SAP has developed functionality called Purchase Account Management to handle related legal requirements. In Belgium, Luxembourg, Spain, Portugal, France, Italy, and Greece, you must use specific statutory (legal) G/L accounts to report the acquisition costs of materials that are put on stock. These accounts are then used in statutory reporting. All companies registered in those countries must follow this requirement if they use what is called periodic inventory. In these systems, changes in the stock are only recorded in the profit and loss statement, which means that the stock value is not kept up to date on the balance sheet. At the end of a period (month, quarter, but normally a year), the company takes an inventory and makes a posting to correct the stock value on the balance sheet. The posting looks like a stock account against a purchase account.*************Basic concept of Purchase Account Management:

When you procure a material & purchase management is active the accounts are triggered in the Goods receipt accounting document.

If the PO is raised for material for say 200 INR then At the time of GR

the accounting postings happen Debit - Inventory Account - 200 Credit - GR/IR clearing account - 200 Debit - Purchase Account - 200 (EIN) Credit- Purchase offsetting account -200 (EKG) (this triggers for balancing the Document ).

These will trigger when you activate the Purchase account management in the Company code SPRO-. IMG-> Materials Management-> Valuation and Account Assignment-> Account Determination-> Account Determination Without Wizard-> Purchase Account Management-> Activate Purchase Account in Company Code

set purcahse account and offsetting account in EIN and EKG in OBYC and check accunting entries

SAP Purchase Accounting

Purchase Accounting:The Purchase Accounts Posting System allows you to manage a company's budget and expenses. It is a sensitive definition in the sense that once it's activated and journal entries have been created it cannot be updated. Purchase accounts posting system has to be activated. Purchase accounts help you get the details of all the purchases made in a period, typically required to some legal reporting in these countries companies need to present a purchase ledger for statutory reporting. Purchase accounting is a legal requirement for Roman countries like Belgium, France, Portugal, spain. These countries need to present a purchase ledger for statutory reporting.

In companies which manage a continuous stock system, it is now possible to use the Purchase Accounts Posting System. This option includes the recording of expense accounts in journal

entries created automatically due to purchasing documents which affect the inventory valuation: A/P Invoice (not based on a Goods Receipt PO), A/P Credit Memo, Goods Receipt PO and Good Returns.Purchase accounting in SAP will not give desired results if sub contracting activities are involved. For settlements of subcontracting transactions, the system does not post to the purchase account nor to the purchase offsetting account.Purchase account: When an A/P invoice or a goods receipt PO is created; the purchase account is recorded in the journal entry along with the same amount that is recorded for the stock account.Purchase return account: When a goods return or an A/P credit memo is created, this account is recorded in the journal entry along with the same amount that is recorded for the stock account.Purchase offset account: This account is an offsetting account for purchase account or purchase return account.

Purchase accounts can be updated in the following ways:At the receipt value: In this case, the exact amount posted at goods receipt to the GR/IR clearing account is posted to the purchase account. In Invoice Verification, the system only posts to the purchase account if there is a price difference. The system posts this difference to the stock account or to a price difference account, the sum of these two postings is posted to the purchase account.At the stock value: In this case, the exact amount posted at goods receipt or at invoice receipt is posted to the purchase account. In Invoice Verification, the system only posts to the stock account – and therefore to the purchase account and to the purchase offsetting account – if the invoice item meets the following conditions:A price variance has occurredThe material is subject to moving average price controlStock exists for the materialSimilar to the purchase account, a freight account exists for documenting delivery costs that have been posted for externally procured materials. If purchase account management is active, the system automatically carries out the additional postings.

Purchase order: 100 pieces material A at $10.00 /piece planned freight costs $200Goods receipt: 100 piecesInvoice: 100 pieces material A at $ 11 /piece plus freight costs ($ 1100 + $ 250 = $ 1350)Goods receipt Invoice receiptStock account 1200 + 150 +GR/IR clearing account 1000 - 1000 +Freight clearing 200 - 200 +Vendor account 1350 -Purchase account 1000 + 100 +Freight account (purchasing) 200 + 50 +Purchase offsetting account 1200 - 150 –

What are the transactions which would have the Purchase Accounting Entries?Transaction Code OBYCTransaction EIN à Purchasing accountPurchase Consumables

PurchasePurchase Returns ConsumablesPurchase ReturnsTransaction EKGà Purchase offsetting accountPurchase Consumables offsetting accountPurchase Polished offsetting accountPurchase Rough offsetting accountTransaction FREà Purchase Freight accountPurchase Consumables Freight ExpensesPurchase Freight ExpensesPurchase Returns Consumables Freight ExpensesPurchase Returns Freight Expenses