Internal Document

PROCURE TO PAY CYCLE ACCOUTING ENTRIES

SCOPE: ORACLE PURCHASING

PUBLISHED FOR: All Internal Employees Only

AUTHOR: AMIR JAVED

Oracle Applications Consultant

Document History:
Version Description Date
01 First time published as an internal document 14-July-2008
02 Second time published as an internal document 01-Jan-2009

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 1/10

Creation date: July 14, 2008
 Internal Document

OBJECTIVES

After completing this document, you should be able to understand the

accounting entries generated by the system during procure to pay cycle.

 When Inventory / Material is in Transit

 When Inventory is delivered to the Inventory Sub Stores
 When Invoice is booked / recorded
 When Payment is made
 When Reconciliation is made

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 2/10

Creation date: July 14, 2008
 Internal Document

ENTRY 01:

When Goods / Material Are In-Transit Or When We Receive Inventory, The

Following Accounting Entry Will Be Generated.

Description Dr. Cr.

Receiving Inventory Account xxxxx
Inventory AP Accrual Account xxxxx

There are two inventory Organizations:

 Receiving Organization
 Inventory Organization

When the inventory is received at Receiving Organization then the above entry will be
generated. Receiving of Inventory can be made through Purchasing Responsibility as well as
Inventory Responsibility.

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 3/10

Creation date: July 14, 2008
 Internal Document

Receiving Inventory Account

This account is defined in the Receiving Options of purchasing Responsibility.

Navigation: PURCHASING > SETUPS > ORGANIZATIONS > RECEIVING OPTIONS

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 4/10

Creation date: July 14, 2008
 Internal Document

Inventory AP Accrual Account

This account is defined in the Inventory Organization Parameters window; click on Others (B)
and then select Inventory Information and then chose the Other Accounting tab.

Navigation: PURCHASING > SETUPS > ORGANIZATIONS > ORGANIZATIONS

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 5/10

Creation date: July 14, 2008
 Internal Document

ENTRY 02:

When Inventory Is Delivered To Sub Inventory Stores Then The Following

Accounting Entry Will Be Generated.

Description Dr. Cr.

Material Account xxxxx
Receiving Inventory Account xxxxx

When the Inventory is delivered in the Stores this account will be hit in the Inventory
Organization click on the others button and then select the Inventory Information and then
choose the Costing Information tab and this account will be defined in the Valuation Account
region named as Material.

Receiving Inventory Account

This account is defined in the Receiving Options of purchasing Responsibility.

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 6/10

Creation date: July 14, 2008
 Internal Document

Material / Inventory Account

This account is defined in the Inventory Organization Parameters window; click on Others (B)
and then select Inventory Information and then chose the Costing Information tab.

Navigation: PURCHASING > SETUPS > ORGANIZATIONS > ORGANIZATIONS

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 7/10

Creation date: July 14, 2008
 Internal Document

ENTRY 03:

When We Book Liability At Invoice Level, The Following Accounting Entry Will Be
Generated.

Description Dr. Cr.

Inventory AP Accrual Account xxxxx
Liability Account xxxxx

At the Invoice Level when we book the liability the supplier liability account will be credited.

Inventory AP Accrual Account

This account is defined in the Inventory Organization Parameters window; click on Others (B)
and then select Inventory Information and then chose the Other Accounting tab.

Supplier Liability Account

To define the Liability account in the Payables Responsibility click on Setups, choose Options,
click on Financials, and then select the Accounting tab.

Navigation: PAYABLES > SETUPS > OPTIONS > FINANCIALS

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 8/10

Creation date: July 14, 2008
 Internal Document

ENTRY 04:

When Payment Is Made To Supplier, The Following Accounting Entry Will Be

Generated.

Description Dr. Cr.

Liability Account xxxxx
Cash Clearing Account xxxxx

Cash Clearing Account is defined in the Payables Responsibility while defining the banks.

Supplier Liability Account

To define the Liability account in the Payables Responsibility click on Setups, choose Options,
click on Financials, and then select the Accounting tab.

Cash Clearing Account

To define Cash Clearing Account click on Setups, choose Payments and then click on Banks.
After entering the required information in the main bank window click on the Bank Accounts
button. In the Bank Accounts region choose the Account Use Type Internal to show the GL
Accounts. Here we find the Cash Clearing Account.

Navigation: PAYABLES > SETUPS > PAYMENT > BANKS

ENTRY 05:

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 9/10

Creation date: July 14, 2008
 Internal Document

When Reconciliation Is Made In Cash Management, The Following Accounting

Entry Will Be Generated.

Description Dr. Cr.

Cash Clearing Account xxxxx
Bank / Cash Account xxxxx

Switch to the Cash Management Responsibility for Reconciliation purpose. When we made the
Reconciliation then the above Accounting entry will be generated.

Cash Clearing Account

To define Cash Clearing Account click on Setups, choose Payments and then click on Banks.
After entering the required information in the main bank window click on the Bank Accounts
button. In the Bank Accounts region choose the Account Use Type Internal to show the GL
Accounts. Here we find the Cash Clearing Account.

Bank / Cash Account

To define Cash Account click on Setups, choose Payments and then click on Banks. After
entering the required information in the main bank window click on the Bank Accounts button.
In the Bank Accounts region choose the Account Use Type Internal to show the GL Accounts.

IT Applications Ref. Code: PO-ACCOUNTING-ENTRIES-14 10/10

Creation date: July 14, 2008