basic concepts po[1]

7/31/2019 Basic Concepts Po[1]

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PROCURE TO PAY CYCLE TRANSACTIONS

BASIC CONCEPTS3333

Procurement means purchase of Trading Goods, Mfg Goods, Service Item, Expense

and Asset. Asset procured transferred to FA when Destination type kept as Expense,

Item definition is Asset and Asset Clearing account used as Charge Account in PO.

Definition of Items used in Purchasing.

There are 3 kinds of Items used in Purchasing.

Expense Items - Referred to as Item A (Service Item/Expense)

Inventory Expense Items - Referred to as Item B (Trading Goods/Mfg Goods)

Inventory Asset Items - Referred to Item C (Asset)

1) Expense Items - Referred to as Item A.

These items normally have the following attributes...

INVENTORY_ASSET_FLAG = NPURCHASING_ITEM_FLAG = Y

INVENTORY_ITEM_FLAG = N

2) Inventory Expense Items - Referred to as Item BThese items normally have the following attributes...

INVENTORY_ASSET_FLAG = NPURCHASING_ITEM_FLAG = YINVENTORY_ITEM_FLAG = Y

c) Inventory Asset Items - Referred to Item CThese items have the following attributes...

INVENTORY_ASSET_FLAG = YPURCHASING_ITEM_FLAG = Y

INVENTORY_ITEM_FLAG = YCOSTING_ENABLED_FLAG = Y


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2 WAY MATCHING

Example-1 Incurred an advertisement expenditure of Rs.20000 requirement is to have

PO for expenses also.

Steps1. Prepare Purchase Order for Service item/Expense keeping type as Service.

(a) The quantity will be 1 and rate will be Rs.20000. Mention the need by date

(b) Specify the Destination Type as Expense.

In Distribution specify 2 way matching, uncheck the flag of Accrue at Receipt.

(d) Specify the Charge Account as Advertisement Expense Account.

2. Approve the Purchase Order and note the number.

3. Go to Invoice Entry Invoice in AP

(a) Choose Invoice type as PO Default

(b) Give the PO number approved above. Fill the invoice number, invoice date etc.

(d) Clik on Match button (choose Purchase Order from the list) and then find

(e) When window appears, check the box and clik on Match to complete the

transaction.

4. Validate the invoice and create accounting.

5. Check Accouting as below:-

Charge Account Dr. (Defined in PO in distribution)

Liability Account Cr. (From setup of Supplier)

3 WAY MATCHING

Example-2 Purchased 25 quantities of traded item @Rs.1000 each.

Steps

1. Prepare Purchase Order for Item keeping type as Goods.

(a) The quantity will be 25 and rate will be Rs.1000. Mention the need by date.

(b) Specify the Destination Type as Inventory and also choose the Receiving

Inventory org say M1 or V1.

In Distribution specify 3 way matching, check the flag of Accrue at Receipt.

(d) No need to specify any account these will come up automatically from setup.(e) Keep the Receipt Routing as Standard.

2. Approve the Purchase Order and note the number.

3. Create Receipt of 10 quantities (Receiving- Receipt)

(a) Search on basis of PO number

(b) Specify Shipment no. and date of receipt

Choose Inventory Org in which u receive the goods

(d) Check box to receive and specify the location.

(e) Save and note the Receipt Number created.


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Accounting Entry

Receiving Account Dr. Rs.10000

Inventory AP Accrual Account Cr. Rs.10000

4. Perform Delivery of Goods Received to Production location

(Receiving- Receiving Transaction)

(a) Search on basis of Receipt Number

(b) Specify the Sub inventory where u actually deliver the goods received deliver

only 10 quantities.

Accounting Entry

Material Account Dr. Rs.10000

Receiving Account Cr. Rs.10000

Note:- Stock of item purchased update the inventory only when u do Receiving

Transaction otherwise stock not get increased. The reason is u have specified

Receipt Routing as Standard.

5. Run Pay on Receipt Auto invoice program to generate Invoice through

automated process for the goods received i.e. only for 10 quantities.

Setup of Supplier Site should be as Receipt for Self billing as below (otherwise it

will not generate invoice automatically):


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6. Go to Invoice Entry Invoice in AP

Query Invoice Created in Invoice No. as ERS%Receipt no. % u will be able to

see the invoice created for 10 quantities.

7. Validate the invoice and create accounting.

8. Check Accouting as below:-

Accounting Entry

Inventory AP Accrual Account Dr. Rs.10000

(Coming from Setup of Inventory org)

Supplier Liability Account Cr. Rs.10000

(From setup of Supplier)

9. Make Payment against Invoice

Accounting Entry

Supplier Liability Account Dr. Rs.10000

Bank Account Cr. Rs.10000

10. Run Payables Accouting Process to account and transfer the data.

basic concepts po[1]

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