ACCOUNTING ENTRIES

A). Purchase Order receipt to the Receiving Inspection Location. When the goods are received into
Inspection Location.
When you receive material from a vendor into receiving inspection, Apps uses the quantity received
and the PO price to update the following accounts.
Accounting Entry

Receiving inspection account @ PO price

Debit

xx

Inventory A/P Accrual account @ PO

price
(for receiving Inventory Items)
Receiving inspection account @ PO price
Expense A/P Accrual account @ PO
price
(for receiving expense items)

Credit

Source

At Define Organization/
Receiving Options
At Organization
Parameters

xx

xx

At Define Organizations
At Define Purchasing
Options

xx

B). Delivery from Receiving Inspection to Inventory under Standard Costing. Recorded at the time,
when the goods are transferred from Receiving Inspection to Inventory
With Enter Receiving form, you can move material from receiving inspection to inventory.
Case#1: If the standard cost is greater than purchase order price then the PPV is favourable and
Apps records this expense as a credit (negative expense).
Accounting Entry
Source
Sub-inventory accounts @ Std. Cost
Receiving Inspection account @ PO price

Debit

Credit

xx

At Define Sub-inventory
At Define Organization

xx

e Variance Account (Negative Expense)

xx At Define Organization
Parameters
Case#2: If the standard cost is less than the PO price then the variance is unfavourable and Apps
record this as a debit (positive expense)

Accounting Entry
Sub-inventory accounts @ Std. Cost
Variance Account (Positive Expense)

Debit
xx
xx

Credit

Source
At Define Sub-inventory
At Define Organization

Parameters
Receiving Inspection account @ PO price

xx

At Define Organization/ Define

Receiving Options

(C). Purchase Order receipt to the Receiving Inspection at Average Cost. When the goods are
received into Inspection Location at the Enter Receipts form.
If you use average costing, the actual cost is picked from the PO and hence you do not have any
PPV.
Accounting Entry
Source
Receiving inspection account @ PO price

Debit

Credit

xx

Inventory A/P Accrual account @ PO price

xx

At Define Organization/ Define

Receiving Options
At Organization Parameters

(for receiving Inventory Items)

(D). Delivery from Receiving Inspection to Inventory under Average Costing. Recorded at the time,
when the goods are transferred from Receiving Inspection to Inventory
After inspection, you deliver the inventory items to the inventory at the Enter Receiving Transactions
form.
Accounting Entry
Source
Sub-inventory accounts @ PO price
Receiving Inspection account @ PO price

Debit
xx
xx

Credit
At Define Sub-inventory
At Define Organisation/ Define
Receiving Options

(for delivering to the inventory at

actual POcost)

To record the actual Landed cost (Average Cost)

The goods are received into Landed Organisation first and then are transferred to actual
organisations with the addition of landed cost recorded as the transfer charges. This step is
performed in Inventory as Inter-organisations transfers and the accounting impact is:

Accounting Entry
Debit
Credit
Source
Inter-Org Receivable account
xx
At Define Inter-Org transfers
@ Purchase order cost + actual Landed cost
Networks
Sub-inventory Material account
xx
At Define Sub-inventories /
@ Purchase order Cost
Define Organisation
Inter-Org transfer charges account
xx
At Define Inter-Org transfers
@ Amount of actual Landed cost
Networks
E). Delivery from Receiving Inspection to Expense. Recorder at the time, when the goods are
transferred from Receiving Inspection to Expense Destination
With Enter Receiving form, you can also move material from receiving inspection to expense
destinations.
Oracle Purchasing uses the transaction quantity and the PO price of the delivered item to update the
receiving inspection and expense charge account.
Accounting Entry

Source
PO distribution charge accounts @ PO price
pection account @ PO price

Debit
xx

Credit

At individual item level

xx At Define Receiving Options

(F). Purchase Order receipt to the Inventory without inspection at Standard Cost. When the goods
are received into Inspection Location at the Enter Receipts form and delivered to inventory directly in
one step.
In this case, Apps performs both receipt and delivery in one step. Purchasing uses quantity ordered
and PO price to update the following accounts. At the same time, Oracle Inventory uses the quantity
and the standard cost of the received item to update the receiving inspection and the sub-inventory
balances (The accounting impact is the same except as the case of inspection & deliver, except this
one is arrived with one operation/step).
Accounting Entry
Source
Receiving inspection account @ PO price

Debit

Credit

xx

Inventory A/P Accrual account @ PO price

xx

At Define Organisation/
Receiving Options
At Organisation Parameters

(for receiving Inventory Items)

Case # 1
Sub-inventory accounts @ Std. Cost

xx

At Define Sub-inventory

Receiving Inspection account @ PO price

xx

e Variance Account (Negative Expense)

At Define Organisation

xx At Define Organisation
Parameters

(Delivered into inventory when the Std.cost

is more than the PO price)
Case # 2
Sub-inventory accounts @ Std. Cost

Variance Account (Positive Expense)

xx

At Define Sub-inventory

xx

At Define Organisation
Parameters
xx
At Define Organisation/ Define
Receiving Options

Receiving Inspection account @ PO price

(Delivered into inventory when the Std.cost
is less than the PO price)

(G). Purchase Order receipt to the Inventory without inspection at Average Cost. When the goods
are received into Inspection Location at the Enter Receipts form and delivered directly in one step.
If you use average costing, the actual cost is picked from the PO and hence you do not have any
PPV (The accounting impact is the same except as the case of inspection & deliver, except this one
is arrived with one operation/step).
Accounting Entry
Source
Receiving inspection account @ PO price

Debit
xx

Inventory A/P Accrual account @ PO price

xx

Credit
At Define Organisation/
Receiving Options
At Organisation Parameters

(for receiving Inventory Items)

Sub-inventory accounts @ PO price
Receiving Inspection account @ PO price

xx

At Define Sub-inventory
xx

At Define Organisation/ Define

Receiving Options

(for delivering to the inventory at

actual POcost)
(H). Purchase Order receipt to the Expense destinations without inspection. When the goods are
received into Inspection Location at the Enter Receipts form and delivered to inventory directly in one
step.

Accounting Entry
Source
Receiving inspection account @ PO price

Debit
xx

Expense account @ PO price

xx

Credit
At Define Organisation/ Define
Receiving Options
At Define Items

(for receiving expense items)

PO distribution charge account @ PO price

xx

Receiving inspection account @ PO price

From Purchase Order

xx

At Define Organisation/ Define

Receiving Options

(for delivering to the expense destinations

directly)

Return to Vendor from Receiving Inspection at

Standard Cost.
For a return from inspection, Purchasing decreases the receiving inspection balance, and reverses
the accounting entry created for the original receipt.
Accounting Entry
Source
Inventory A/P Accrual account @ PO price

Debit
xx

Receiving inspection account @ PO price

Credit
At Organisation Parameters

xx

At Define Organisation/
Receiving Options

(for returning Inventory Items)

Expense A/P Accrual account @ PO price
Receiving inspection account @ PO price

xx

At Define Purchasing Options

Xx

At Define Organizations

(for returning expense items)

Return to Vendor from Inventory (to Receiving

Inspection) at Standard Cost.

If you use receiving inspection and delivered material into inventory and if you want to return material
from the same inventory, you must first return the material to Receiving Inspection from inventory
before you can return to your vendor. For a return from inspection, Purchasing decreases the
receiving inspection balance, and reverses the accounting entry created for the original receipt. This
is two step process.
Case # 1: Incase of Std.cost is less than PO price of the returned item when it was received into the
inventory.
Accounting Entry
Source
Step#1: When you return goods from inventory
to receiving location
Receiving Inspection account @ PO price

Debit

Sub inventory accounts @ Std. Price

xx

At Define Organisation/ Define

Receiving parameters
At Define Sub-inventory

Purchase Price Variance

xx

At Define Org. Parameters

(for reversing the entry when the items is

returned from SI to Receiving Inspection)
Step#2: When you return goods from receiving
inspection location to the supplier
Inventory A/P Accrual account @ PO price
Receiving inspection account @ PO price

xx

Credit

xx

At Organisation Parameters
xx

At Define Organisation/
Receiving Options

(for returning Inventory Items from

Receiving inspection to the vendor)

Case # 2: Incase of Std.cost is more than PO price of the returned item when it was received into the
inventory.
Accounting Entry
Debit Credit
Source
Step#1: When you return goods from inventory
to receiving location
Receiving Inspection account @ PO price
xx
At Define Organisation/ Define
Receiving parameters
Purchase Price Variance
xx
At Define Org. Parameters
Sub inventory accounts @ Std. Price
(for reversing the entry when the items is
returned from SI to Receiving Inspection)
Case #2: When you return goods from the
receiving inspection location to the supplier

Xx

At Define Sub-inventory

Inventory A/P Accrual account @ PO price

Xx

Receiving inspection account @ PO price

At Organisation Parameters
Xx

At Define Organisation/
Receiving Options

(for returning Inventory Items from

Receiving inspection to the vendor)

(I). Return to Vendor from Inventory when the items

are received through Direct Receipt without
inspection at Standard Cost.
The accounting impact is the same as in the previous inspection case, except all the accounting is
done in one step.
Case # 1: Incase of Std.cost is less than PO price of the returned item when it was received into the
inventory.
Accounting Entry
Debit Credit
Source
Receiving Inspection account @ PO price
xx
At Define Organisation/ Define
Receiving parameters
Sub inventory accounts @ Std. Price
xx
At Define Sub-inventory
Purchase Price Variance
(for reversing the entry that is made when
the items is received & delivered directly)
Inventory A/P Accrual account @ PO price
Receiving inspection account @ PO price

xx

xx

At Define Org. Parameters

At Organisation Parameters
Xx

At Define Organisation/
Receiving Options

(for returning Inventory Items from

Receiving inspection to the vendor)

Case # 2: Incase of Standard cost is more than PO price of the returned item when it was received
into the inventory.
Accounting Entry
Debit Credit
Source
Receiving Inspection account @ PO price
xx
At Define Organization/ Define
Receiving parameters
Purchase Price Variance
xx
At Define Org. Parameters

Sub inventory accounts @ Std. Price

Xx

(for reversing the entry that is made when

the items are received & delivered directly)
Inventory A/P Accrual account @ PO price

Xx

At Define Sub-inventory

At Organization Parameters

Receiving inspection account @ PO price

Xx

At Define Organization/
Receiving Options

(for returning Inventory Items from

Receiving inspection to the vendor)
Same Procedure has to be followed for returning the expense items also.

ACCOUNTS PAYABLE

Invoice Booking at Standard Costing at Algorithm

For Actual Supplier Invoice

When matched with the PO both Inventory AP Accrual account and Liability accounts come from the
related Purchase order. If it s an unmatched invoice, you have to give the Inventory AP Accrual
account and the liability account is defaulted from the supplier definition

When the Invoice Price is more than the Purchase order Price
Accounting Entry
Inventory AP Accrual account @ PO price

Invoice Price Variance account

@ Invoice quantity * (Invoice price - PO price)
AP liability account @ Invoice price * Invoice
qty

Debit
Xx

Credit

Source
Comes from Purchase Order /
and Entered in the
Distributions
At Define Org. Parameters

xx

At individual Define Suppliers

Xx

When the Invoice Price is less than the Purchase order Price
Accounting Entry
Inventory AP Accrual account @ PO price

Debit
xx

AP liability account @ Invoice price * Invoice

qty
Invoice Price Variance account
@ Invoice quantity * (Invoice price
- PO price)

Credit

Xx

Source
Comes from Purchase Order /
and Entered in the
Distributions
At individual Define Suppliers

Xx

At Define Org. Parameters

For Other Cost Invoices like Clearing Agent payments, Insurance, Freight, etc.
Different invoices are booked for each supplier invoice. 1.Supplier invoice 2.Clearing Agent invoice
3.Insurance invoice 4.Freight invoice. As these are booked as four different invoices this accounting
entry is impacted that many times and the payments are made separately for each invoice.

Accounting Entry
Source
Inventory AP Accrual account @ Actual costs

AP liability account @ Invoice price

Debit
xx

Xx

Credit
Comes from Purchase Order /
and Entered in the
Distributions
At individual Define Suppliers

Invoice Booking at Average Costing at DU

While making the inter-organization transfer (to record the landed cost) from Landed cost
organization to Pharma or Non Pharma organizations, the Landed cost Clearing Account is credited
with the landed costs as the Transfer Charges. The same account is debited at the time of invoice
booking as an expense account.

Accounting Entry
Source
Inventory AP Accrual account @ PO price

Landed Cost Clearing Account

@ the actual landed cost

Debit
xx

Credit
Comes from Purchase Order /
and Entered in the
Distributions

xx

AP liability account @ Invoice price * Invoice

qty

Xx

At individual Define Suppliers

Payment of the Invoices booked

As mentioned above payment is done separately for each invoice.
Accounting Entry
Source
AP liability account @ Amount paid

Debit
xx

Bank account @ Amount paid

xx

Credit
Comes from Purchase Order /
and Entered in the
Distributions
At individual Define Banks

Incase of Debit and Credit Memo

When you enter a credit note and match it with a purchase order the following entry is created.
Accounting Entry
Source
AP liability account @ Amount of credit note

Accrual account @ Amount of credit note

Debit
xx

xx

Credit
At individual Define Banks/
and comes from the related
invoice
Comes from Purchase Order /
and Entered in the
Distributions

When you pay the invoice, applying the credit/debit note, the following entry is created with the
difference in the amounts.
Accounting Entry
Source
AP liability account
@ (Invoice Amount Credit/Debit note amount)

Debit
xx

P Accrual account
Amount Credit/Debit note amount)

xx

Credit
At individual Define Banks/
and comes from the related
invoice
Comes from Purchase Order /
and Entered in the
Distributions

Prepayment Advance to Suppliers

The complete cycle of transaction relating to Prepayment to suppliers and their accounting impact is
detailed under.
Step-1: When you pay Prepayment to the supplier (one prepayment account is maintained for all
suppliers and on liability account is maintained for all suppliers in Algorithm). Payables keep track of
individual supplier balances and the individual application of prepayments to the invoices.

Accounting Entry
Source
Prepayment to Suppliers account
@ Amount of Prepayment paid
nt @ Amount of credit note

Debit
xx

Credit
At individual Define Suppliers

xx

At individual Define Banks

Step-2: When you receive invoice from the supplier and booked. Invoice Price Variance account @
Invoice quantity * (Invoice price - PO price) is debited or credited by Payables according the invoice
price variances.
Accounting Entry
Inventory AP Accrual account @ PO price

AP liability account @ Invoice price * Invoice

qty

Debit
xx

Credit

xx

Source
Comes from Purchase Order /
and Entered in the
Distributions
At individual Define Suppliers

Step-3: When you apply the existing prepayment to the invoice booked. The amount of the
application depends on the amount you want to apply from the prepayment to the invoice.

Accounting Entry
Source
AP liability account
@ (Prepayment amount applied)

Debit
xx

nt to Suppliers account
ment amount applied)

xx

Credit
At individual Define Banks/
and comes from the related
invoice
Comes from Define suppliers /
Entered in the related Invoices

Step-4: When the Invoice amount is less than the Prepayment amount, you can apply the remaining
amount to the future invoice (the accounting impact is same as above). In other way, If the Invoice
amount is more than the Prepayment amount, then the difference amount has to be paid to the
supplier with the following accounting impact.
Accounting Entry
Source
AP liability account
@ (Invoice amount Prepayment amount)
Bank account @ Amount paid

Debit
xx

xx

Credit
Comes from Purchase Order /
and Entered in the
Distributions
At individual Define Banks

Employee Advances
The complete cycle of transaction relating to Prepayment to suppliers and their accounting impact is
detailed under.
Step-1: When you pay Advance to the supplier (one Advance/prepayment account is maintained for
all employees and on liability account is maintained for all employees in Algorithm). Payables keep

track of individual employee balances and the individual application of advances/prepayments to the
invoices.
Accounting Entry

Source
Advances to Employee account
@ Amount of advance paid
nt @ Amount of advance

Debit
xx
xx

Credit
At individual Define Employees
as Suppliers
At individual Define Banks

Step-2: When you receive Expense report from the employee, an invoice is booked from it.
Accounting Entry
Expense account @ Expense cost

Debit
xx

AP liability account @ Expense cost

Credit

xx

Source
Comes from Define Expense
Reports
At individual Define Employees
defined as Suppliers

Step-3: When you apply the existing advance to the invoice booked. The amount of the application
depends on the amount you want to apply from the advance to the invoice.

Accounting Entry
Source
AP liability account
@ (Advance amount applied)
o Employees account
ce amount applied)

Debit
xx
xx

Credit
Comes from the invoice to
which the advance is applied
Comes from Define suppliers /
Entered in the related Invoices

Step-4: When the Expense report/Invoice amount is less than the Advance amount, the employee
has to return the money back to the company.
For that, create an adjustment invoice against the same employee for the difference amount he/she
has to pay, debiting the Advance to employee account. The accounting impact in Payables is
detailed under.

Accounting Entry

Source
Advances to Employees account
be paid by the employee)
AP liability account
@ (Amount to be paid by the employee)

Debit
xx
xx

Credit
Has to be given manually
Comes from Define suppliers /
Entered in the related Invoices

Then you apply the remaining amount of the advance to the new invoice created. In payables you
have the following accounting impact.
Accounting Entry

Source
AP liability account
@ (Remaining advance amount applied)
o Employees account
ning advance amount applied)

Debit
xx
xx

Credit
Comes from the invoice to
which the advance is applied
Comes from Define suppliers /
Entered in the related Invoices

The accounting impact in Receivables receive a miscellaneous receipt crediting the same Advances
to Employee account which was debited while booking the adjustment invoice. The accounting
impact is detailed under.
Accounting Entry

Source
Bank account
be paid by the employee)
Advances to Employees account
be paid by the employee)

Debit
xx

Credit
Comes from Payment methods

xx

At Define Receivables
Activities

In other way, If the Invoice amount is more than the Prepayment amount, then the difference amount
has to be paid to the employee with the following accounting impact.
(All the remaining entries are same as the above advance application except the Step-4)
Step-4
Accounting Entry

Source
AP liability account
@ (Amount to be paid to employee)
Bank account
be paid by the employee)

Debit
xx
xx

Credit
At individual Define Employees
defined as Suppliers
Comes from Payment methods