource Accounting

Material trx accounting

Sugar has material cost of 50,material overhead (PO cost) 52,overhead 2milk has material cost of 100cocoa has material cost of 100

Depart - condensing has indirect overhead of 100department - packaging has eqp/tool cost of 3.1/hr and indirect overhead of 50/hr

Total :material :250;Resourse:250 ;overhead:5.1 +52 = 557.1Indirect overhead of 100+50 = 150

Total of all cost :557.1+150 = 707.1 Resource: condensing 200+packaging 50

Sugar:

Milk

Cocoa

Coffie bite

Org parm

For

Comparison

Wip class setupFor Comparison

Intransit Accounting:Transferd from M2 to M1

Created sales order 66398,pick relasing it, so it will create material transfersAfter pick confirm, I didn’t see any accounting before pick confirm

After ship confirm

After invoicing

After payment

940 goes to unapplied cahs account because total receipt was for 2000 and we only applied 1060.Applied another invoice for the rest of the amount.re-run create accounting and below is the accounting for the same receipt

If you just unapply the addition invoice and run create acconting then below

What happens if we create write off instead of applying to another invoice

When I unapply from claim and applied to on account

Write off a/c 4150 comes from receivable activity

Application looks as below

After applying invoice to receipt and running Generate COGs events, system transferd amount from deferred ac to COGS ac

PO write off:So when you receive goods, we have accrual entries either at receipt or at period end that entries again here areFor inventory destionation For Expense destinationReceiving inspection A/c DR Charge a/c entered at the po creation DRAP Accrual Account CR AP expense accrual setup at purchase system option CR

So write off is, we are saying we don’t invoice for that value and we are writing off so we have to clear the accrual entries

AP accrual Account or AP expense accrual ac DRWrite off off set which is invoice price variace setup at org level CR

* Miscellaneous Write-Offs - allow you to select an offset account * AP and PO Write-Offs - use invoice price variance account as a offset account

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