Skip to main content

Accounting information in Procure to Pay Cycle

Flow of accounting information in Procure to Pay Cycle

If you are implementing the Procure to Pay Cycle in Oracle Apps, you might have come across the following accounting activities:
1. Run the Create Accounting program after creating an invoice to post entries to the General Ledger
2. Run the Create Accounting program after making payments to post entries to the General Ledger.
As a newbie consultant, I always used to wonder why someone would have run the accounting entries twice. If you are one of the professional consultants or belong to the Chartered Accounting fraternity, you may already know the answer.
Else, read on..
1. The reason for creating accounting entries after creating an invoice is to ensure that the General Ledger is updated with the correct accounting information for the following 2 types of accounts:
a) Accounts Payable A/C
b) Merchandise A/C (incase of goods purchased) or Expense A/C (in case of expense)
When a supplier invoice is created, the business is liable to pay for the invoice and hence, the Accounts Payables A/C is credited. Since the invoice is raised for purchasing goods or for an expense, the corresponding Merchandise A/C or Expense A/C is debited.
AccountDrCr
Merchandise A/C or Expense A/C
100

Accounts Payable A/C
100
2.  The reason for creating accounting entries after making a payment is to ensure that the General Ledger is updated with the correct accounting information for the following 2 types of accounts:
a) Cash A/C or Bank A/C
b)Accounts Payable A/C 

When the invoice is paid, the payment is made in Cash. Hence the Cash A/C or Bank A/C is credited. Since the payment reduces the amount that the company owes to the Supplier, the Accounts Payable A/C is debited to the same extent.
AccountDrCr
Accounts Payable A/C100
Cash A/C100
Labels:

Comments

Post a Comment

Popular posts from this blog

Oracle Subledger Accounting (SLA) Tables, Views

Oracle Subledger Accounting (SLA) Tables, Views Oracle Subledger Accounting Tables: TABLE NAME DESCRIPTION XLA_AAD_GROUPS The XLA_AAD_GROUPS table stores the merge dependencies analyzed during the merge analysis.  All application accounting definitions with the same GROUP_NUM must be merged together. XLA_AAD_HDR_ACCT_ATTRS The XLA_AAD_HDR_ACCT_ATTRS stores standard, system and custom sources assigned to an accounting attribute at the AAD level. XLA_AAD_HEADER_AC_ASSGNS Store the analytical criteria for the application accounting definitions. XLA_AAD_LINE_DEFN_ASSGNS This table stores the journal lines definitions for the application accounting definitions. XLA_AAD_LOADER_DEFNS_T The XLA_AAD_LOADER_DEFNS_T table is the interface table that facilitates the data transfer from data files and the database. XLA_AAD_LOADER_LOGS The XLA_AAD_LOADER_LOGS table stores the errors and logs generated by the application accounting definitions loader. XLA_AAD_SOURCES XLA_AAD_SOURCES table stores a...
1 comment
Read more

O2C Cycle with Accounting Entries

  ORDER    TO  CASH  PARTICULARS  DR  CR SPL NOTES ACCOUNT IS PULLED FROM Sales order entry No Accounting Sales Order Pick From Sub Inventory A/c 100 At Standard Cost Sub-inventory Material A/c Setup To Sub Inventory A/c 100 At Standard Cost(Staging) Sub-inventory Material A/c Setup Sales Order Issue COGS 100 It can be fetched from five places Master Item/Org/Order Type/Line Type/Shipping Params To Sub Inventory A/c 100 At Standard Cost Sub-inventory Material A/c Setup Transaction level Receivable A/c 120 Auto Accounting Tax A/c 10 Auto Accounting Freight A/c 10 Auto Accounting Revenue A/c 100 Auto Accounting Receipts Receipts with no remittance method Cash 100 Before application of the receipt Receipt class Unapplied A/c 100 Receipt class Unapplied A/c 100 After application of the receipt to the transaction Receipt class Receivables A/c 100 Receipt class Cash A/c 100 Receipt class Unidentified A/c 100 In case of receipt without customer...
Post a Comment
Read more

R12 Oracle E-Business Tax Configuration Guide

Applies to: Oracle E-Business Tax - Version: 12.0 to 12.2 Information in this document applies to any platform. Abstract R12 Oracle E-Business Tax Configuration Guide Document History R12 Oracle E-Business Tax Configuration 1. Tax Basic Tax Configuration Tax Definition: comprises the tax data that you set up for each tax regime and tax that your company or institution is subject to. The Tax Authority designates the regulations and rates that apply to the tax regime. Required Task List a) External Dependencies Create First Party: Legal Entity and Establishments Create Reporting and Collecting Tax Authorities b) Tax Configuration Create Tax Authorities Party Tax Profiles Create Tax Regimes Create First Party Legal Entity Party Tax Profile Create Tax Create Tax Status Create Tax Jurisdictions Tax Rate Responsibility: Tax Manager Path: Tax Managers -> Tax Managers -> Home Complete the following setup tasks: -Legal Entities and Establishments -Reporting and Collecting Tax Authorities ...
1 comment
Read more