accting in all modules

8/10/2019 Accting in All Modules

1/75

Accounting Entries in all modules Inventory , Purchasing ,

Payables , OE , Receivables ,Assets and Projects.

Assets Assets

Work-In-Process WIP

Inventory Standard Costing InventorystandardCosting

Receivables Receivables


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Assets

Depreciation:

Dr. Depreciation Expense 200.00

Cr. Accumulated Depreciation 200.00

Example: The recoverable cost is $4!!! and the method isstraight"line 4 years#

Current and Prior Period Additiono% p%rchase and place the asset into service in ear & '%arter (Payables)

Dr. Asset Clearing 4,000.00

Cr. Accounts Payable Liability 4,000.00

(Fixed Assets)

Dr. Asset Cost 4,000.00


Cr. Asset Clearing 4,000.00


o% place an asset in service in ear & '%arter & b%t yo% do not enterit into (racle Assets %ntil ear ) '%arter )# o%r payables systemcreates the same *o%rnal entries to asset clearing and acco%nts payable

liability as +or a c%rrent period addition#

(Oracle Assets PRIOR PERIOD ADDITION)



Dr. Depreciation Expense(adjustment) 1250.00



,erge ,ass AdditionsWhen yo% merge t-o mass additions (racle Assets adds the asset cost o+ the mass addition thatyo% are merging to the asset acco%nt o+ the mass addition yo% are merging into# (racle Assetsrecords the merge -hen yo% per+orm the transaction# (racle Assets does not change the assetclearing acco%nt *o%rnal entries it creates +or each line so each o+ the appropriate clearingacco%nts clears separately#Payables Syste


(mass addition #2


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asset cost account)


(mass addition #1 accounts

payables clearing account)


(mass addition #2 accounts

payables clearing account)

ConstructionInProcess (CIP) Addition

o% add a CIP asset# .CIP assets do not depreciate/Oracle Assets

Dr. CIP Cost 4,000.00

Cr. CIP Clearing 4,000.00

Deleted !ass Additions

(racle Assets creates no *o%rnal entries +or deleted mass additions and does not clear the assetclearing acco%nts credited by acco%nts payable#

"ou clear t#e accounts by eit#er re$ersin% t#e in$oice in your payables syste& orcreatin% anual 'ournal entries in your %eneral led%er

CapitaliationA capitali0ation transaction is similar to an addition transaction: yo% place the asset in service soyo% can begin depreciating it# When yo% capitali0e an asset in the period yo% added it (racle

Assets creates the +ollo-ing *o%rnal entries:

Payables Syste

Dr. CIP Clearing 4,000.00

Cr. Accounts Payable Liability 4,000.00

Oracle Assets CAPITA*I+ED IN PERIOD ADDED



Cr. CIP Clearing 4,000.00


Oracle Assets CAPITA*I+ED A,TER PERIOD ADDED



Cr. CIP Cost 4,000.00



4/75

Asset Type Ad'ustents

I+ yo% change the asset type +rom capitali0ed to CIP (racle Assets creates *o%rnal entries to debitthe CIP cost acco%nt and credit the asset clearing acco%nt# (racle Assets does not createcapitali0ation or reverse capitali0ation *o%rnal entries +or CIP reverse transactions#

Oracle Assets C-AN.E T"PE ,RO! CAPITA*I+ED TO CIP (C/RRENT PERIOD)

Dr. CIP Cost 4,000.00


Cost Ad'ustents to Assets /sin% a *i0e1ased Depreciation !et#od

Example: o% place an asset in service in ear & '%arter The recoverable cost is $4!!!# Theli+e o+ yo%r asset is 4 years and yo% are %sing straight"line depreciation# In ear & '%arter 4 yo%receive an additional invoice +or the asset and change the recoverable cost to $41!!#

Payables Syste

Dr. Asset Clearing 800.00

Cr. Accounts Payable Liability 800.00

Oracle Assets

Dr. Asset Cost 800.00Cr. Asset Clearing 800.00

E2pensedOracle Assets E3PENSED



(adjustment)


Aortied

Oracle Assets A!ORTI+ED




5/75

Cost Ad'ustents to Assets /sin% a ,latRate Depreciation !et#odExample: o% place an asset in service in ear & '%arter The recoverable cost is $4!!!# o%are depreciating the asset cost at a )!2 +lat"rate# In ear & '%arter 4 yo% change therecoverable cost to $41!!#

Payables Syste



Oracle Assets

Dr. Asset Cost 800.00

Cr. Asset Clearing 800.00




(adjustment)


Aortied




Cost Ad'ustents to Assets /sin% a Diinis#in% 4alue Depreciation!et#odExample: o% place an asset in service in ear & '%arter The recoverable cost is $4!!!# o%are %sing a )!2 +lat"rate that yo% apply to the beginning o+ year net boo3 val%e# In ear )'%arter & yo% change the recoverable cost to $41!!#

Payables Syste



Oracle Assets




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7/75

AortiedOracle Assets A!ORTI+ED

Dr. Depreciation Expense 3,666.67

Cr. Accumulated Depreciation 3,666.67

Cost Ad'ustents to Capitalied and CIP Source *ines

When yo% trans+er so%rce lines yo% ad*%st the recoverable cost o+ an asset# 7eca%se CIP assetsdo not depreciate (racle Assets does not need to reverse depreciation expense -hen yo%trans+er invoice lines bet-een CIP assets# I+ yo% trans+er so%rce lines +rom CIP to capitali0edassets (racle Assets ta3es catch%p depreciation as +or any cost ad*%stment transaction# I+ yo%trans+er so%rce lines +rom capitali0ed to CIP assets (racle Assets m%st bac3 o%t some o+ thedepreciation +rom the capitali0ed asset#

Trans0er Source *ines 1et5een Assets (Prior Period)(racle Assets creates the +ollo-ing *o%rnal entries +or an so%rce line trans+er bet-een capitali0edassets added in a prior period#

Oracle Assets TRANS,ER *INE ,RO! ASSET 67 TO ASSET 68


(from asset #2 category)

Cr. Asset Cost 400.00


Oracle Assets AD9/ST DEPRECIATION ON ASSET 67

Dr. Accumulated Depreciation 70.00


Cr. Depreciation Expense 70.00

Oracle Assets AD9/ST DEPRECIATION ON ASSET 68


Dr. Depreciation Expense 70.00s

(adjustment)



Trans0er Source *ines 1et5een Assets (Current Period)(racle Assets creates the +ollo-ing *o%rnal entries +or an so%rce line trans+er bet-een assetsadded in the c%rrent period:

Oracle Assets TRANS,ER *INE ,RO! ASSET 67 TO ASSET 68



Cr. Asset Clearing (from accounts 300.00

payable for asset #1)


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Cost Ad'ustent by Addin% a !ass Addition to an E2istin% AssetI+ yo% add a mass addition to an asset (racle Assets creates a *o%rnal entry to the asset costacco%nt o+ the existing asset# (racle Assets also credits the clearing acco%nt yo% assigned to theinvoice distrib%tion line in acco%nts payable to net it to 0ero#I+ yo% -ant the existing asset to ass%me the asset category and description o+ the mass addition(racle Assets creates a *o%rnal entry +or the ne- total asset cost to the asset cost acco%nt o+ the

mass addition8s category# It also creates *o%rnal entries +or the clearing acco%nt yo% assigned tothe invoice line in acco%nts payable and +or the clearing or cost acco%nt o+ the original additioncategory#(racle Assets creates the +ollo-ing *o%rnal entries +or a capitali0ed $)!!! mass addition addedto a ne- man%ally added $6!! asset -here the asset %ses the category o+ the mass addition:

Oracle Assets ADD !ASS ADDITION TO AN E3ISTIN. ASSET


(from asset category of mass

addition)


(from original asset category)Cr. Asset Clearing 2,000.00

(from accounts payable)

9epreciation ,ethod Ad*%stmentsExample: o% place an asset in service in ear & '%arter The recoverable cost is $4!!! theli+e is 4 years and yo% are %sing the )!! declining balance depreciation method# In ear )'%arter & yo% change the depreciation method to straight"line#

E2pensed

Oracle Assets E3PENSED



Cr. Depreciation Expense 1,000.00

(adjustment)

Aortied




i+e Ad*%stments

Example: o% place an asset in service in ear & '%arter The asset cost is $4!!! the li+e is 4years and yo% are %sing straight"line depreciation# In ear ) '%arter ) yo% change the assetli+e to 6 years#


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E2pensed

Oracle Assets E3PENSED



Cr. Depreciation Expense 250.00(adjustment)




Rate Ad'ustents ,latRate Depreciation !et#od

Example: o% place an asset in service in ear & '%arter The recoverable cost is $4!!! andyo% are depreciating the asset cost at a )!2 +lat"rate# In ear ) '%arter 5 yo% change the + lat"rate to )62#




(adjustment)






10/75

Rate Ad'ustents Diinis#in% 4alue Depreciation !et#odExample: o% place an asset in service in ear & '%arter The recoverable cost is $4!!! andyo% are %sing a )!2 +lat"rate that yo% apply to the beginning o+ year net boo3 val%e# In ear )'%arter 5 yo% change the +lat"rate to )62#




(adjustment)


Aortied




Capacity Ad*%stmentsExample: o% p%rchase an oil -ell +or $&!!!!# o% expect to extract &!!!! barrels o+ oil +romthis -ell# Each %arter yo% extract )!!! barrels o+ oil# In ear & '%arter 4 yo% discover that yo%entered the -rong capacity# o% increase the prod%ction capacity to 6!!!! barrels#



Dr. Accumulated Depreciation 4,400.00Cr. Depreciation Expense 4,800.00

(adjustment)


Aortied




11/75

;o%rnal Entries +or Trans+ers and Reclassi+icationsExample: o% place an asset in service in ear & '%arter The recoverable cost is $4!!! theli+e is 4 years and yo% are %sing straight"line depreciation#

C%rrent Period Trans+er 7et-een Cost Centers:

Prior Period Trans+er 7et-een Cost Centers:

C%rrent Period Trans+er 7et-een 7alancing


12/75

1

Oracle Assets TRANS,ER ASSET AD9/ST AND C-AR.E DEPRECIATION

Cost Center 100

Dr. Accumulated Depreciation 2,750.00

Cr. Asset Cost 4,000.00


(adjustment)

Cost Center 200




(adjustment)


Current Period Trans0er 1et5een 1alancin% Se%entsIn ear 5 '%arter 4 yo% trans+er the asset +rom the A7C ,an%+act%ring Company to the >?9istrib%tion Company#

Oracle Assets TRANS,ER ASSET

ABC Manufacturing


Dr. Intercompany Receivables 1,250.00


13/75


XYZ Distribution




Cr. Intercompany Payables 1,250.00


14/75

1

Oracle Assets AD9/ST AND C-AR.E DEPRECIATION

ABC Manufacturing


Dr. Intercompany Receivables 1,500.00


Cr. Depreciation Expense 250.00(adjustment)

XYZ Distribution




(adjustment)


Cr. Intercompany Payables 1,500.00

/nit Ad'ustentA %nit ad*%stment is similar to a trans+er since yo% m%st %pdate assignment in+ormation -hen yo%change the n%mber o+ %nits +or an asset# @or example yo% place the same $4!!! asset inservice -ith t-o %nits assigned to cost center &!!# In ear ) '%arter 5 yo% reali0e theasset act%ally has +o%r %nits t-o o+ -hich belong to cost center )!!#

Oracle Assets AD9/ST /NITS

Cost Center 100




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Cost Center 200



ote: I+ all %nits remain in the original cost center (racle Assets does not create any *o%rnalentries#

Reclassi0icationExample: o% reclassi+y an asset +rom o++ice e%ipment to comp%ters in ear & '%arter 5# Theasset cost is $4!!! the li+e is 4 years and yo% are %sing straight"line depreciation#When yo% reclassi+y an asset in a period a+ter the period yo% entered it (racle Assets creates

*o%rnal entries to trans+er the cost and acc%m%lated depreciation to the asset and acc%m%lateddepreciation acco%nts o+ the ne- asset category# This occ%rs -hen yo% create *o%rnal entries +oryo%r general ledger## (racle Assets also changes the depreciation expense acco%nt to the de+a%ltdepreciation expense Acco%nt +or the ne- category b%t does not ad*%st +or prior period expense#

1

Oracle Assets TRANS,ER COST AND ACC/!/*ATED DEPRECIATION

Office Equipment



Computers




;o%rnal Entries +or Retirements and ReinstatementsWhen yo% retire an asset and create *o%rnal entries +or that period(racle Assets creates *o%rnalentries +or yo%r general ledger +or each component o+ the gainBloss amo%nt# (racle Assetscreates *o%rnal entries +or either the gain or the loss acco%nts +or the +ollo-ing components:proceeds o+ sale cost o+ removal net boo3 val%e retired and reval%ation reserve retired# (racle

Assets also creates *o%rnal entries to clear the proceeds o+ sale and cost o+ removal#(racle Assets creates *o%rnal entries +or the retirement acco%nts yo% set %p in the 7oo3 Controls+orm# I+ yo% enter distinct gain and loss acco%nts +or each component o+ the gainBloss amo%nt


16/75

(racle Assets creates m%ltiple *o%rnal entries +or these acco%nts# o% can enter di++erent sets o+retirement acco%nts +or retirements that res%lt in a gain and retirements that res%lt in a loss#

Depreciation 0or Retireents

The retirement convention date retired and depreciation method control ho- m%ch depreciation(racle Assets ta3es -hen yo% retire an asset# (racle Assets reverses the year"to"datedepreciation i+ the asset8s depreciation method does not depreciate it in the year o+ retirement# Inthis case -hen yo% per+orm a +%ll retirement (racle Assets reverses the year"to"datedepreciation o+ the asset and comp%tes the gain or loss %sing the res%lting net boo3 val%e# @orpartial retirements (racle Assets reverses the appropriate +raction o+ the year"to"datedepreciation and comp%tes the gain or loss %sing the appropriate +raction o+ the res%lting netboo3 val%e# I+ the depreciation method ta3es depreciation in the year o+ retirement

(racle Assets %ses yo%r retirement convention to determine -hether the asset is eligible +oradditional depreciation in that year or -hether some o+ that year8s depreciation m%st be reversed#When yo% per+orm a partial retirement (racle Assets depreciates the portion o+ the asset yo% didnot retire based on the method yo% %se# I+ yo%r depreciation method m%ltiplies a +lat"rate by thecost (racle Assets depreciates the asset8s cost remaining a+ter a partial retirement# @or assetsthat %se a diminishing val%e method (racle Assets depreciates the remaining +raction o+ theasset8s net boo3 val%e as o+ the beginning o+ the +iscal year#

Depreciation 0or Reinstateents

The retirement convention date retired and period in -hich yo% reinstate an asset control ho-m%ch depreciation (racle Assets calc%lates -hen yo% reinstate an asset# When yo% reinstate aretired asset (racle Assets %s%ally calc%lates some additional depreciation expense in the period

in -hich yo% per+orm the reinstatement %nless yo% per+orm it in the same period that yo% retiredthe asset# This additional depreciation is the depreciation that -o%ld have been ta3en i+ yo% hadnot retired the asset#


17/75

Payables Syste

Dr. Cost of Removal Clearing 500.00

Cr. Accounts Payable 500.00

Oracle Assets !/*TIP*E .AIN*OSS ACCO/NTS


Dr. Proceeds of Sale Clearing 2,000.00

Dr. Cost of Removal Gain 500.00

Dr. Revaluation Reserve 600.00

Dr. Net Book Value Retired Gain 1,500.00Cr. Asset Cost 4,000.00

Cr. Proceeds of Sale Gain 2,000.00

Cr. Cost of Removal Clearing 500.00

Cr. Revaluation Reserve Retired Gain 600.00

I+ yo% enter the same acco%nt +or each gain and loss acco%nt (racleAssets creates a single *o%rnal entry +or the net gain or loss#

7oo3 Controls +orm:Accounts .ain *ossProceeds o+


18/75

%ses a retirement convention and depreciation method -hich allo- yo% to ta3e depreciation in theperiod o+ retirement#

Recei$ables Syste

Dr. Accounts Receivable 2,000.00

Cr. Proceeds of Sale Clearing 2,000.00

Payables Syste


Cr. Accounts Payable 500.00

Oracle Assets


Dr. Proceeds of Sale Clearing 2,000.00

Dr. Cost of Removal Loss 500.00

Dr. Net Book Value Retired Loss 1,750.00

Cr. Proceeds of Sale Loss 2,000.00

Cr. Cost of Removal Clearing 500.00



Current Period ReinstateentExample: o% discover that yo% retired the -rong asset# (racle Assets creates *o%rnal entries +orthe reinstatement to debit asset cost credit acc%m%lated depreciation and reverse the gain orloss yo% recogni0ed +or the retirement# (racle Assets reverses the *o%rnal entries +orproceeds o+ sale cost o+ removal net boo3 val%e retired and reval%ation reserve retired# (racle

Assets also reverses the *o%rnal entries yo% made to clear the proceeds o+ sale and cost o+removal# (racle Assets also creates *o%rnal entries to recover the depreciation not charged to theasset and +or the c%rrent period depreciation

e2penseOracle Assets



Dr. Gain / Loss 600.00




Cr. Revaluation Reserve 600.00


19/75

Prior Period ReinstateentExample: o% place an asset in service in ear & '%arter The asset cost is $4!!! the li+e is 4years and yo% are %sing straight"line depreciation# In ear ) '%arter & yo% retire the asset# Inear ) '%arter 4 yo% reali0e that yo% retired the -rong asset so yo% reinstate it#

Oracle Assets



Dr. Proceeds of Sale Loss 2,000.00



(adjustment)

Cr. Net Book Value Retired Loss 2,750.00

Cr. Cost of Removal Loss 500.00



Assets ,ully Reser$ed /pon AdditionI+ yo% add an asset -ith an acc%m%lated depreciation e%al to the recoverable cost it is +%llyreserved %pon addition# When yo% retire it (racle Assets does not bac3 o%t any depreciationeven i+ yo% assigned the asset a depreciation method that bac3s o%t all depreciation in theyear o+ retirement# Do-ever it creates all the other *o%rnal entries associated -ith retiring a

capitali0ed asset#

NonDepreciated CapitaliedConstructionInProcess (CIP) AssetsA non"depreciated capitali0ed asset or a CIP asset has no acc%m%lated depreciation# There+ore(racle Assets does not create *o%rnal entries to catch %p depreciation to the retirement proratedate and does not remove the acc%m%lated depreciation# Do-ever (racle Assets createsall other *o%rnal entries associated -ith retiring a capitali0ed asset#

Reinstateent TransactionsPENDIN. Asset RetireentWhen yo% reinstate an asset retired in the c%rrent acco%nting period that the calc%late gains andlosses program has not yet processed the retirement transaction is deleted and the asset isimmediately reinstated# o *o%rnal entries are created#

PROCESSED Asset RetireentWhen yo% reinstate an asset retired in a previo%s acco%nting period or already processed in thec%rrent period the existing retirement transaction gets a ne-


20/75

Re$alue Accuulated Depreciation

Example &: o% place an asset in service in ear & '%arter The asset cost is $&!!!! the li+eis 6 years and yo% are %sing straight"line depreciation#In ear ) '%arter & yo% reval%e the asset %sing a reval%ation rate o+ 62# Then in ear 4 '%arter

& yo% reval%e the asset again %sing a reval%ation rate o+ "&!2#

Re$aluation Rules:

Reval%e Acc%m%lated 9epreciation es

Amorti0e Reval%ation Reserve o

Retire Reval%ation Reserve o

(racle Assets bases the ne- depreciation expense on the reval%ed remaining net boo3 val%e#In ear 6 '%arter 4 at the end o+ the asset8s li+e yo% retire the asset -ith no proceeds o+ sale orcost o+ removal#


21/75

1


22/75

RE4A*/ATION 7"ear 8& ;uarter 7& = re$aluation in "ear ?& ;uarter 7:

Oracle Assets RE4A*/ATION




Retireent in "ear


23/75

Accuulated Depreciation Not Re$alued

E2aple 8: o% place an asset in service in ear & '%arter The asset cost is $&!!!! the li+e

is 6 years and yo% are %sing straight"line depreciation# In ear ) '%arter & yo% reval%e theasset %sing a reval%ation rate o+ 62# Then in ear 4 '%arter & yo% reval%e the asset again %singa reval%ation rate o+ "&!2#

Re$aluation Rules:

Reval%e Acc%m%lated 9epreciation o


Retire Reval%ation Reserve es

@or the +irst reval%ation the asset8s ne- reval%ed cost is $&!6!!#


24/75

1


25/75

RE4A*/ATION 7


26/75

The e++ects o+ the reval%ations are ill%strated in the +ollo-ing table:

1


27/75

RE4A*/ATION 7"ear 8& @uarter 7&


28/75

Re$aluation o0 a ,ully Reser$ed AssetExample 4: o% place an asset in service in ear & '%arter The asset cost is $&!!!! the li+eis 6 years and yo% are %sing straight"line depreciation# The asset8s li+e extension +actor is ) andthe maxim%m +%lly reserved reval%ations allo-ed +or this boo3 is 5#In year 6 %arter 4 the asset is +%lly reserved# In ear F '%arter & yo% -ant to reval%e the asset-ith a reval%ation rate o+ 62#

Re$aluation Rules:

Reval%e Acc%m%lated 9epreciation es


@irst (racle Assets chec3s -hether this +%lly reserved asset has been previo%sly reval%ed as+%lly reserved and that the maxim%m n%mber o+ times is not exceeded by this reval%ation#


29/75

1




Cr. Revaluation Reserve 2,100.00


30/75

Re$aluation 5it# *i0e E2tension Ceilin%

Example 6: o% place an asset in service in ear & '%arter The asset cost is $&!!!! the li+eis 6 years and yo% are %sing straight"line depreciation# The asset8s li+e extension +actor is 5#!and its li+e extension ceiling is )#

In ear 6 '%arter 4 the asset is +%lly reserved# In year F %arter & yo% -ant to reval%e the asset-ith a reval%ation rate o+ 62#

Reval%ation R%les: Reval%e Acc%m%lated 9epreciation es


To determine the depreciation ad*%stment (racle Assets %ses the smaller o+ the li+e extension+actor and the li+e extension ceiling#


31/75

1Depreciation Ad'ustent (calculated usin% li0e e2tension ceilin%)8&>>>



Dr. Accumulated Depreciation 1,600.00Cr. Revaluation Reserve 2,100.00

Re$aluation 5it# a Re$aluation Ceilin%Example G: o% o-n an asset -hich has been damaged d%ring its li+e#o% placed the asset in service in ear & %arter The asset cost is $&!!!! the li+e is 6 yearsand yo% are %sing straight"line depreciation# o% entered a reval%ation ceiling o+ $&!5!! +or theasset# In year 5 %arter 5 yo% reval%e the asset8s category -ith a reval%ationrate o+ 62#

Re$aluation Rules:

Reval%e Acc%m%lated 9epreciation o

Amorti0e Reval%ation Reserve es

I+ (racle Assets applied the ne- reval%ation rate o+ 62 the asset8s ne- cost -o%ld be higherthan the reval%ation ceiling +or this asset so instead (racle Assets %ses the ceiling as the ne-cost# The ceiling creates the same e++ect as reval%ing the asset at a rate o+ 52# (racle

Assets bases the asset8s ne- depreciation expense on the reval%ed asset cost#


32/75

1




Cr. Revaluation Reserve 5,300.00

(racle Assets creates the +ollo-ing *o%rnal entries each period toamorti0e the reval%ation reserve:



Cr. Revaluation Amortization 530.00


33/75

;o%rnal Entries +or Tax Acc%m%lated 9epreciation Ad*%stments

Example: o% place an asset in service in ear & '%arter The asset cost is $4!!! the li+e is 4years and yo% are %sing straight"line depreciation# In ear 4 '%arter & yo%r tax a%thorityre%ests that yo% change the depreciation ta3en in ear ) +rom $&!!! to $1!!#

(racle Assets creates the +ollo-ing *o%rnal entries +or the reserve ad*%stment:

Oracle Assets


Cr. Depreciation Adjustment 200.00

Dome


34/75

Bor in Process Accountin% Transactions

The +ollo-ing are the basic acco%nting transactions carried o%t in WIP Relieve Inventory and charge WIP at standard Cost#)# ,ove Assemblies on the shop +loor and charge Reso%rces5# Earn Reso%rces and (verheads into ;obs and 8

This evel Costs

CostElement

(peration =nits Inc%rredcost per


35/75

%nit

Reso%rceR


36/75

6.


37/75

12.


38/75

T#e table belo5 %i$es a suary o0 all t#e transactions at t#is point

Bor in Process 4alueCost Incurred Cost Relie$ed 1alance

Cost Element Thisevel

Previo%sevel

Thisevel

Previo%sevel

Thisevel

Previo%sevel

,aterial &6&4 .&6!!/ &4,aterial (D &6! .&6!/ !Reso%rce G)6 46! .G6!/ .46!/ .)6/ !

(

) 8G< 7?

4ariances are reco%nised 5#en you close your 'obs and sc#edules16. Close ;ob or


39/75

5# Reso%rce cost decreases by &6#4# (verhead rate increases +rom &!!2 to &6!2 o+ reso%rce cost#B6# (verhead cost remains at 46 d%e to decrease in reso%rce costsG# '%antity in *ob &!

1ill o0 !aterial CostMaterial Material

OHResource OSP Overhead Total

(ld Cost &6! &6 46 ! 46 )66e- Cost )!! )! 5! ! 46 )F6IncreaseB9ecrease

6! 6 .&6/ ! ! 4!

=pdate this evel Costs

Reso%rce R


40/75

9ecrease


41/75


42/75

Dome


43/75

Purchase Orders and Releases

P( Accr%al Acco%nt Menerator P( 7%dget Acco%nt Menerator

P( Charge Acco%nt Menerator

P( ariance Acco%nt Menerator

Re@uisitions

P( Re%isition Accr%al Acco%nt Menerator

P( Re%isition 7%dget Acco%nt Menerator

P( Re%isition Charge Acco%nt Menerator

P( Re%isition ariance Acco%nt Menerator

PO Accrual Account .enerator andPO Re@uisition Accrual Account .enerator

Accr%al Acco%nt +or Expense Item

Accr%al Acco%nt +rom (rgani0ation

P( Pro*ect"RelatedN .o% can c%stomi0e this +%nction i+ yo%-ant to b%ild pro*ect"related acco%nts %sing yo%r o-n r%les andi+ (racle Pro*ects is installed#/

P%rchase (rder @lex7%ilder =pgrade

Wor3 Item 9estination TypeP( 7%dget Acco%nt Menerator andP( Re%isition 7%dget Acco%nt Menerator

7%ild Inventory Charge Acco%nt

Met 7%dget Acco%nt +rom ItemB


44/75


45/75

Inventory - Standard Costing

Prere@uisites 9e+ine (rgani0ation Parameters

Costing ,ethod is set to


46/75

Deli$ery ,ro Recei$in% Inspection to In$entory

o% can %se the Receiving Transactions -indo- to move material +rom receiving inspection toinventory# The system %ses the %antity and the p%rchase order price o+ the delivered item to%pdate the receiving inspection acco%nt and %antity#

The system %ses the standard cost o+ the delivered item to %pdate the s%binventory balances#

Account Debit Credit

>

Receiving Inspection acco%nt O P( price >>

DebitCredit P%rchase Price ariance

I+ yo%r item has material overhead associated -ith it the s%binventory acco%nt is debited +or theamo%nt o+ the material overhead and the material overhead absorption acco%nt.s/ are credited#


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Purc#ase Price 4ariance (PP4)P%rchase price variances .PP/ occ%r -hen there are di++erences bet-een the standard cost andthe p%rchase order cost o+ an item#

E2pense Subin$entories and E2pense Ites

When yo% receive inventory expense items into expense s%binventory locations the +ollo-ingacco%nting entry is generated:

Account Debit Credit>

Inventory ABP Accr%al acco%nt O P( price >>

When yo% receive an expense .non"asset/ inventory item or into an expense s%binventory thes%binventory expense acco%nt instead o+ the val%ation acco%nt is debited# 7eca%se the expenseacco%nt is debited at the p%rchase order price there is no p%rchase price variance#

Purc#ase Order Receipt to In$entory

When yo% receive material +rom a s%pplier directly to inventory the receipt and deliverytransactions are per+ormed in one step#

@irst the Receiving Inspection acco%nt is debited and the Inventory ABP Accr%al acco%nt creditedbased on %antity received and the p%rchase order price#



Inventory ABP Accr%al acco%nt O P( price >>

ext the


DebitCreditP%rchase Price ariance

I+ yo%r item has material overhead.s/ the s%binventory entry is debited +or the material overheadand the material overhead absorption acco%nt.s/ is credited#


>,aterial (verhead Absorption acco%nt >>

Attention: I+ the s%binventory acco%nt is combined -ith the above entry the material overheadabsorption acco%nt adds one additional entry#


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R!A Returns

o% can ret%rn items received into inventory thro%gh an R,A bac3 to the c%stomer %sing R,A

Ret%rns -indo-#@or example yo% can send bac3 Qret%rn an item that -as ret%rned by the c%stomer to yo%+or repair#This transaction reverses an R,A receipt# It also mimics a sales order shipment and %pdates thesame acco%nts as a sales order shipment#

Account Debit CreditCost o+ Moods >>

Attention:9o not create any acco%nting entries -hen yo% ret%rn material +or an R,A +or anexpense item or expense s%binventory#

!iscellaneous Transactions=sing the ,iscellaneo%s Transaction -indo- yo% can iss%e material +rom a s%binventory to ageneral ledger acco%nt .or acco%nt alias/ or receive material to a s%binventory +rom an acco%nt oralias# An acco%nt alias identi+ies another name +or a general ledger acco%nt#

Su%%estion:=se acco%nt aliases +or acco%nt n%mbers yo% %se +re%ently# @or example %se thealias >>

Receiving material to a s%binventory +rom an acco%nt or an alias generates the +ollo-ingacco%nting entries:

Account Debit Credit>Entered Meneral edger Acco%nt O standard cost >>

Expense


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InterOr%aniation Trans0erso% can trans+er material +rom one inventory organi0ation to another either directly or thro%ghintransit inventory# Intransit inventory represents material that has not yet arrived at the receivingorgani0ation#/sin% Intransit In$entory o% can move material +rom the shipping organi0ation to intransit

inventory %sing the Trans+er

,O1 Point is set to S#ipent:

Account Or%aniation Debit Credit

Inter"(rgani0ation Receivable >

Intransit Inventory acco%nt Receiving >>

Inter"(rgani0ation Payable Receiving >>

Receipt Transaction9epending %pon the @(7 point de+ined in the organi0ation relationship the receipt +rom intransitinventory creates the +ollo-ing acco%nting entries:

,O1 Point is set to Recei$in%:



Intransit Inventory acco%nt >

>


,O1 Point is set to S#ipent:Account Or%aniation Debit Credit>

Intransit Inventory acco%nt Receiving >>


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In addition to acco%nting +or the movement o+ the material these transactions also %pdate theinter"organi0ation receivable and payable acco%nts# These inter"organi0ation clearing acco%ntsrepresent inter"organi0ation receivables and payables +or the respective shipping and receivingorgani0ations#

Direct InterOr%aniation Trans0erWhen yo%r organi0ation relationship is set to directly trans+er material Inventory per+orms boththe iss%e and the receipt transaction at the time o+ the iss%e# Any di++erence bet-een the cost o+items in the t-o organi0ations is recogni0ed as variance in the receiving organi0ation#

The acco%nting entries created are as +ollo-s:



>


=se the Trans+er ,aterial (verhead Absorption acco%nt >>

Attention: The s%binventory acco%nt is combined -ith the above entry# The material overheadabsorption transaction adds one additional acco%nt to the entry#

The @(7 Point changes the acco%nting +or +reight# With @(7 receiving +reight is accr%ed on thereceipt transaction by the sending organi0ation# With @(7 shipment +reight is accr%ed on theshipment transaction by the receiving organi0ation# @or direct trans+ers the receipt and shipmenttransaction occ%r at the same time#When the @(7 Point is set to Receiving the trans+er creates the +ollo-ing +reight and trans+er

charge entries at time o+ receipt:

Account Or%aniation Debit CreditInter"(rgani0ation Receivable >

@reight Expense acco%nt >



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E2pense Subin$entories and E2pense Ites

o% can iss%e +rom an asset to an expense s%binventory and yo% can iss%e +rom an expenses%binventory i+ the (racle InventoryIN4:Allo5 E2pense to Asset Trans0er pro0ile option is set to "esThe system ass%mes the material is cons%med at the expense location#

Internal Re@uisitions :o% can %se the internal re%isitions to replenish inventory# o% can so%rce material +rom as%pplier a s%binventory -ithin yo%r organi0ation or +rom another organi0ation# 9epending %ponthe so%rce yo% choose the acco%nting entries are similar to one o+ the proceeding scenarios#Do-ever %nli3e inter"organi0ation trans+ers internal re%isitions do not s%pport +reight charges#

Cycle Count and P#ysical In$entory :

=se cycle co%nting and physical inventory to correct inventory on"hand balances# A cycle co%nt%pdates the acco%nts o+ the a++ected s%binventory and o++sets the ad*%stment acco%nt yo%

speci+y#

I+ yo% physically co%nt more than yo%r on"hand balance the acco%nting sentries are:


Ad*%stment acco%nt O standard cost >>

I+ yo% co%nt less than yo%r on"hand balance the acco%nting entries are:


Ad*%stment acco%nt O standard cost >>

>

i3e a cycle co%nt a physical inventory ad*%stment also %pdates the acco%nts o+ the a++ecteds%binventories and the physical inventory ad*%stment acco%nt yo% speci+y#


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Wor3 in Process

T#e accountin% entries 0or return transactions are:


>

WIP acco%nting class val%ation acco%nts >>


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1ac0lus# !aterial Transactions

With bac3+l%shing yo% iss%e component material %sed in an assembly or s%bassembly byexploding the bills o+ material and then m%ltiplying by the n%mber o+ assemblies prod%ced#,ove transactions can create operation p%ll bac3+l%sh material transactions that iss%e componentmaterial +rom designated WIP s%pply s%binventories and locators to a *ob or repetitive sched%le#@or bac3+l%sh components %nder lot or serial n%mber control yo% assign the lot or serial n%mbersd%ring the move transaction#When yo% move bac3-ard in a ro%ting Wor3 in Process a%tomatically reverses operation p%llbac3+l%sh transactions#The acco%nting entries +or move transactions are:

Account Debit CreditWIP acco%nting class val%ation acco%nts >>

>

The acco%nting entries +or ret%rn transactions are:Account Debit Credit>


!o$ed 1ased Resource C#ar%in%

As the assemblies yo% b%ild pass thro%gh the operations on their ro%tings move transactionscharge all pre"assigned reso%rces -ith an a%to"charge type o+ WIP ,ove at their standard rate#o% can charge reso%rces based %pon a +ixed amo%nt per item moved in an operation .Item

basis/ or based %pon a +ixed lot charge per item moved in an operation .ot basis/# @or reso%rces-ith a basis o+ ot Wor3 in Process a%tomatically charges the lot cost %pon completion o+the +irst assembly in the operation#o% can also enter man%al reso%rce transactions associated -ith a move or independent o+ anymoves# o% can man%ally charge reso%rces to a *ob and repetitive sched%le provided the *ob andrepetitive sched%le has a ro%ting# o% can also transact reso%rces thro%gh the (pen Reso%rceTransaction Inter+ace#

Resource C#ar%esWor3 in Process s%pports +o%r reso%rce a%tocharging methods:,an%al WIP ,ove P( ,ove and P( Receipt#o% can charge reso%rces at an act%al rate#o% can also charge reso%rce overheads a%tomatically as yo% charge reso%rces#

WIP ,ove Reso%rce Charges o% can a%tomatically charge reso%rces at their standard rate to a*ob or repetitive sched%le -hen yo% per+orm a move transaction %sing either the ,oveTransactions -indo- or the (pen ,ove Transaction Inter+ace# When yo% move assemblies +romthe '%e%e or R%n intra operation steps +or-ard to the To move Re*ect or


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o% can %ndo the WIP ,ove reso%rce charges a%tomatically by moving the assemblies +rom'%e%e or R%n o+ yo%r c%rrent operation to '%e%e or R%n o+ any prior operation or by moving theassemblies +rom the To move Re*ect or


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Any di++erence bet-een the total labor charged at act%al and the standard labor amo%nt isrecogni0ed as an e++iciency variance at period close#I+ the >

Reso%rce rate variance acco%nt .9ebit -hen act%al >> >>rate is greater than the standard rate# Credit -henthe act%al rate is less than the standard rate#/

Reso%rce absorption acco%nt >>

PO Receipt and PO !o$e Transactionso% can receive p%rchased items associated -ith o%tside reso%rces +rom an o%tside processing

operation bac3 into -or3 in process in (racle P%rchasing# @or these items Wor3 in Processcreates reso%rce transactions at the standard or act%al rate +or all o%tside reso%rces -ithan a%tocharge type o+ P( receipt or P( move# @or o%tside reso%rces -ith an a%tocharge type o+P( move Wor3 in Process also moves the assemblies +rom the '%e%e or R%n intraoperationstep o+ the o%tside processing operation into the '%e%e intraoperation step o+ the nextoperation or into the To move intraoperation step i+ the o%tside processing operation is the lastoperation on the ro%ting#

I+ yo% assigned internal reso%rces to an o%tside operation -ith an a%tocharge type o+ ,an%alcharge the reso%rces %sing the Reso%rce Transactions -indo- or the (pen Reso%rceTransaction Inter+ace#

I+ yo% ret%rn assemblies to the s%pplier %sing the Enter Ret%rns and Ad*%stments -indo- in

(racle P%rchasing (racle P%rchasing a%tomatically reverses the charges to all a%tomaticreso%rces associated -ith the operation# o% m%st man%ally reverse all man%al reso%rce charges%sing the Reso%rce Transactions -indo-# @or o%tside reso%rces -ith an a%tocharge type o+ P(move (racle P%rchasing a%tomatically moves the assemblies +rom the '%e%e intraoperationstep o+ the operation immediately +ollo-ing the o%tside processing operation into the '%e%eintraoperation step o+ yo%r o%tside processing operation#

I+ the o%tside processing operation is the last operation on the ro%ting the assembliesa%tomatically move +rom the To move intraoperation step to the '%e%e intraoperation step# P(move reso%rce transactions are applied to m%ltiple repetitive sched%les on a line based on ho-the assemblies being moved are allocated# ,oves are allocated across m%ltiple repetitivesched%les on a +irst in"+irst o%t basis# P( receipt reso%rce transactions are allocated acrosssched%les on a +irst in +irst .@I@(/ o%t basis#


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Outside Processin% C#ar%es

Wor3 in Process a%tomatically creates reso%rce transactions at the standard or act%al rate +or allo%tside processing reso%rces -ith an charge type o+ P( Receipt or P( ,ove -hen yo% receiveassemblies +rom an o%tside processing operation bac3 into -or3 in process %sing the Enter

Receipts -indo- in P%rchasing# @or o%tside processing reso%rces -ith an charge type o+ P(,ove Wor3 in Process also per+orms a move o+ the assemblies +rom the '%e%e or R%nintraoperation step o+ yo%r o%tside processing operation into the '%e%e intraoperation step o+yo%r next operation or into the To move intraoperation step i+ the o%tside processing operation isthe last operation on yo%r ro%ting#

I+ yo% assigned internal reso%rces to an o%tside operation -ith an charge type o+ ,an%al yo% %sethe ,ove Transactions -indo- or the (pen Reso%rce Transaction Inter+ace to charges thesereso%rces#

I+ yo% ret%rn assemblies to the s%pplier Wor3 in Process a%tomatically reverses the charges to alla%tomatic reso%rces associated -ith the operation# o% m%st man%ally reverse all man%alreso%rce charges %sing the ,ove Transactions -indo-# @or o%tside processing reso%rces

-ith an charge type o+ P( ,ove Wor3 in Process a%tomatically moves the assemblies +rom the'%e%e intraoperation step o+ the operation immediately +ollo-ing the o%tside processingoperation into the '%e%e intraoperation step o+ yo%r o%tside processing operation#

I+ the o%tside processing operation is the last operation on yo%r ro%ting Wor3 in Processa%tomatically moves the assemblies +rom the To move intraoperation step to the '%e%eintraoperation step# Wor3 in Process applies P( ,ove reso%rce transactions to m%ltiple repetitivesched%les on a line based on ho- the assemblies being moved are allocated# Wor3 in Processallocates moves across m%ltiple repetitive sched%les based on a +irst in"+irst o%t basis# Wor3 inProcess applies P( Receipt reso%rce transactions to the +irst open repetitive sched%leon the line#

Costin% Outside Processin% C#ar%es at StandardWhen yo% receive the assembly +rom the s%pplier P%rchasing sends the reso%rce charges toWor3 in Process at either standard cost or act%al p%rchase order price depending %pon ho- yo%speci+ied the standard rate +or the o%tside processing reso%rce#I+ the >

P%rchase price variance acco%nt .9ebit -hen the >> >>act%al rate is greater than the standard rate# Credit

-hen the act%al rate is less than the standard rate#/

(rgani0ation Receiving acco%nt >>

Any %antity or %sage di++erence is recogni0ed as an o%tside processing e++iciency variance atperiod close#


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T#e accountin% entries 0or return to supplier 0or outside processin% are:Account Debit Credit(rgani0ation Receiving acco%nt >>

P%rchase price variance acco%nt .9ebit -hen >> >>act%al rate is less than the standard rate# Credit-hen the act%al rate is greater than the standardrate#WIP acco%nting class o%tside processing val%ation acco%nt >>

Costin% Outside Processin% C#ar%es at Actual Purc#ase Order PriceI+ the >acco%nt

(rgani0ation Receiving acco%nt >>

Any di++erence +rom the standard is recogni0ed as a reso%rce e++iciencyvariance at period close#

O$er#ead C#ar%es!o$e 1ased O$er#ead C#ar%in%Wor3 in Process a%tomatically charges appropriate overhead costs as yo% move assemblies

thro%gh the shop +loor# o% can charge overheads directly based on move transactions or basedon reso%rce charges# @or overheads charged based on move transactions -ith a basis o+ ItemWor3 in Process a%tomatically charges overheads %pon completion o+ each assembly in theoperation# Wor3 in Process a%tomatically reverse these charges d%ring a bac3-ard movetransaction#

@or overheads based on move transactions -ith a basis o+ ot Wor3 in Process a%tomaticallycharges overheads %pon completion o+ the +irst assembly in the operation# Wor3 in Processa%tomatically reverses these charges d%ring a bac3-ard move transaction i+ it res%lts in 0eronet assemblies completed in the operation#

Resource 1ased O$er#ead C#ar%in%Wor3 in Process a%tomatically charges appropriate overhead costs as yo% charge reso%rces# o%

can charge overheads based on reso%rce %nits or val%e# Wor3 in Process a%tomatically reversesoverhead charges -hen yo% reverse the %nderlying reso%rce charge#Costin% O$er#ead C#ar%es(verhead charges increase -or3 in process val%ation# The acco%nting entries +or overheadcharges are:

Account Debit CreditWIP acco%nting class overhead acco%nt >>(verhead absorption acco%nt >>


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o% can reverse overhead charges by entering negative ,an%al reso%rce charges or per+ormingbac3-ard moves +or WIP ,ove reso%rces# The acco%nting entries +or reverse overhead chargesare:

Account Debit Credit(verhead absorption acco%nt >>

WIP acco%nting class overhead acco%nt >>

Assebly Scrap Transactionso% can move partially completed assemblies that yo% consider %nrecoverable to the

>

Assebly Copletion Transactions=se the Completion Transactions -indo- ,ove Transactions -indo- and Inventory TransactionInter+ace to move completed assemblies +rom -or3 in process into s%binventories# Completiontransactions relieve the val%ation acco%nt o+ the acco%nting class and charge the s%binventoryacco%nts .+or example +inished goods/ based %pon the assembly8s elemental cost str%ct%re#Costing Assembly Completion Transactions Completions decrease -or3 in process val%ation andincrease inventory val%ation at standard costs#


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The acco%nting entries +or completion transactions are:Account Debit Credit>


Earnin% Assebly !aterial O$er#ead on Copletiono% can assign overheads based on Item ot or Total al%e basis# @or standard discrete *obsand repetitive sched%les yo% can earn these overheads as yo% complete assemblies +rom -or3in process to inventory#

T#e accountin% entries 0or aterial o$er#ead on copletion transactions 0or standarddiscrete 'obs and repetiti$e sc#edules are:


Inventory material overhead absorption >>Acco%nt

=se non"standard expense *obs +or s%ch activities as repair and maintenance# =se non"standardasset *obs to %pgrade assemblies +or teardo-n and to prototype prod%ction# on"standarddiscrete *obs do not earn overhead on completion#


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Period Close TransactionsThe period close process in Inventory recogni0es variances +or non"standard expense *obs andrepetitive sched%les# It also trans+ers the -or3 in process period costs to the general ledger#

Costin% NonStandard E2pense 9ob Period Close Transactions

o% can close discrete *obs and recogni0e variances +or non"standard expense *obs at any time#In addition the period close process a%tomatically recogni0es variances on all non"standardexpense *ob charges inc%rred d%ring the period# There+ore open non"standard expense *obshave 0ero WIP acco%nting balances at the start o+ a ne- period#

I+ there is a positive balance in the *ob at the end o+ the period the acco%nting entries +or non"standard expense *obs at period close are:

Account Debit CreditWIP acco%nting class variance acco%nts >>


Costin% Repetiti$e Sc#edule Period Close Transactions

o% do not close a repetitive sched%le# Do-ever yo% do recogni0e variances on a period basisthat res%lt in 0ero WIP acco%nting balances at the start o+ the ne- period# o% sho%ld chec3 yo%rtransactions and balances %sing the Repetitive al%e Report be+ore yo% close a period#When yo% de+ine Wor3 in Process parameters yo% can speci+y -hich repetitive sched%levariances yo% recogni0e -hen yo% close anacco%nting period# o% can either recogni0e variances +or all repetitive sched%les -hen yo% closean acco%nting period or recogni0e variances +or those repetitive sched%les -ith stat%ses o+ eitherComplete " o Charges or Cancelled#

Ass%ming positive balances in the repetitive sched%les at the end o+ the period the acco%ntingentries +or repetitive sched%les at period close are:Account Debit Credit

WIP acco%nting class variance acco%nts >>


Wor3 in Process


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I+ the res%lt o+ the cost %pdate is an increase in the standard cost o+ the *ob the acco%ntingentries +or a cost %pdate transaction are:



WIP >

I+ the res%lt o+ the cost %pdate is a decrease in the standard cost o+ the *ob the acco%nting entries+or a cost %pdate transaction are:

Account Debit CreditWIP >


When the cost %pdate occ%rs +or open *obs standards and WIP balances are reval%ed accordingto the ne- standard th%s retaining relie+ variances inc%rred %p to the date o+ the %pdate#


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Standard Cost 4aluation

Inventory and Wor3 in Process contin%ally %pdate inventory val%e -ith each transaction# Wor3 inProcess balances are %pdated -ith each related acco%nting transaction# Inventory s%binventoryval%es may be reported -hen the %antity movement occ%rs#

4alue by Cost Eleent

Inventory or -or3 in process val%e is maintained and reported on by distinct cost element .s%chas material material overhead and so on/ even i+ yo% assign the same general ledger val%ationacco%nt to each cost element# o% can also report -or3 in process val%e by cost element -ithinspeci+ic WIP acco%nting classes#

Standard Costin%

=nder standard costing the val%e o+ inventory is determined %sing the material and materialoverhead standard costs o+ each inventory item# I+ yo% %se 7ills o+ ,aterial Inventory maintainsthe standard cost by cost element .material material overhead reso%rce o%tside processingand overhead/#

/nliited Cost Types

o% can de+ine an %nlimited n%mber o+ cost types and %se them -ith any inventory val%ation andmargin analysis reports# This allo-s yo% to see the potential e++ects o+ a cost roll%pB%pdate# o%can also %pdate yo%r standard costs +rom any o+ the cost types yo% have de+ined# When yo% %se7ills o+ ,aterial -ith Inventory yo% can speci+y the cost type in explosion reports and report thesecosts +or sim%lation p%rposes


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In$entory and Bor in Process Standard Cost 4ariances

This section describes Inventory standard cost variances and Wor3 in Process standard costvariances#

In$entory Standard Cost 4ariances

In general Inventory records p%rchase price variance .PP/ and recogni0es cycle co%nt andphysical inventory ad*%stments as variances#

Purc#ase Price 4ariance (PP4)9%ring a p%rchase order receipt Inventory calc%lates p%rchase price variance# In general this isthe di++erence bet-een -hat yo% pay the s%pplier and the item8s standard cost# Inventorycalc%lates this val%e as +ollo-s:PP4 (PO unit price standard unit cost) @uantity recei$ed

Inventory %pdates the p%rchase price variance acco%nt -ith the PP val%e# I+ the p%rchase order

price is in a +oreign c%rrency Inventory converts it into the +%nctional c%rrency o+ the inventoryorgani0ation and calc%lates the p%rchase price variance# P%rchasing reports PP %sing theP%rchase Price ariance Report# o% distrib%te this variance to the general ledger -hen yo%per+orm the general ledger trans+er or period close#

In$oice Price 4ariance (IP4)In general invoice price variance is the di++erence bet-een the p%rchase price and the invoiceprice paid +or a p%rchase order receipt# P%rchasing reports invoice variance# =pon invoiceapproval Payables a%tomatically records Invoice Price ariance to both invoice pricevariance and exchange rate variance acco%nts#

Cycle Count and P#ysical In$entoryInventory considers cycle co%nt and physical inventory ad*%stments as variance# o% distrib%tethese variances to the general ledger -hen yo% per+orm the general ledger trans+er or periodclose#

Bor in Process Standard Cost 4ariancesWor3 in Process provides %sage e++iciency and standard cost ad*%stment variances#/sa%e and E00iciency 4ariances

=sage and e++iciency variances res%lt -hen the total costs charged to a *ob or sched%le do note%al the total costs relieved +rom a *ob or sched%le at standard# Charges occ%r +rom iss%es andret%rns reso%rce and overhead charges and o%tside processing receipts# Cost relie+ occ%rs +romassembly completions scrap transactions and close transactions#

o% can vie- these variances in the 9iscrete ;ob al%e report the Repetitive al%e report andby %sing the WIP al%e


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also incl%de rate variance as -ell as %antity variance i+ yo% charged reso%rces or o%tsideprocessing at act%al#

o% can calc%late and report %sage and e++iciency variances based on planned start %antity orthe act%al %antity completed# o% can %se the planned start %antity to chec3 potential variancesd%ring the *ob or repetitive sched%le# o% can %se the act%al %antity completed tochec3 the variances be+ore the *ob or period close# o%r choice o+ planned start %antity or act%al%antity completed determines the standard re%irements# These standard re%irements arecompared to the act%al material iss%es reso%rce o%tside processing and overhead charges todetermine the reported variance#

Wor3 in Process calc%lates reports and recogni0es the +ollo-ing %antity variances:

!aterial /sa%e 4arianceThe material %sage variance is the di++erence bet-een the act%al material iss%ed and thestandard material re%ired to b%ild a given assembly calc%lated as +ollo-s:

standard aterial cost (@uantity issued @uantity re@uired)

This variance occ%rs -hen yo% over or %nder iss%e components or %se an alternate bill#

Resource and Outside Processin% E00iciency 4ariance

The reso%rce and o%tside processing e++iciency variances is the di++erence bet-een the reso%rcesand o%tside processing charges inc%rred and the standard reso%rce and o%tside processingcharges re%ired to b%ild a given assembly calc%lated as +ollo-s:

.applied reso%rce %nits >standard or act%al rate/ L.standard reso%rce %nits at standard reso%rcerate/This variance occ%rs -hen yo% %se an alternate ro%ting add ne- operations to a standardro%ting d%ring prod%ction assign costed reso%rces to o " direct charge operations s3ipped byshop +loor moves overcharge or %ndercharge a reso%rce or charge a reso%rce atact%al#

!o$e 1ased O$er#ead E00iciency 4ariance,ove based overhead e++iciency variance is the di++erence bet-een overhead charges inc%rred+or move based overheads .overhead basis o+ Item or ot/ and standard move based overheadsre%ired to b%ild a given assembly calc%lated as +ollo-s:

applied o$e based o$er#eads standard o$e based o$er#eads

This variance occ%rs -hen yo% %se an alternate ro%ting add operations to a standard ro%tingd%ring prod%ction or do not complete all the move transactions associated -ith the assembly%antity being b%ilt#

Resource 1ased O$er#ead E00iciency 4ariance

Reso%rce based overhead e++iciency variance is the di++erence bet-een overhead chargesinc%rred +or reso%rce based overheads .overhead basis o+ Reso%rce %nits or Reso%rce val%e/and standard reso%rce based overheads re%ired to b%ild a given assembly calc%lated as+ollo-s:

applied resource based o$er#eads standard resource based o$er#eads


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This variance occ%rs -hen yo% %se an alternate ro%ting add ne- operations to a standardro%ting d%ring prod%ction assign costed reso%rces to o " direct charge operations s3ipped byshop +loor moves overcharge or %ndercharge a reso%rce or charge a reso%rce at act%al#

Standard Cost Ad'ustent 4ariance


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=nder average costing yo% cannot share costs# Average costs are maintained separately in eachorgani0ation# =nder standard costing i+ yo% %se Inventory -itho%t Wor3 in Processyo% can de+ineyo%r item costs in the organi0ation that controls yo%r costs and share those costs acrossorgani0ations# I+ yo% share standard costs across m%ltiple organi0ations all reports in%iries andprocesses %se those costs# o% are not re%ired to enter d%plicate costs#

ote: The organi0ation that controls yo%r costs can be a man%+act%ring organi0ation that %sesWor3 in Process or 7ills o+ ,aterial# (rgani0ations that share costs -ith the organi0ation thatcontrols yo%r costs cannot %se 7ills o+ ,aterial#

4aluation Accounts and Cost Eleents 5it# A$era%e Costin%The system maintains the average %nit cost at the organi0ation levelS it does not %se anys%binventory val%ation acco%nts# I+ yo% had separate val%ation acco%nts by s%binventory totalinventories -o%ld balance b%t acco%nt balances by s%binventory -o%ld not match the inventoryval%ation reports#ote: Cost ,anagement en+orces the same acco%nt n%mber +or organi0ation level material andintransit acco%nts# (ther-ise the balances o+ inventory val%ation reports do note%al the s%m o+ acco%nting transactions#

C#an%in% 0ro Standard to A$era%e Costin%(nce transactions have been per+ormed yo% cannot change the costing method o+ anorgani0ation in the (rgani0ation Parameters -indo- in (racle Inventory#

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Recei$ables

Acco%nting +or TransactionsThis essay describes the acco%nting entries created -hen yo% enter transactions in Receivables%sing the Accr%al method o+ acco%nting#

In$oicesWhen yo% enter a reg%lar invoice thro%gh the Transaction -indo- Receivables creates the+ollo-ing *o%rnal entry:

DR Receivables

CR Revenue

CR Tax (If you charge tax)

CR Freight (If you charge freight)

I+ yo% enter an invoice -ith a 7ill in Arrears invoicing r%le Receivables creates the +ollo-ing*o%rnal entry:

In t#e 0irst period o0 Rule:

DR Unbilled ReceivablesCR Revenue

In all periods o0 Rule:

DR Receivables

CR Unbilled Receivables



I+ yo% enter an invoice -ith a 7ill in Advance invoicing r%le Receivables creates the +ollo-ing*o%rnal entries:

DR Receivables

CR Unearned Revenue



DR Unearned Revenue

CR Revenue

Receivables %ses the @reight Receivable Reven%e


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When yo% credit a commitment Receivables creates the +ollo-ing *o%rnal entries:

DR Revenue

CR Receivables

When yo% enter a credit memo against an installment Receivables lets yo% choose bet-een the+ollo-ing methods: I@( @I@( and Prorate#When yo% enter a credit memo against an invoice -ith invoicing and acco%nting r%lesReceivables lets yo% choose bet-een the +ollo-ing methods:I@( Prorate and =nit#

I+ the pro0ile option /se In$oice Accountin% 0or Credit !eos is set to "es Receivablescredits the acco%nts o+ the original transaction# I+ t#is pro0ile option is set to No Receivables%ses A%toAcco%nting to determine the @reight Receivables Reven%e and Tax acco%nts#

Receivables %ses the acco%nt in+ormation +or on"acco%nt credits thatyo% speci+ied in yo%rA%toAcco%nting str%ct%re# Receivables let yo% %pdate acco%nting in+ormation +or yo%r creditmemo a+ter it has posted to yo%r general ledger#Receivables 3eeps the original acco%nting in+ormation as an a%dit trail -hile it creates an

o++setting entry and the ne- entry#

CoitentsDepositsWhen yo% enter a deposit Receivables creates the +ollo-ing *o%rnal entry:

DR Receivables (Deposit)

CR Unearned Revenue

These acco%nts come +rom the deposit8s transaction type# When yo% enter an invoice against thisdeposit Receivables creates the +ollo-ing *o%rnal entries:

DR Receivables (Invoice)

CR Revenue



DR Unearned Revenue

CR Receivables (Invoice)

When yo% apply an invoice to a deposit Receivables creates a receivable ad*%stment against theinvoice# Receivables %ses the acco%nt in+ormation yo% speci+ied in yo%r A%toAcco%ntingstr%ct%re# When cash is received against this deposit Receivables creates the+ollo-ing *o%rnal entry:

DR Cash

CR Receivables (Deposit)


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.uaranteesWhen yo% enter a g%arantee Receivables creates the +ollo-ing *o%rnal entry:

DR Unbilled Receivables

CR Unearned Revenue

These acco%nts come +rom the g%arantee8s transaction type#When yo% enter an invoice againstthis g%arantee Receivables creates the +ollo-ing *o%rnal entry:


CR Revenue



DR Unearned Revenue

CR Unbilled Receivables

When yo% apply an invoice to a g%arantee Receivables creates a receivable ad*%stment againstthe g%arantee# These acco%nts come +rom yo%r g%arantee8s transaction type#

When cash is received against this g%arantee Receivables creates the +ollo-ing *o%rnal entry:DR Cash


ReceiptsWhen yo% enter a receipt and +%lly apply this receipt to an invoice Receivables creates the+ollo-ing *o%rnal entry:

DR Cash

CR Receivables

When yo% enter an %napplied receipt Receivables creates the +ollo-ing *o%rnal entry:

DR Cash

CR Unapplied

When yo% enter an %nidenti+ied receipt Receivables creates the +ollo-ing *o%rnal entry:

DR Cash

CR Unidentified

When yo% enter an on"acco%nt receipt Receivables creates the +ollo-ing *o%rnal entry:

DR Cash

CR OnAccount

When yo%r receipt incl%des a disco%nt Receivables creates the +ollo-ing *o%rnal entry:DR Receivables

CR Revenue

DR Cash

CR Receivables

DR Earned/Unearned Discount

CR Receivables


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Receivables %ses the de+a%lt Cash =napplied =nidenti+ied (n"Acco%nt =nearned and Earnedacco%nts that yo% speci+ied in the Remittance 7an3s -indo- +or this receipt class# When yo%enter a receipt and combine it -ith an on"acco%nt credit Receivables creates the +ollo-ing

*o%rnal entry:

DR Cash


DR OnAccount


When yo% enter a receipt and combine it -ith a negative ad*%stment Receivables creates the+ollo-ing *o%rnal entries:

DR Cash


DR WriteOff


o% set %p a Write " (++ acco%nt -hen de+ining yo%r Receivables Activity#When yo% enter a receipt and combine it -ith a positive ad*%stment Receivables creates the+ollo-ing *o%rnal entries:

DR Cash



CR WriteOff

When yo% enter a receipt and combine it -ith a Chargebac3 Receivables creates the +ollo-ing*o%rnal entries:

DR Cash


DR Receivables (Chargeback)


DR Chargeback

CR Receivables (Chargeback)

o% set %p a Chargebac3 acco%nt -hen de+ining yo%r Receivables Activity#

RemittancesWhen yo% create a receipt that re%ires remittance to yo%r ban3 Receivables debits theCon+irmation acco%nt instead o+ Cash# An example o+ a receipt re%iring remittance -o%ld be achec3 be+ore it -as cashed# Receivables creates the +ollo-ing *o%rnal entry -hen yo% enter s%ch

a receipt:

DR Confirmation

CR Receivables

o% can then remit the receipt to yo%r remittance ban3 %sing one o+ the t-o remittance methods:


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DR Remittance

CR Confirmation

When yo% clear the receipt Receivables creates the +ollo-ing *o%rnal entry:

DR Cash

DR Bank Charges

CR Remittance

I+ yo% remit yo%r receipt %sing the +actoring remittance method Receivables creates the +ollo-ing*o%rnal entry:

DR Factor

CR Confirmation

When yo% clear the receipt Receivables creates a short term liability +or receipts -hich mat%re ata +%t%re date# The +actoring process let yo% receive cash be+ore the mat%rity date and ass%mesthat yo% are liable +or the receipt amo%nt %ntil the c%stomer pays the balance on mat%rity

date# When yo% receive payment Receivables creates the +ollo-ing *o%rnal entry:

DR cash

DR Bank Charges

CR Short Term Debt

(n the mat%rity date Receivables reverses the short term liability and creates the +ollo-ing*o%rnal entry:

DR Short Term Debt

CR Factor

Ad'ustentsWhen yo% enter a negative ad*%stment against an invoice Receivables creates the +ollo-ing

*o%rnal entry:

DR WriteOff


When yo% enter a positive ad*%stment against an invoice Receivables creates the +ollo-ing*o%rnal entry:


CR WriteOff

Debit !eos

When yo% enter a debit memo in the Transaction -indo- Receivables creates the +ollo-ing*o%rnal entries:

DR Receivables

CR Revenue (If you enter line amounts)



DR Receivables

CR Finance Charges


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OnAccount CreditsWhen yo% enter an on"acco%nt credit in the Credit ,emo or the Transaction -indo- Receivablescreates the +ollo-ing *o%rnal entry:

DR Revenue (If you credit line amounts)

DR Tax (If you credit tax)

DR Freight (If you credit freight)

CR Receivables

Receivables %se the @reight Receivable Reven%e and Tax acco%nts that yo% speci+ied in yo%rA%toAcco%nting str%ct%re#

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