Accounting Entries in Various Modules

Accounting Entries in all modules – Inventory , Purchasing ,
Payables , Receivables ,Assets.
Assets Assets
Work-In-Process WIP
Inventory – Standard Costing Inventory standard Costing
Receivables Receivables
Payables Payables
Assets
Depreciation:
Dr. Depreciation Expense 200.00

Cr. Accumulated Depreciation 200.00
Example: The recoverable cost is $4,000 and the method is

straight–line 4 years.
Current and Prior Period Addition

You purchase and place the asset into service in Year 1, Quarter 1.
(Payables)
Dr. Asset Clearing 4,000.00
Cr. Accounts Payable Liability 4,000.00
(Fixed Assets)
Dr. Asset Cost 4,000.00
Cr. Asset Clearing 4,000.00
You place an asset in service in Year 1, Quarter 1, but you do not enter
it into Oracle Assets until Year 2, Quarter 2. Your payables system
creates the same journal entries to asset clearing and accounts payable
liability as for a current period addition.
(Oracle Assets – PRIOR PERIOD ADDITION)

Dr. Depreciation Expense(adjustment) 1250.00
Merge Mass Additions

When you merge two mass additions, Oracle Assets adds the asset cost of the mass addition that
you are merging to the asset account of the mass addition you are merging into. Oracle Assets
records the merge when you perform the transaction. Oracle Assets does not change the asset
clearing account journal entries it creates for each line, so each of the appropriate clearing
accounts clears separately.
Payables System

(mass addition #2
asset cost account)

(mass addition #1 accounts
payables clearing account)

(mass addition #2 accounts
payables clearing account)
Construction–In–Process (CIP) Addition
You add a CIP asset. (CIP assets do not depreciate)

Oracle Assets
Dr. CIP Cost 4,000.00
Cr. CIP Clearing 4,000.00
Deleted Mass Additions
Oracle Assets creates no journal entries for deleted mass additions and does not clear the asset
clearing accounts credited by accounts payable.
You clear the accounts by either reversing the invoice in your payables system, or creating
manual journal entries in your general ledger.
Capitalization
A capitalization transaction is similar to an addition transaction: you place the asset in service so
you can begin depreciating it. When you capitalize an asset in the period you added it, Oracle
Assets creates the following journal entries:
Payables System
Dr. CIP Clearing 4,000.00
Oracle Assets – CAPITALIZED IN PERIOD ADDED

Cr. CIP Clearing 4,000.00
Oracle Assets – CAPITALIZED AFTER PERIOD ADDED

Cr. CIP Cost 4,000.00
Asset Type Adjustments
If you change the asset type from capitalized to CIP, Oracle Assets creates journal entries to debit
the CIP cost account and credit the asset clearing account. Oracle Assets does not create
capitalization or reverse capitalization journal entries for CIP reverse transactions.
Oracle Assets – CHANGE TYPE FROM CAPITALIZED TO CIP (CURRENT PERIOD)

Dr. CIP Cost 4,000.00
Cost Adjustments to Assets Using a Life–Based Depreciation Method
Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000. The life
of your asset is 4 years, and you are using straight–line depreciation. In Year 1, Quarter 4, you
receive an additional invoice for the asset and change the recoverable cost to $4,800.
Payables System
Dr. Asset Clearing 800.00

Cr. Accounts Payable Liability 800.00
Oracle Assets
Dr. Asset Cost 800.00

Cr. Asset Clearing 800.00
Expensed
Oracle Assets – EXPENSED
(adjustment)
Amortized
Oracle Assets – AMORTIZED

Cost Adjustments to Assets Using a Flat–Rate Depreciation Method

Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000. You
are depreciating the asset cost at a 20% flat–rate. In Year 1, Quarter 4, you change the recoverable
cost to $4,800.
Payables System

Oracle Assets

Expensed

(adjustment)
Amortized

Cost Adjustments to Assets Using a Diminishing Value Depreciation Method

Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000. You
are using a 20% flat–rate that you apply to the beginning of year net book value. In Year 2,
Quarter 1, you change the recoverable cost to $4,800.
Payables System

Oracle Assets

Expensed

(adjustment)
Amortized

Cost Adjustments to Assets Depreciating Under a Units of Production

Method :
Example: You purchase an oil well for $10,000. You expect to extract 10,000 barrels of oil from this
well. Each quarter you extract 2,000 barrels of oil. In Year 1, Quarter 3, you realize that you
entered the wrong asset cost. You adjust the recoverable cost to $15,000.
Payables System
Dr. Asset Clearing 5,000.00

Oracle Assets

Expensed
Dr. Depreciation Expense 3,000.00

(adjustment)
Cr. Accumulated Depreciation 5,000.00
Amortized

Cost Adjustments to Capitalized and CIP Source Lines
When you transfer source lines you adjust the recoverable cost of an asset. Because CIP assets do
not depreciate, Oracle Assets does not need to reverse depreciation expense when you transfer
invoice lines between CIP assets. If you transfer source lines from CIP to capitalized
assets, Oracle Assets takes catchup depreciation as for any cost adjustment transaction. If you
transfer source lines from capitalized to CIP assets, Oracle Assets must back out some of the
depreciation from the capitalized asset.
Transfer Source Lines Between Assets (Prior Period)

Oracle Assets creates the following journal entries for an source line transfer between capitalized
assets added in a prior period.
Oracle Assets – TRANSFER LINE FROM ASSET #1 TO ASSET #2

(from asset #2 category)
Cr. Asset Cost 400.00
Oracle Assets – ADJUST DEPRECIATION ON ASSET #1

Dr. Accumulated Depreciation 70.00
Cr. Depreciation Expense 70.00
Oracle Assets – ADJUST DEPRECIATION ON ASSET #2

Dr. Depreciation Expense 70.00s
(adjustment)
Transfer Source Lines Between Assets (Current Period)
Oracle Assets creates the following journal entries for an source line transfer between assets
added in the current period:
Oracle Assets – TRANSFER LINE FROM ASSET #1 TO ASSET #2

Cr. Asset Clearing (from accounts 300.00
payable for asset #1)
Cost Adjustment by Adding a Mass Addition to an Existing Asset

If you add a mass addition to an asset, Oracle Assets creates a journal entry to the asset cost
account of the existing asset. Oracle Assets also credits the clearing account you assigned to the
invoice distribution line in accounts payable to net it to zero.
If you want the existing asset to assume the asset category and description of the mass addition,
Oracle Assets creates a journal entry for the new total asset cost to the asset cost account of the
mass addition’s category. It also creates journal entries for the clearing account you assigned to
the invoice line in accounts payable, and for the clearing or cost account of the original addition
category.
Oracle Assets creates the following journal entries for a capitalized $2,000 mass addition added to
a new, manually added $500 asset, where the asset uses the category of the mass addition:
Oracle Assets – ADD MASS ADDITION TO AN EXISTING ASSET

(from asset category of mass
addition)
(from original asset category)
(from accounts payable)
Depreciation Method Adjustments

Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000, the life
is 4 years, and you are using the 200 declining balance depreciation method. In Year 2, Quarter 1,
you change the depreciation method to straight–line.
Expensed

Cr. Depreciation Expense 1,000.00
(adjustment)
Amortized

Life Adjustments
Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000, the life is 4
years, and you are using straight–line depreciation. In Year 2, Quarter 2, you change the asset life
to 5 years.
Expensed

(adjustment)
Amortized

Rate Adjustments – Flat–Rate Depreciation Method
Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000 and
you are depreciating the asset cost at a 20% flat–rate. In Year 2, Quarter 3, you change the flat–
rate to 25%.
Expensed

(adjustment)
Amortized
Rate Adjustments – Diminishing Value Depreciation Method
Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000 and
you are using a 20% flat–rate that you apply to the beginning of year net book value. In Year 2,
Quarter 3, you change the flat–rate to 25%.
Expensed

(adjustment)
Amortized

Capacity Adjustments
Example: You purchase an oil well for $10,000. You expect to extract 10,000 barrels of oil from this
well. Each quarter you extract 2,000 barrels of oil. In Year 1, Quarter 4 you discover that you
entered the wrong capacity. You increase the production capacity to 50,000 barrels.
Expensed
Dr. Accumulated Depreciation 4,400.00
Cr. Depreciation Expense 4,800.00
(adjustment)

Amortized
Journal Entries for Transfers and Reclassifications

Example: You place an asset in service in Year 1, Quarter 1. The recoverable cost is $4,000, the life
is 4 years, and you are using straight–line depreciation.
Current Period Transfer Between Cost Centers:

Prior Period Transfer Between Cost Centers:
Current Period Transfer Between Balancing Segments
Prior Period Transfer Between Balancing Segments:
Unit Adjustment:
Reclassification:
Current Period Transfer Between Cost Centers
In Year 2, Quarter 2, you transfer the asset from cost center 100 to cost center 200 in the current
period.
Oracle Assets – TRANSFER ASSET / CHARGE DEPRECIATION
Cost Center 100

Cr. Asset Cost 4,000.00
Cost Center 200

Oracle Assets – TRANSFER ASSET / ADJUST AND CHARGE DEPRECIATION
Cost Center 100

(adjustment)
Cost Center 200
(adjustment)
Current Period Transfer Between Balancing Segments

In Year 3, Quarter 4, you transfer the asset from the ABC Manufacturing Company to the XYZ
Distribution Company.
Oracle Assets – TRANSFER ASSET
ABC Manufacturing
Dr. Intercompany Receivables 1,250.00
XYZ Distribution
Cr. Intercompany Payables 1,250.00
Oracle Assets – ADJUST AND CHARGE DEPRECIATION

ABC Manufacturing
Dr. Intercompany Receivables 1,500.00
(adjustment)
XYZ Distribution
(adjustment)
Cr. Intercompany Payables 1,500.00
Unit Adjustment
A unit adjustment is similar to a transfer, since you must update assignment information when
you change the number of units for an asset. For example, you place the same $4,000 asset in
service with two units assigned to cost center 100. In Year 2, Quarter 3, you realize the
asset actually has four units, two of which belong to cost center 200.
Oracle Assets – ADJUST UNITS

Cost Center 100
Cost Center 200
Note: If all units remain in the original cost center, Oracle Assets does not create any journal
entries.
Reclassification
Example: You reclassify an asset from office equipment to computers in Year 1, Quarter 3. The
asset cost is $4,000, the life is 4 years, and you are using straight–line depreciation.
When you reclassify an asset in a period after the period you entered it, Oracle Assets creates
journal entries to transfer the cost and accumulated depreciation to the asset and accumulated
depreciation accounts of the new asset category. This occurs when you create journal entries for
your general ledger.. Oracle Assets also changes the depreciation expense account to the default
depreciation expense Account for the new category, but does not adjust for prior period expense.
Oracle Assets – TRANSFER COST AND ACCUMULATED DEPRECIATION
Office Equipment
Computers
Journal Entries for Retirements and Reinstatements

When you retire an asset and create journal entries for that period, Oracle Assets creates journal
entries for your general ledger for each component of the gain/loss amount. Oracle Assets creates
journal entries for either the gain or the loss accounts for the following components: proceeds of
sale, cost of removal, net book value retired, and revaluation reserve retired. Oracle Assets also
creates journal entries to clear the proceeds of sale and cost of removal.
Oracle Assets creates journal entries for the retirement accounts you set up in the Book Controls
form. If you enter distinct gain and loss accounts for each component of the gain/loss amount,
Oracle Assets creates multiple journal entries for these accounts. You can enter different sets of
retirement accounts for retirements that result in a gain and retirements that result in a loss.
Depreciation for Retirements
The retirement convention, date retired, and depreciation method control how much depreciation
Oracle Assets takes when you retire an asset. Oracle Assets reverses the year–to–date
depreciation if the asset’s depreciation method does not depreciate it in the year of retirement. In
this case, when you perform a full retirement, Oracle Assets reverses the year–to–date
depreciation of the asset, and computes the gain or loss using the resulting net book value. For
partial retirements, Oracle Assets reverses the appropriate fraction of the year–to–date
depreciation and computes the gain or loss using the appropriate fraction of the resulting net
book value. If the depreciation method takes depreciation in the year of retirement,
Oracle Assets uses your retirement convention to determine whether the asset is eligible for
additional depreciation in that year or whether some of that year’s depreciation must be
reversed.
When you perform a partial retirement, Oracle Assets depreciates the portion of the asset you did
not retire based on the method you use. If your depreciation method multiplies a flat–rate by the
cost, Oracle Assets depreciates the asset’s cost remaining after a partial retirement. For assets that
use a diminishing value method, Oracle Assets depreciates the remaining fraction of the asset’s
net book value as of the beginning of the fiscal year.
Depreciation for Reinstatements
The retirement convention, date retired, and period in which you reinstate an asset control how
much depreciation Oracle Assets calculates when you reinstate an asset. When you reinstate a
retired asset, Oracle Assets usually calculates some additional depreciation expense in the period
in which you perform the reinstatement, unless you perform it in the same period that you
retired the asset. This additional depreciation is the depreciation that would have been taken if
you had not retired the asset. Sometimes, however, a reinstatement results in a reversal of
depreciation. This occurs if the retirement convention caused some additional depreciation when
you retired the asset, and then you reinstate the asset before the retirement prorate date. Then
Oracle Assets reverses the extra depreciation that it took at retirement, and waits until the
appropriate accounting periods to take it.
Current Period Retirements
years, and you are using straight–line depreciation. In Year 3, Quarter 3, you sell the asset for
$2,000. The cost to remove the asset is $500. The asset uses a retirement convention and
depreciation method which take depreciation in the period of retirement. You retire revaluation
reserve in this book.
Receivables System
Dr. Accounts Receivable 2,000.00

Cr. Proceeds of Sale Clearing 2,000.00
Payables System
Dr. Cost of Removal Clearing 500.00

Cr. Accounts Payable 500.00
Oracle Assets – MULTIPLE GAIN/LOSS ACCOUNTS

Dr. Proceeds of Sale Clearing 2,000.00
Dr. Cost of Removal Gain 500.00
Dr. Revaluation Reserve 600.00
Dr. Net Book Value Retired Gain 1,500.00
Cr. Proceeds of Sale Gain 2,000.00
Cr. Cost of Removal Clearing 500.00
Cr. Revaluation Reserve Retired Gain 600.00
If you enter the same account for each gain and loss account, Oracle
Assets creates a single journal entry for the net gain or loss.
Book Controls form:

Accounts Gain Loss
Proceeds of Sale 1000 1000
Cost of Removal 1000 1000
Net Book Value Retired 1000 1000
Revaluation Reserve Retired 1000 1000
Oracle Assets – SINGLE GAIN/LOSS ACCOUNT

Cr. Gain/Loss 600.00
Prior Period Retirement

years, and you are using straight–line depreciation. In Year 3, Quarter 3, you discover that the
asset was sold in Year 3, Quarter 1, for $2,000. The removal cost was $500. The asset
uses a retirement convention and depreciation method which allow you to take depreciation in
the period of retirement.
Receivables System
Dr. Accounts Receivable 2,000.00
Payables System

Cr. Accounts Payable 500.00
Oracle Assets

Dr. Cost of Removal Loss 500.00
Dr. Net Book Value Retired Loss 1,750.00
Cr. Proceeds of Sale Loss 2,000.00
Current Period Reinstatement

Example: You discover that you retired the wrong asset. Oracle Assets creates journal entries for
the reinstatement to debit asset cost, credit accumulated depreciation, and reverse the gain or loss
you recognized for the retirement. Oracle Assets reverses the journal entries for proceeds of sale,
cost of removal, net book value retired, and revaluation reserve retired. Oracle Assets also
reverses the journal entries you made to clear the proceeds of sale and cost of removal. Oracle
Assets also creates journal entries to recover the depreciation not charged to the asset and for the
current period depreciation expense.
Oracle Assets

Dr. Gain / Loss 600.00
Cr. Revaluation Reserve 600.00
Prior Period Reinstatement

years, and you are using straight–line depreciation. In Year 2, Quarter 1, you retire the asset. In
Year 2, Quarter 4, you realize that you retired the wrong asset so you reinstate it.
Oracle Assets

Dr. Proceeds of Sale Loss 2,000.00
(adjustment)
Cr. Net Book Value Retired Loss 2,750.00
Cr. Cost of Removal Loss 500.00
Assets Fully Reserved Upon Addition

If you add an asset with an accumulated depreciation equal to the recoverable cost, it is fully
reserved upon addition. When you retire it, Oracle Assets does not back out any depreciation,
even if you assigned the asset a depreciation method that backs out all depreciation in the
year of retirement. However, it creates all the other journal entries associated with retiring a
capitalized asset.
Non–Depreciated Capitalized/Construction–In–Process (CIP) Assets

A non–depreciated capitalized asset or a CIP asset has no accumulated depreciation. Therefore,
Oracle Assets does not create journal entries to catch up depreciation to the retirement prorate
date, and does not remove the accumulated depreciation. However, Oracle Assets creates
all other journal entries associated with retiring a capitalized asset.
Reinstatement Transactions
PENDING Asset Retirement
When you reinstate an asset retired in the current accounting period that the calculate gains and
losses program has not yet processed, the retirement transaction is deleted, and the asset is
immediately reinstated. No journal entries are created.
PROCESSED Asset Retirement

When you reinstate an asset retired in a previous accounting period or already processed in the
current period, the existing retirement transaction gets a new Status REINSTATE, and the asset is
reinstated when you process retirements. Oracle Assets creates journal entries to catch up any
missed depreciation expense.
Journal Entries for Revaluations

The following examples illustrate the effect on your assets and your accounts when you specify
different revaluation rules.
Revalue Accumulated Depreciation
Example 1: You place an asset in service in Year 1, Quarter 1. The asset cost is $10,000, the life is 5
years, and you are using straight–line depreciation.
In Year 2, Quarter 1 you revalue the asset using a revaluation rate of 5%. Then in Year 4, Quarter
1 you revalue the asset again using a revaluation rate of –10%.
Revaluation Rules:
Revalue Accumulated Depreciation = Yes

Amortize Revaluation Reserve = No
Retire Revaluation Reserve = No
Oracle Assets bases the new depreciation expense on the revalued remaining net book value.
In Year 5, Quarter 4, at the end of the asset’s life, you retire the asset with no proceeds of sale or
cost of removal.
REVALUATION 1
Year 2, Quarter 1, 5% revaluation
*Accumulated Depreciation =
Existing Accumulated Depreciation +
[Existing Accumulated Depreciation x (Revaluation Rate / 100)]
2,000 + [2,000 X (5/100)] = 2,100
**Revaluation Reserve =
Existing Revaluation Reserve + Change in Net Book Value
0 + (8,400 – 8,000) = 400
Oracle Assets – REVALUATION

Cr. Revaluation Reserve 400.00
REVALUATION 2
–10% revaluation in Year 4, Quarter 1:

Retirement in Year 5, Quarter 4:
Oracle Assets – RETIREMENT

Accumulated Depreciation Not Revalued
years, and you are using straight–line depreciation. In Year 2, Quarter 1 you revalue the asset
using a revaluation rate of 5%. Then in Year 4, Quarter 1 you revalue the asset again using a
revaluation rate of –10%.
Revaluation Rules:
Revalue Accumulated Depreciation = No

Retire Revaluation Reserve = Yes
For the first revaluation, the asset’s new revalued cost is $10,500. Since you do not revalue the
accumulated depreciation, Oracle Assets transfers the balance to the revaluation reserve in
addition to the change in cost. Since you are also not amortizing the revaluation reserve, this
amount remains in the revaluation reserve account until you retire the asset, when Oracle Assets
transfers it to the appropriate revaluation reserve retired account. Oracle Assets bases the new
depreciation expense on the revalued net book value. For the second revaluation, the asset’s
revalued cost is $9,450. Again, since you do not revalue the accumulated depreciation, Oracle
Assets transfers the balance to the revaluation reserve along with the change in cost.
You retire the asset in Year 5, Quarter 4, with no proceeds of sale or cost of removal.
REVALUATION 1
5% revaluation in Year 2, Quarter 1:

Cr. Revaluation Reserve 2,500.00
REVALUATION 2
–10% revaluation in Year 4, Quarter 1:

Retirement in Year 5, Quarter 4:

Dr. Revaluation Reserve 6,700.00
Cr. Revaluation Reserve Retired Gain 6,700.00
Amortizing Revaluation Reserve

years, and you are using straight–line depreciation.
In Year 2, Quarter 1 you revalue the asset using a rate of 5%. Then in Year 4, Quarter 1 you
revalue the asset again using a rate of –10%.
Revaluation Rules:
Amortize Revaluation Reserve = Yes
For the first revaluation, the asset’s new revalued cost is $10,500. Since you do not revalue the
accumulated depreciation, Oracle Assets transfers the entire amount to the revaluation reserve.
Since you are amortizing the revaluation reserve, Oracle Assets calculates the revaluation
amortization amount for each period using the asset’s depreciation method. Oracle Assets also
bases the new depreciation expense on the revalued net book value.
For the second revaluation, the asset’s revalued cost is $9,450. Again, since you do not revalue the
accumulated depreciation, Oracle Assets transfers the entire amount to the revaluation reserve.
REVALUATION 1
Year 2, quarter 1, 5% revaluation

Oracle Assets creates the following journal entries each period to amortize the revaluation
reserve:

Cr. Revaluation Amortization 156.25
REVALUATION 2
Year 4, quarter 1, –10% revaluation

Oracle Assets creates the following journal entries each period to amortize the revaluation
reserve:

Revaluation of a Fully Reserved Asset

years, and you are using straight–line depreciation. The asset’s life extension factor is 2 and the
maximum fully reserved revaluations allowed for this book is 3.
In year 5, quarter 4 the asset is fully reserved. In Year 9, Quarter 1 you want to revalue the asset
with a revaluation rate of 5%.
Revaluation Rules:
First, Oracle Assets checks whether this fully reserved asset has been previously revalued as fully
reserved, and that the maximum number of times is not exceeded by this revaluation. Since this
asset has not been previously revalued as fully reserved, this revaluation is allowed.
The asset’s new revalued cost is $10,500. The life extension factor for this asset is 2, so the asset’s
new life is 2 _ 5 years = 10 years. Oracle Assets calculates depreciation expense over its new life of
10 years.
Oracle Assets calculates the depreciation adjustment of $2,000 using the new 10 year asset life. It
transfers the change in net book value to the revaluation reserve account.
Oracle Assets revalues the accumulated depreciation using the 5% revaluation rate. The change
in net book value is transferred to the revaluation reserve account. Since you do not amortize the
revaluation reserve, the amount remains in the revaluation reserve account.

Revaluation with Life Extension Ceiling
years, and you are using straight–line depreciation. The asset’s life extension factor is 3.0 and its
life extension ceiling is 2.
In Year 5, Quarter 4 the asset is fully reserved. In year 9, quarter 1 you want to revalue the asset
with a revaluation rate of 5%.
Revaluation Rules:
To determine the depreciation adjustment, Oracle Assets uses the smaller of the life extension
factor and the life extension ceiling. Since the life extension ceiling is smaller than the life
extension factor, Oracle Assets uses the ceiling to calculate the depreciation adjustment. The
new life used to calculate the depreciation adjustment is 2 _ 5 years = 10 years, the life extension
ceiling of 2 multiplied by the original 5 year life of the asset.
Oracle Assets calculates the asset’s depreciation expense under the new life of 10 years up to the
revaluation period, and moves the difference between this value and the existing accumulated
depreciation from accumulated depreciation to revaluation reserve.
Oracle Assets then determines the new asset cost using the revaluation rate of 5% and revalues
the accumulated depreciation with the same rate. Oracle Assets calculates the asset’s new life by
multiplying the current life by the life extension factor. The asset’s new life is 3 _ 5 years = 15
years. Oracle Assets bases the new depreciation expense on the revalued net book value and the
new 15 year life.
Depreciation Adjustment (calculated using life extension ceiling)=

2,000

Revaluation with a Revaluation Ceiling

Example 6: You own an asset which has been damaged during its life.
You placed the asset in service in Year 1, quarter 1. The asset cost is $10,000, the life is 5 years,
and you are using straight–line depreciation. You entered a revaluation ceiling of $10,300 for the
asset. In year 3, quarter 3 you revalue the asset’s category with a revaluation
rate of 5%.
Revaluation Rules:

Amortize Revaluation Reserve = Yes
If Oracle Assets applied the new revaluation rate of 5%, the asset’s new cost would be higher
than the revaluation ceiling for this asset, so instead Oracle Assets uses the ceiling as the new
cost. The ceiling creates the same effect as revaluing the asset at a rate of 3%. Oracle
Assets bases the asset’s new depreciation expense on the revalued asset cost.

Oracle Assets creates the following journal entries each period to

amortize the revaluation reserve:

Journal Entries for Tax Accumulated Depreciation Adjustments

years, and you are using straight–line depreciation. In Year 4, Quarter 1, your tax authority
requests that you change the depreciation taken in Year 2 from $1000 to $800.
Oracle Assets creates the following journal entries for the reserve adjustment:
Oracle Assets

Cr. Depreciation Adjustment 200.00
Home
Work in Process Accounting Transactions
The following are the basic accounting transactions carried out in WIP
1. Relieve Inventory and charge WIP at standard Cost.
2. Move Assemblies on the shop floor and charge Resources
3. Earn Resources and Overheads into Jobs and Schedules
4. Relieve WIP and Charge Inventory at Standard Cost.
Example
Given below is an example of what transaction and which stage they are generated in Oracle
Application.
The following table details the costs that are used for the accounting flows.
Item Cost – At start of Production

Material Material Resource OSP Overhead Total
Overhead
This Level 0 20 65 32 120 237
Previous 150 15 45 0 40 250
Level
Total 150 35 110 32 160 487
Previous Level
Costs
Overhead
Component 100 10 45 0 40 195
1
Component 30 3 33
2
Component 20 2 22
3
Total 150 15 45 0 40 250
This Level Costs
Cost Operation Units Incurred Standard
Element cost per Cost /unit
unit
Resource 10 10 50 40
RS1
Overhead 10 * 125 (250% of Rs 50) 100
Resource 20 5 30 25
Rs2
Overhead 20 10 20 20
OSP OS1 30 10 25 20
OSP OS2 40 10 10 12
Material # 10 20 20
O/H
Total 280 237
 * Overhead for operation 10 is applied at 250% of the resource value earned at the operation
 # Material overhead is earned when an assembly is completed from a discrete job or
repetitive schedule into inventory. Material Overhead is never earned in the job or schedule.
Transactions
1. Material Transactions, Issue all material Transaction: Push all components at standard
cost into the job 10 units at 250 =2500
Dr. WIP Accounts 2500

Cr. Sub inventory Accounts 2500
2. Material Transactions, Return specific component: Return 2 defective units of component

2 to inventory 2 units at 33 = 66
Dr. Sub inventory Accounts 66

Cr. WIP Accounts 66
3. Material Transactions, Issue Specific Component: Replace defective components with
substitute items
2 units at 40 = 80
Dr. WIP Accounts 80
Cr. Sub inventory Accounts 80
Resource charged at Actual Cost and no variance accounted
4. Shop Transaction, Resource w/o rate variance : Charge resource RS1 at actual for
operation 10.
11 units at 50 = 550
Cr. Resource Absorption Account 550
5. Shop Floor Transaction, Reverse resource charge : Reverse Overcharge

1 unit at 50 = 50
Dr. Resource Absorption Account 50
Cr. WIP Accounts 50
Resource Charged at Standard Cost and variance accounted
6. Shop Floor Transaction, Resource with rate variance: Charge resource RS2 at standard for
operation 20 5 units at 25 = 125

Cr. Resource Absorption Account 150 (Incurred cost of 30 for 5 units = 150)
Dr. Rate Variance 25
7. Shop Floor Transaction, OSP resource w/o rate variance: Charge OSP OS1 at actual for
operation 30 Receive 11 units at 25 = 275
On pushing the quantity to outside processing operation

Cr. Receiving Inspection Account 275
On receiving the material after being processed
Dr. Receiving Inspection Account 275

Cr. Inventory AP Accrual Account 275
8. Shop Floor Transaction, Reverse OSP overcharge: Reverse Overcharge 1 unit at 25 = 25
Dr. Inventory AP Accrual Account 25


Cr. WIP Accounts 25
9. Shop Floor Transactions, OSP resource with rate variance : Charge OSP OSP2 at standard
for operation 20. Receive 10 units at 12 = 120


Cr. Inventory AP Accrual Account 100
Cr. Purchase Price Variance 20
10. Shop Floor Transactions, Resource based O/H: Charge 250% on the resource charged in
step 4
550 * 250 % = 1375
Cr. Overhead Absorption Accounts 1375
11. Shop Floor Transaction, Reverse resource based O/H : Reverse overhead for resource
reversed in step 5 50 * 250 % = 125
Dr. Overhead Absorption Accounts 125

Cr. WIP Accounts 125
12. Shop Floor Transactions, Item based O/H : Move through operation 20 and charge item
based overhead 10 units at 20 = 200

Cr. Overhead Absorption Accounts 200
Summary of Transactions
The table below gives a summary of all the transactions at this point.
Work in Process Value
Cost Incurred Cost Relieved Balance
Cost Element This Previous This Previous This Previous
Level Level Level Level Level Level
Material 1514 1514
Material OH 150 150
Resource 625 450 625 450
OSP 370 0 370 0
Overhead 1450 400 1450 400
Total 2445 2514 2445 2514
Costs are relieved from Work in Process when assemblies are completed to inventory or
scrapped at an operation. Costs are always relieved from Jobs and Schedules at Standard.
13. Shop Floor Transaction: Scrap 2 assemblies at operation 40. 2 units at 495.90 = 934
Dr. Scrap Account 991.80

Cr. WIP Accounts 991.80
14. Shop Floor Transaction: Return repaired unit from scrap. 1 unit at 495.90 = 495.90
Dr. WIP Accounts 495.90

Cr. Scrap Account 495.90
15. WIP Completion Transaction: Complete 9 assemblies from WIP to inventory. 9 units at
495.90 = 4959+ 9 units at 20 for Material Overhead.
Dr. Sub inventory Accounts 5139

Cr. Material O/H Abs Account 180
The table below gives a summary of all the transactions at this point.
Work in Process Value
Cost Incurred Cost Relieved Balance
Cost Element This Previous This Previous This Previous
Level Level Level Level Level Level
Material 1514 (1500) 14
Material OH 150 (150) 0
Resource 625 450 (525) (450) 100 0
OSP 370 0 (320) 50 0
Overhead 1450 400 (1200) (400) 250 0
Total 2445 2514 (2045) (2500) 400 14
Variances are recognized when you close your jobs and schedules.
16. Close Job or Schedule: Recognise this and previous level variances.
Dr. Variance Accounts 414

Cost Update in WIP
The Cost update revalues your discrete and asset non-standard jobs.
Example
Carrying from the previous example
Update Previous level Costs
1. Material cost increases by 50.

2. Material overhead rate remains at 10% but the cost increases by 5 due to increase in material
cost.
3. Resource cost decreases by 15.
4. Overhead rate increases from 100% to 150% of resource cost./
5. Overhead cost remains at 45 due to decrease in resource costs
6. Quantity in job = 10
Bill of Material Cost
OH
Old Cost 150 15 45 0 45 255
New Cost 200 20 30 0 45 295
Increase/ 50 5 (15) 0 0 40
Decrease
Update this Level Costs
1. Resource RS1 amount decreases by 5

2. Outside processing OSP1 amount per item increases by 20.
3. Overhead rate increases from 200% of RS1 value to 400% of RS1 value.
4. 10 hours of RS1 charged to the job.
5. 10 units received for OSP1

Resource OSP Overhead Total
Old Cost 35 100 70 205
New Cost 30 120 120 270
Increase/ Decrease (5) 20 50 65
Adjusting Accounting Entries
Dr. Material 500

Dr. Material OH 50
Dr. OSP 200
Dr. Overhead 500
Cr. Resource 200

Cr. Standard Cost Variance Account 1050
Adjustment Recorded in the Job

OH
This Level (50) 200 500 650
Previous Level 500 50 (150) 0 0 400
Increase/ 500 50 (200) 200 500 1050
Decrease
Home
Purchase Orders and Releases
 PO Accrual Account Generator

 PO Budget Account Generator
 PO Charge Account Generator
 PO Variance Account Generator
Requisitions
 PO Requisition Accrual Account Generator

 PO Requisition Budget Account Generator
 PO Requisition Charge Account Generator
 PO Requisition Variance Account Generator
PO Accrual Account Generator and

PO Requisition Accrual Account Generator
 Accrual Account for Expense Item

 Accrual Account from Organization
 PO Project–Related? (You can customize this function if you
 Want to build project–related accounts using your own rules and if Oracle Projects is
installed.)
 Purchase Order Flex Builder Upgrade
 Work Item Destination Type
 PO Budget Account Generator and
 PO Requisition Budget Account Generator
 Build Inventory Charge Account
 Get Budget Account from Item/Sub
 Get Charge Account
 Get Item Level Budget Account
 Get Org Level Budget Account
 Item Pre–Defined?
installed.)
PO Charge Account Generator and

PO Requisition Charge Account Generator
 Build Inventory Charge Account

 Expense Account
 Job WIP Account
 PO Project–Related? (You can customize this function if you want to build project–
related accounts using your own rules and if Oracle Projects is installed.)
 Schedule Account
 Type of WIP
 PO Variance Account Generator and
 PO Requisition Variance Account Generator
 Get Charge Account
installed.)
 Variance Account from Organization
Inventory - Standard Costing
Prerequisites
 Define Organization Parameters
 Costing Method is set to Standard
 Transfer Detail to GL is appropriately set
 Default Material Sub–Element account (Required)
 Define cost types are defined.
 Define activities and activity costs are defined.
 Define material overhead defaults are defined
 Define item, item costs, and establish item cost controls.
 Launch transaction managers are launched
Inventory Standard Cost Transactions

The following transactions can be performed in distribution Organizations.
 Purchase Order Receipt To Receiving Inspection:

 Delivery From Receiving Inspection To Inventory:
 Purchase Order Receipt To Inventory:
 Return To Supplier From Receiving:
 Return To Supplier From Inventory:
 Sales Order Shipments:
 RMA Receipts:
 RMA Return:
 Miscellaneous Transactions:
 Inter–Organization Transfers:
 Sub inventory Transfers:
 Internal Requisitions:
 Cycle Count and Physical Inventory:
Purchasing related transactions with inventory destinations are also discussed, but not those with
expense destinations such as office supplies and non–inventory purchases.
Purchase Order Receipt to Receiving Inspection

You can use the Receipts window in Oracle Purchasing to receive material from a supplier into a
receiving location. You can also use this window to receive material directly to inventory. Please
note that this section addresses Inventory destinations only.
When you receive material or outside processing items from a supplier into receiving
inspection, the Receiving Inspection account is debited and the Inventory A/P Accrual account
is credited based on the quantity received and the purchase order price.
Account Debit Credit
Receiving Inspection account @ PO price XX
Inventory A/P Accrual account @ PO price XX
Delivery From Receiving Inspection to Inventory
You can use the Receiving Transactions window to move material from receiving inspection to
inventory. The system uses the quantity and the purchase order price of the delivered item to
update the receiving inspection account and quantity.
The system uses the standard cost of the delivered item to update the subinventory balances.
Sub inventory accounts @ standard cost XX
Debit/Credit Purchase Price Variance
If your item has material overhead associated with it, the sub inventory account is debited for the
amount of the material overhead and the material overhead absorption account(s) are credited.
Purchase Price Variance (PPV)

Purchase price variances (PPV) occur when there are differences between the standard cost and
the purchase order cost of an item.
Expense Sub inventories and Expense Items

When you receive inventory expense items into expense sub inventory locations, the following
accounting entry is generated:
Sub inventory Expense account @ PO price XX
When you receive an expense (non–asset) inventory item, or into an expense sub inventory, the
sub inventory expense account instead of the valuation account is debited. Because the expense
account is debited at the purchase order price, there is no purchase price variance.
Purchase Order Receipt to Inventory

When you receive material from a supplier directly to inventory, the receipt and delivery
transactions are performed in one step.
First, the Receiving Inspection account is debited and the Inventory A/P Accrual account
credited based on quantity received and the purchase order price.
Next, the Sub inventory and Receiving Inspection accounts are, respectively, debited and
credited based on the transaction quantity and standard cost of the received item.
Debit/Credit Purchase Price Variance
If your item has material overhead(s), the sub inventory entry is debited for the material
overhead and the material overhead absorption account(s) is credited.
Sub inventory accounts XX

Material Overhead Absorption account XX
Attention: If the sub inventory account is combined with the above entry, the material overhead
absorption account adds one additional entry.
Return To Supplier From Inventory
When you do not use receiving inspection, the return to supplier transaction updates the same
accounts as the direct receipt to inventory, with reverse transaction amounts. The Inventory A/P
Accrual account is debited and the Receiving Inspection account is credited based on quantity
received and the purchase order price.
Foreign Currencies
As with the purchase order receipt to inventory transaction, the system converts the purchase
order price to the functional currency and uses this converted value for the return to supplier
accounting entries.
Sales Order Shipments

Ship material on a sales order using Order Entry/Shipping. The accounting entries generated by
a sales order shipment are:

Cost of Goods Sold account XX
Based on the rules you define in Order Entry/Shipping, the Account Generator dynamically
creates the cost of goods sold account.
 Attention: You do not create any accounting information when you ship from an expense sub
inventory or ship an expense inventory item.
RMA Receipts
You can receive items back from a customer using the RMA (return material authorization)
Receipts window.

Cost of Goods Sold Account XX
This uses the same account as the original cost of goods sold transaction.
 Attention: You do not create any accounting entries when you receive material for an RMA
for an expense item or expense sub inventory.
RMA Returns
You can return items received into inventory through an RMA back to the customer using RMA
Returns window.
For example, you can send back — “return” — an item that was returned by the customer to you
for repair.
This transaction reverses an RMA receipt. It also mimics a sales order shipment and updates the
same accounts as a sales order shipment.

Cost of Goods Sold Account XX
 Attention: Do not create any accounting entries when you return material for an RMA for an
expense item or expense sub inventory.
Miscellaneous Transactions
Using the Miscellaneous Transaction window, you can issue material from a sub inventory to a
general ledger account (or account alias) or receive material to a sub inventory from an account
or alias. An account alias identifies another name for a general ledger account.
Suggestion: Use account aliases for account numbers you use frequently. For example, use the
alias SCRAP for your general ledger scrap account.
Issuing material from a sub inventory to a general ledger account or alias generates the following
accounting entries:

Entered General Ledger Account @ standard cost XX
Receiving material to a sub inventory from an account or an alias generates the following
accounting entries:

Entered General Ledger Account @ standard cost XX
Expense Sub inventories and Expense Items When you receive into an expense location or receive
an expense item, you have expensed the material. If you use the miscellaneous Transaction to
issue from an expense location, You can issue to an account or to an asset sub inventory of the
INV : Allow Expense to Asset Transfer profile option in Oracle Inventory is set to Yes.
If issued to an account the system assumes the material is consumed at the expense
Location and moves the quantity without any associated value. If transferred to an asset sub
inventory, the material moves at its current cost.
When you perform a miscellaneous transaction to receive an expense item to either an asset or
expense sub inventory, no accounting occurs. Since the account balance could involve different
costs over time, the system assumes that the cost of the expense item is unknown.
Inter–Organization Transfers
You can transfer material from one inventory organization to another either directly or through
in transit inventory. In transit inventory represents material that has not yet arrived at the
receiving
organization.
Using In transit Inventory You can move material from the shipping organization to in transit
Inventory using the Transfer Sub inventories window. You can use the Receipts window to move
material from in transit inventory to the receiving organization.
Issue Transaction
Depending upon the Freight On Board (FOB) point defined in the inventory organization
relationship, the shipment to in transit inventory creates the following accounting entries:
FOB Point is set to Receiving:

Account Organization Debit Credit
In transit inventory account Sending XX
Sub inventory accounts Sending XX
FOB Point is set to Shipment:
Inter–Organization Receivable Sending XX
In transit Inventory account Receiving XX
Inter–Organization Payable Receiving XX
Receipt Transaction
Depending upon the FOB point defined in the organization relationship, the receipt from in
transit inventory creates the following accounting entries:
FOB Point is set to Receiving:
In transit Inventory account Sending XX
Sub inventory accounts Receiving XX
FOB Point is set to Shipment:

In addition to accounting for the movement of the material, these transactions also update the
inter–organization receivable and payable accounts. These inter–organization clearing accounts
represent inter–organization receivables and payables for the respective shipping and receiving
organizations.
Direct Inter–Organization Transfer

When your organization relationship is set to directly transfer material, Inventory performs both
the issue and the receipt transaction at the time of the issue. Any difference between the cost of
items in the two organizations is recognized as variance in the receiving organization.
The accounting entries created are as follows:

Use the Transfer Sub inventories window for direct transfers. Material Overhead and Inter–
Organization Transfers If your item has material overhead(s), you earn material overhead on
inter–organization transfers. The sub inventory entry is increased for the material overhead with
a credit to the material overhead absorption account(s) in the receiving organization.
Sub inventory accounts XX

Material Overhead Absorption account XX
 Attention: The sub inventory account is combined with the above entry. The material
overhead absorption transaction adds one additional account to the entry.
The FOB Point changes the accounting for freight. With FOB receiving, freight is accrued on the
receipt transaction by the sending organization. With FOB shipment, freight is accrued on the
shipment transaction by the receiving organization. For direct transfers, the receipt and shipment
transaction occur at the same time.
When the FOB Point is set to receiving, the transfer creates the following freight and transfer
charge entries at time of receipt:

Freight Expense account Sending XX
Inter–Org. Transfer Credit Sending XX
Org. Material account Receiving XX
For the receiving organization, the inter–organization payable account is increased for freight and
transfer charges. These charges are included in the comparison to the standard cost.
When the FOB Point is set to Shipment, the transfer creates the following freight and transfer
charge entries at shipment:
Inter–Org. Transfer Credit Sending XX
Freight Expense account Receiving XX
In transit inventory includes both freight and transfer charges. The inter–organization payable is
only increased for transfer charges.
Expense Subinventories and Expense Items:
When you receive an inter–organization transfer into an expense sub inventory or receive an
expense inventory item, you have expensed the material and cannot directly issue it. The system
assumes the material cost is consumed at the expense location.
Using the direct or in transit method, you can receive material to an expense sub inventory or
receive an expense inventory item. When you receive to expense locations or receive expense
inventory items, the sub inventory expense account is debited for the receiving organization,
instead of the valuation accounts. The sub inventory expense account is charged the total
transaction value from the other organization.
Inter–Organization Transfers and Sets of Books
The Inter–Organization Direct Transfer transaction also supports transfers from any set of books,
even if the currency is different. However, you cannot use the Inter–Organization In transit with
multiple sets of books. These transactions use receiving functions from Purchasing, which only
supports one set of books. To perform an inter–organization in transit transfer from one set of
books to another, you need to perform a combination of two transactions: a direct
transfer and an in transit transfer.
Subinventory Transfers
This transaction increases the accounts of the To Sub inventory and decreases the From Sub
inventory, but has no net effect on overall inventory value. If you specify the same sub inventory
as the From and To Sub inventory, you can move material between locators within a sub
inventory.
Account Sub inventory Debit Credit

Sub inventory accounts To XX
Sub inventory accounts From XX
You can issue from an asset to an expense sub inventory, and you can issue from an expense sub
inventory if the Oracle Inventory
INV:Allow Expense to Asset Transfer profile option is set to Yes.

The system assumes the material is consumed at the expense location.
Internal Requisitions:
You can use the internal requisitions to replenish inventory. You can source material from a
supplier, a sub inventory within your organization, or from another organization. Depending
upon the source you choose, the accounting entries are similar to one of the proceeding scenarios.
However, unlike inter–organization transfers, internal requisitions do not support freight
charges.
Cycle Count and Physical Inventory:
Use cycle counting and physical inventory to correct inventory on–hand balances. A cycle count
updates the accounts of the affected sub inventory and offsets the adjustment account you
specify.
If you physically count more than your on–hand balance, the accounting sentries are:

Adjustment account @ standard cost XX
If you count less than your on–hand balance, the accounting entries are:
Adjustment account @ standard cost XX
Like a cycle count, a physical inventory adjustment also updates the accounts of the affected sub
inventories and the physical inventory adjustment account you specify.
 Suggestion: Since the standard cost is not stored as you freeze the physical quantities, you
should not perform a standard cost update until you have adjusted your physical inventory.

The system does not record accounting entries for expense sub inventories or expense items for
either physical inventory or cycle count adjustments. However, the on–hand balance of an
expense sub inventory is corrected if you track the quantities.
Work in Process Standard Cost Transactions

The following cost transactions can occur when Oracle Work in Process is installed:
 Component Issue and Return Transactions:

 Move Transactions:
 Resource Charges:
 Outside Processing Charges:
 Overhead Charges:
 Assembly Scrap Transactions:
 Assembly Completion Transactions:
 Job Close Transactions:
 Period Close Transactions:
 Work in Process Cost Update Transactions:
Component Issue and Return Transactions

Component issue and return transactions can be launched in a variety of ways. See: Component
Issue and Return Transaction Options, Oracle Work in Process User’s Guide and Back flush
Transactions, Oracle Work in Process User’s Guide.
Costing Issue and Return Transactions
Issue transactions increase the work in process valuation and decrease the inventory valuation.
The accounting entries for issue transactions are:

WIP accounting class valuation accounts XX
Sub inventory elemental accounts XX
The accounting entries for return transactions are:

Sub inventory accounts are defined in the Define Sub inventories window in Oracle Inventory.
WIP elemental accounts are defined in the WIP Accounting Classes window in Work in Process.
See: Defining Sub inventories, Oracle Inventory User’s Guide, Sub inventory General Ledger
Account Fields, Oracle Inventory User’s Guide, and WIP Accounting Classes, Oracle Work in
Process User’s Guide.
Move Transactions
A move transaction moves assemblies within an operation, such as from Queue to Run, or from
one operation to the next. Move transactions can automatically launch operation completion
backflushing and charge resources and overheads.
You can perform move transactions using the Move Transactions window, Open Move
Transaction Interface window, or the Enter Receipts window in Purchasing.
Backflush Material Transactions
With back flushing, you issue component material used in an assembly or subassembly by
exploding the bills of material, and then multiplying by the number of assemblies produced.
Move transactions can create operation pull back flush material transactions that issue
component material from designated WIP supply sub inventories and locators to a job or
repetitive schedule. For back flush components under lot or serial number control, you assign the
lot or serial numbers during the move transaction.
When you move backward in a routing, Work in Process automatically reverses operation pull
back flush transactions.
The accounting entries for move transactions are:
The accounting entries for return transactions are:

Moved Based Resource Charging
As the assemblies you build pass through the operations on their routings, move transactions
charge all pre–assigned resources with an auto–charge type of WIP Move at their standard rate.
You can charge resources based upon a fixed amount per item moved in an operation (Item basis)
or based upon a fixed lot charge per item moved in an operation (Lot basis). For resources with a
basis of Lot, Work in Process automatically charges the lot cost upon completion of
the first assembly in the operation.
You can also enter manual resource transactions associated with a move, or independent of any
moves. You can manually charge resources to a job and repetitive schedule provided the job and
Repetitive schedule has a routing. You can also transact resources through the Open Resource
Transaction Interface.
Resource Charges
Work in Process supports four resource autocharging methods:
Manual, WIP Move, PO Move, and PO Receipt.
You can charge resources at an actual rate.
You can also charge resource overheads automatically as you charge resources.
WIP Move Resource Charges You can automatically charge resources at their standard rate to a
job or repetitive schedule when you perform a move transaction using either the Move
Transactions window or the Open Move Transaction Interface. When you move assemblies from
the Queue or Run intra operation steps forward to the To move, Reject, or Scrap intra-operation
steps, or to the next operation, Work in Process charges all pre–assigned resources with an charge
type of WIP Move at their standard rate. For resources with a basis of Item, Work in Process
automatically charges the resource’s usage rate or amount multiplied by the resource’s standard
cost upon completion of each assembly in the operation. For resources with a basis of Lot, Work
in Process automatically charges the resource’s usage rate or amount multiplied by the resource’s
standard cost upon completion of the first assembly in the operation.
You can undo the WIP Move resource charges automatically by moving the assemblies from
Queue or Run of your current operation to Queue or Run of any prior operation, or by moving
the assemblies from the To move, Reject, or Scrap intra-operation steps backward to the Queue or
Run intra-operation steps of the same operation, or to any intra-operation step of any prior
operation.
Work in Process applies WIP Move resource transactions to multiple repetitive schedules on a
line based on how the assemblies being moved are allocated. Work in Process allocates moves
across multiple repetitive schedules based on a first in–first out basis.
Manual Resource Charges

You can charge manual resources associated with a move transaction or independent of any
moves. Manual resource transactions require you to enter the actual resource units applied rather
than auto charging the resource’s usage rate or amount based on the move quantity. You can
charge resources using that resource’s unit of measure or any valid alternate. You can manually
charge resources to a job or repetitive schedule provided the job or repetitive schedule has a
routing. If you use the Move Transactions window to perform moves and manual resource
transactions at the same time, Work in Process displays all pre–assigned manual resources with
an charge type of Manual assigned to the operations completed in the move. If the resource is a
person–type resource, you can enter an employee number. In addition to the resources displayed,
you can manually charge any resource to a job or repetitive schedule, even if you have not
previously assigned the resource to an operation in the job or repetitive schedule.
You can also manually charge resources to an operation added ad hoc by entering any resource
defined for the department associated with the operation. Work in Process applies Manual
resource transactions to the first open repetitive schedule on the line. You can correct or undo
manual resource transactions by entering negative resource units worked.
Costing Resource Charges at Resource Standard

Resource charges increase work in process valuation. The accounting entries for resource
transactions are:

WIP accounting class resource valuation account XX
Resource absorption account XX
If Auto charge is set to WIP Move, work in process and labors are charged at standard. There are
no resource rate or efficiency variances.
The accounting entries for negative Manual resource transactions and backward moves for WIP
Move resources are:
Costing Labor Charges at Actual

You can charge labor charges at actual in two ways. You can enter an actual rate for the employee
using the Open Resource Transaction Interface or when you define employee rates. For labor
charges using an actual or employee rate for a resource for which charge standard rate is turned
off, the accounting entries are:

Any difference between the total labor charged at actual and the standard labor amount is
recognized as an efficiency variance at period close.
If the Standard Rates check box is checked and you enter an actual rate for a resource, the system
charges the job or repetitive schedule at standard. If Auto charge is set to Manual and actual rates
and quantities are recorded, a rate variance is recognized immediately for any rate difference.
Any quantity difference is recognized as an efficiency variance at period close.
The accounting entries for the actual labor charges are:
Resource rate variance account (Debit when actual XX XX

rate is greater than the standard rate. Credit when
the actual rate is less than the standard rate.)
PO Receipt and PO Move Transactions

You can receive purchased items associated with outside resources from an outside processing
operation back into work in process in Oracle Purchasing. For these items, Work in Process
creates resource transactions at the standard or actual rate for all outside resources with
an auto charge type of PO receipt or PO move. For outside resources with an auto charge type of
PO move, Work in Process also moves the assemblies from the Queue or Run intra-operation step
of the outside processing operation into the Queue intra-operation step of the next
operation or into the To move intra-operation step if the outside processing operation is the last
operation on the routing.
If you assigned internal resources to an outside operation with an auto charge type of Manual,
charge the resources using the Resource Transactions window or the Open Resource Transaction
Interface.
If you return assemblies to the supplier using the Enter Returns and Adjustments window in
Oracle Purchasing, Oracle Purchasing automatically reverses the charges to all automatic
resources associated with the operation. You must manually reverse all manual resource charges
using the Resource Transactions window. For outside resources with an auto charge type of PO
move, Oracle Purchasing automatically moves the assemblies from the Queue intra-operation
step of the operation immediately following the outside processing operation into the Queue
intra-operation step of your outside processing operation.
If the outside processing operation is the last operation on the routing, the assemblies
automatically move from the To move intra-operation step to the Queue intra-operation step. PO
move resource transactions are applied to multiple repetitive schedules on a line based on how
the assemblies being moved are allocated. Moves are allocated across multiple repetitive
schedules on a first in–first out basis. PO receipt resource transactions are allocated across
schedules on a first in first (FIFO) out basis.
Outside Processing Charges
Work in Process automatically creates resource transactions at the standard or actual rate for all
outside processing resources with an charge type of PO Receipt or PO Move when you receive
assemblies from an outside processing operation back into work in process, using the Enter
Receipts window in Purchasing. For outside processing resources with an charge type of PO
Move, Work in Process also performs a move of the assemblies from the Queue or Run
Intra-operation step of your outside processing operation into the Queue intra-operation step of
your next operation or into the To move intra-operation step if the outside processing operation
is the last operation on your routing.
If you assigned internal resources to an outside operation with an charge type of Manual, you use
the Move Transactions window or the Open Resource Transaction Interface to charges these
resources.
If you return assemblies to the supplier, Work in Process automatically reverses the charges to all
automatic resources associated with the operation. You must manually reverse all manual
resource charges using the Move Transactions window. For outside processing resources
with an charge type of PO Move, Work in Process automatically moves the assemblies from the
Queue intra-operation step of the operation immediately following the outside processing
operation into the Queue intra-operation step of your outside processing operation.
If the outside processing operation is the last operation on your routing, Work in Process
automatically moves the assemblies from the To move intra-operation step to the Queue intra-
operation step. Work in Process applies PO Move resource transactions to multiple repetitive
schedules on a line based on how the assemblies being moved are allocated. Work in Process
allocates moves across multiple repetitive schedules based on a first in–first out basis. Work in
Process applies PO Receipt resource transactions to the first open repetitive schedule
on the line.
Costing Outside Processing Charges at Standard

When you receive the assembly from the supplier, Purchasing sends the resource charges to
Work in Process at either standard cost or actual purchase order price, depending upon how you
specified the standard rate for the outside processing resource.
If the Standard Rates option is enabled for the outside processing resource being charged, the
system charges Work in Process at the standard rate and creates a purchase price variance for the
difference between the standard rate and the purchase order price. The accounting entries for
outside processing items are as follows:
WIP accounting class outside processing valuation account XX
Purchase price variance account (Debit when the XX XX

actual rate is greater than the standard rate. Credit
when the actual rate is less than the standard rate.)
Organization Receiving account XX
Any quantity or usage difference is recognized as an outside processing efficiency variance at

period close.
The accounting entries for return to supplier for outside processing are:
Purchase price variance account (Debit when XX XX

actual rate is less than the standard rate. Credit
when the actual rate is greater than the standard
rate.
WIP accounting class outside processing valuation account XX
Costing Outside Processing Charges at Actual Purchase Order Price
If the Standard Rates option is disabled for the outside processing resource being charged, the
system charges Work in Process the purchase order price and does not create a purchase price
variance.
The accounting transactions for outside processing charges at purchase order price are as follows:

WIP accounting class outside processing valuation XX
account
Any difference from the standard is recognized as resource efficiency

Variance at period close.
Overhead Charges
Move Based Overhead Charging
Work in Process automatically charges appropriate overhead costs as you move assemblies
through the shop floor. You can charge overheads directly based on move transactions or based
on resource charges. For overheads charged based on move transactions with a basis of Item,
Work in Process automatically charges overheads upon completion of each assembly in the
operation. Work in Process automatically reverse these charges during a backward move
transaction.
For overheads based on move transactions with a basis of Lot, Work in Process automatically
charges overheads upon completion of the first assembly in the operation. Work in Process
automatically reverses these charges during a backward move transaction if it results in zero
net assemblies completed in the operation.
Resource Based Overhead Charging

Work in Process automatically charges appropriate overhead costs as you charge resources. You
can charge overheads based on resource units or value. Work in Process automatically reverses
overhead charges when you reverse the underlying resource charge.
Costing Overhead Charges
Overhead charges increase work in process valuation. The accounting entries for overhead
charges are:

WIP accounting class overhead account XX
Overhead absorption account XX
You can reverse overhead charges by entering negative Manual resource charges or performing
backward moves for WIP Move resources. The accounting entries for reverse overhead charges
are:

Overhead absorption account XX
WIP accounting class overhead account XX

Assembly Scrap Transactions
You can move partially completed assemblies that you consider unrecoverable to the Scrap intra-
operation step of that operation. (If necessary, you can recover assemblies from scrap by moving
them to another intra-operation step.) By moving into the Scrap intra-operation step, you can
effectively isolate good assemblies from bad.
Work in Process considers a move into the Scrap intra-operation step from the Queue or Run of
the same operation as an operation completion, and thus updates operation completion
information; back flushes components, and charges resource and overhead costs
According to the elemental cost setup.
You can also move assemblies back to the Scrap intra-operation step of the previous operation for
Queue or Run if no work has been completed at the current operation.
Costing Assembly Scrap Transactions
When you define Work in Process parameters, you can specify whether moves into the Scrap
intra-operation step require a scrap account. If you enter a scrap account or alias when you move
assemblies into Scrap, the scrap account is debited and the job or repetitive schedule elemental
accounts for the standard cost of the assembly through the scrap operation are credited. This
removes the cost of the scrapped assemblies from the job or repetitive schedule. If you do not
enter a scrap account or select an alias, the cost of the scrap remains in the job Or schedule until
job or period close. If you recover assemblies from scrap, the scrap account is credited and the job
or repetitive schedule elemental accounts for the standard cost of this assembly through this
Operations are debited.
The accounting entries for scrap transactions are:

Scrap account XX
WIP accounting class valuation XX

accounts standard
The accounting entries for reverse scrap transactions are:

WIP accounting class valuation accounts standard XX
Scrap account XX
Assembly Completion Transactions

Use the Completion Transactions window, Move Transactions window, and Inventory
Transaction Interface to move completed assemblies from work in process into sub inventories.
Completion transactions relieve the valuation account of the accounting class and charge the sub
inventory accounts (for example, finished goods) based upon the assembly’s elemental cost
structure.
Costing Assembly Completion Transactions Completions decrease work in process valuation and
increase inventory valuation at standard costs.
The accounting entries for completion transactions are:

Earning Assembly Material Overhead on Completion

You can assign overheads based on Item, Lot or Total Value basis. For standard discrete jobs and
repetitive schedules, you can earn these overheads as you complete assemblies from work in
process to inventory.
The accounting entries for material overhead on completion transactions for standard discrete
jobs and repetitive schedules are:

Sub inventory material overhead account XX
Inventory material overhead absorption XX

Account
Use non–standard expense jobs for such activities as repair and maintenance. Use non–standard
asset jobs to upgrade assemblies, for teardown, and to prototype production. Non–standard
discrete jobs do not earn overhead on completion. Since you have already earned overhead to
produce the assemblies as you are repairing or reworking, Work in Process prevents you from
double earning material overhead on these assemblies.
The accounting entries for material overhead on completion transactions for non–standard
expense and non–standard asset jobs are:
Sub inventory material overhead account XX

WIP accounting class material overhead account XX
Job Close Transactions

Until you close a job, or change the status of the job to Complete – No Charges, you can make
material, resource, and scrap charges to the job. Closing a discrete job prevents any further
activity on the job.
Costing Job Close Transactions
Work in Process recognizes variances when you close a job. The actual close date you specify
determines the accounting period Work in Process uses to recognize variances. You can backdate
the close to a prior open period if desired. The close process writes off the balances remaining in
the WIP elemental valuation accounts to the elemental variance accounts you
Defined by accounting class, leaving a zero balance remaining in the closed job.
If there is a positive balance in the job at the end of the close, the accounting entries for a job
close are:
WIP accounting class variance accounts XX
Period Close Transactions

The period close process in Inventory recognizes variances for non–standard expense jobs and
repetitive schedules. It also transfers the work in process period costs to the general ledger.
Costing Non–Standard Expense Job Period Close Transactions
You can close discrete jobs and recognize variances for non–standard expense jobs at any time. In
addition, the period close process automatically recognizes variances on all non–standard
expense job charges incurred during the period. Therefore, open non–standard expense jobs have
zero WIP accounting balances at the start of a new period.
If there is a positive balance in the job at the end of the period, the accounting entries for non–
standard expense jobs at period close are:

Costing Repetitive Schedule Period Close Transactions
You do not close a repetitive schedule. However, you do recognize variances on a period basis
that result in zero WIP accounting balances at the start of the new period. You should check your
transactions and balances using the Repetitive Value Report before you close a period.
When you define Work in Process parameters, you can specify which repetitive schedule
variances you recognize when you close an
accounting period. You can either recognize variances for all repetitive schedules when you close
an accounting period, or recognize variances for those repetitive schedules with statuses of either
Complete – No Charges or Cancelled.
Assuming positive balances in the repetitive schedules at the end of the period, the accounting
entries for repetitive schedules at period close are:
Work in Process Standard Cost Update Transactions

The standard cost update process revalues standard and non–standard asset discrete jobs and
updates pending costs to frozen standard costs. Repetitive schedules and non–standard expense
jobs do not get revalued by the cost update.
The cost update creates accounting transactions by job and cost element valuation account. Each
standard and non–standard asset discrete job is updated using the following formula:
Standard cost update adjustment = [new costs in (material, resource, outside processing, and
overhead charges)- new costs out (scrap and assembly completion charges)] - [old costs in
(material, resource, outside processing, and overhead charges) - old costs out (scrap and
assembly completion charges)]
If the result of the cost update is an increase in the standard cost of the job, the accounting entries
for a cost update transaction are:

WIP Standard cost adjustment account XX
If the result of the cost update is a decrease in the standard cost of the job, the accounting entries
for a cost update transaction are:

WIP Standard cost adjustment account XX
When the cost update occurs for open jobs, standards and WIP balances are revalued according
to the new standard, thus retaining relief variances incurred up to the date of the update.
Standard Cost Valuation
Inventory and Work in Process continually update inventory value with each transaction. Work
in Process balances are updated with each related accounting transaction. Inventory sub
inventory values may be reported when the quantity movement occurs.
Value by Cost Element
Inventory or work in process value is maintained and reported on by distinct cost element (such
as material, material overhead, and so on), even if you assign the same general ledger valuation
account to each cost element. You can also report work in process value by cost element within
specific WIP accounting classes.
Standard Costing
Under standard costing, the value of inventory is determined using the material and material
overhead standard costs of each inventory item. If you use Bills of Material, Inventory maintains
the standard cost by cost element (material, material overhead, resource, outside processing,
and overhead).
Unlimited Cost Types
You can define an unlimited number of cost types and use them with any inventory valuation
and margin analysis reports. This allows you to see the potential effects of a cost rollup/update.
You can also update your standard costs from any of the cost types you have defined. When you
use Bills of Material with Inventory, you can specify the cost type in explosion reports and report
these costs for simulation purposes
Inventory and Work in Process Standard Cost Variances
This section describes Inventory standard cost variances and Work in Process standard cost
variances.
Inventory Standard Cost Variances
In general, Inventory records purchase price variance (PPV) and recognizes cycle count and
physical inventory adjustments as variances.
Purchase Price Variance (PPV)

During a purchase order receipt, Inventory calculates purchase price variance. In general, this is
the difference between what you pay the supplier and the item’s standard cost. Inventory
calculates this value as follows:
PPV = (PO unit price – standard unit cost) - quantity received.
Inventory updates the purchase price variance account with the PPV value. If the purchase order
price is in a foreign currency, Inventory converts it into the functional currency of the inventory
organization and calculates the purchase price variance. Purchasing reports PPV using the
Purchase Price Variance Report. You distribute this variance to the general ledger when you
perform the general ledger transfer, or period close.
Invoice Price Variance (IPV)

In general, invoice price variance is the difference between the purchase price and the invoice
price paid for a purchase order receipt. Purchasing reports invoice variance. Upon invoice
approval, Payables automatically records Invoice Price Variance, to both invoice price
variance and exchange rate variance accounts.
Cycle Count and Physical Inventory

Inventory considers cycle count and physical inventory adjustments as variance. You distribute
these variances to the general ledger when you perform the general ledger transfer or period
close.
Work in Process Standard Cost Variances

Work in Process provides usage, efficiency, and standard cost adjustment variances.
Usage and Efficiency Variances
Usage and efficiency variances result when the total costs charged to a job or schedule do not
equal the total costs relieved from a job or schedule at standard. Charges occur from issues and
returns, resource and overhead charges, and outside processing receipts. Cost relief occurs from
assembly completions, scrap transactions, and close transactions.
You can view these variances in the Discrete Job Value report, the Repetitive Value report, and by
using the WIP Value Summary window.
Work in Process reports usage and efficiency variances as you incur them, but does not update
the appropriate variance accounts until you close a job or period. Work in Process updates the
standard cost adjustment variance account at cost update.
Usage and efficiency variances are primarily quantity variances. They identify the difference
between the amount of material, resources, outside processing, and overheads required at
standard, and the actual amounts you use to manufacture an assembly. Efficiency variance can
also include rate variance as well as quantity variance if you charged resources or outside
processing at actual.
You can calculate and report usage and efficiency variances based on planned start quantity or
the actual quantity completed. You can use the planned start quantity to check potential
variances during the job or repetitive schedule. You can use the actual quantity completed to
check the variances before the job or period close. Your choice of planned start quantity or actual
quantity completed determines the standard requirements. These standard requirements are
compared to the actual material issues, resource, outside processing, and overhead charges to
determine the reported variance.
Work in Process calculates, reports, and recognizes the following quantity variances:
Material Usage Variance

The material usage variance is the difference between the actual material issued and the standard
material required to build a given assembly, calculated as follows:
standard material cost - (quantity issued - quantity required)
This variance occurs when you over or under issue components or use an alternate bill.
Resource and Outside Processing Efficiency Variance
The resource and outside processing efficiency variances is the difference between the resources
and outside processing charges incurred and the standard resource and outside processing
charges required to build a given assembly, calculated as follows:
(applied resource units X standard or actual rate) - (standard resource units at standard resource
rate)
This variance occurs when you use an alternate routing, add new operations to a standard
routing during production, assign costed resources to No – direct charge operations skipped by
shop floor moves, overcharge or undercharge a resource, or charge a resource at actual.
Move Based Overhead Efficiency Variance

Move based overhead efficiency variance is the difference between overhead charges incurred for
move based overheads (overhead basis of Item or Lot) and standard move based overheads
required to build a given assembly, calculated as follows:
applied move based overheads - standard move based overheads
This variance occurs when you use an alternate routing, add operations to a standard routing
during production, or do not complete all the move transactions associated with the assembly
quantity being built.
Resource Based Overhead Efficiency Variance

Resource based overhead efficiency variance is the difference between overhead charges incurred
for resource based overheads (overhead basis of Resource units or Resource value) and standard
resource based overheads required to build a given assembly, calculated as follows:
applied resource based overheads - standard resource based overheads
This variance occurs when you use an alternate routing, add new operations to a standard
routing during production, assign costed resources to No – direct charge operations skipped by
shop floor moves, overcharge or undercharge a resource, or charge a resource at actual.
Standard Cost Adjustment Variance

Standard cost adjustment variance is the difference between costs at the previous standards and
costs at the new standards created by cost update transactions.
Standard and Average Costing Compared

Cost Management offers two costing methods: standard costing and average costing.
Average costing is used primarily for distribution and other industries where the product cost
fluctuates rapidly, or when dictated by regulation and other industry conventions.
Average costing allows you to:

 Value inventory at a moving average cost track inventory and manufacturing costs without
the requirement of having predefined standards.
 Determine profit margin based on an “actual” cost method
 Measure the organization’s performance against historical costs
 Include all direct costs of manufacturing an item in that item’s inventory cost
 Use standard costing for performance measurement and cost control. Standard costing
allows you to:
 Value inventory at a predetermined cost
 Determine profit margin based on projected costs
 Record variances against expected costs
 Update standard costs from any cost type
 Evaluate production costs relative to standard costs
 Measure the organization’s performance based on predefined product costs
 Evaluate product costs to assist management decisions
Under average costing, you cannot share costs. Average costs are maintained separately in each
organization. Under standard costing if you use Inventory without Work in Process,you can
define your item costs in the organization that controls your costs and share those costs across
organizations. If you share standard costs across multiple organizations, all reports, inquiries,
and processes use those costs. You are not required to enter duplicate costs.
Note: The organization that controls your costs can be a manufacturing organization that uses
Work in Process or Bills of Material. Organizations that share costs with the organization that
controls your costs cannot use Bills of Material.
Valuation Accounts and Cost Elements with Average Costing

The system maintains the average unit cost at the organization level; it does not use any sub
inventory valuation accounts. If you had separate valuation accounts by sub inventory, total
inventories would balance, but account balances by sub inventory would not match the inventory
Valuation reports.
Note: Cost Management enforces the same account number for organization level material and in
transit accounts. Otherwise the balances of inventory valuation reports do not
equal the sum of accounting transactions.
Changing from Standard to Average Costing

Once transactions have been performed you cannot change the costing method of an
organization in the Organization Parameters window in Oracle Inventory.
Home
Receivables
Accounting for Transactions

This essay describes the accounting entries created when you enter transactions in Receivables
using the Accrual method of accounting.
Invoices
When you enter a regular invoice through the Transaction window, Receivables creates the
following journal entry:
DR Receivables
CR Revenue
CR Tax (If you charge tax)
CR Freight (If you charge freight)
If you enter an invoice with a Bill in Arrears invoicing rule, Receivables creates the following
journal entry:
In the first period of Rule:
DR Unbilled Receivables
CR Revenue
In all periods of Rule:
DR Receivables
CR Unbilled Receivables
If you enter an invoice with a Bill in Advance invoicing rule, Receivables creates the following
journal entries:
DR Receivables
CR Unearned Revenue
DR Unearned Revenue
CR Revenue
Receivables uses the Freight, Receivable, Revenue, Suspense, Tax, Unbilled Receivable, and
Unearned Revenue accounts that you specified in your Auto Accounting structure.
Credit Memos
When you credit an invoice, debit memo, or chargeback through the Credit Memos window,
Receivables creates the following journal entry:
DR Revenue
DR Tax (if you credit tax)
DR Freight (if you credit freight)
CR Receivables
When you credit a commitment, Receivables creates the following journal entries:
DR Revenue
CR Receivables
When you enter a credit memo against an installment, Receivables lets you choose between the
following methods: LIFO, FIFO, and Prorate.
When you enter a credit memo against an invoice with invoicing and accounting rules,
Receivables lets you choose between the following methods:
LIFO, Prorate, and Unit.
If the profile option Use Invoice Accounting for Credit Memos is set to Yes, Receivables credits
the accounts of the original transaction. If this profile option is set to No, Receivables uses Auto
Accounting to determine the Freight, Receivables Revenue, and Tax accounts.
Receivables use the account information for on–account credits that you specified in your Auto
Accounting structure. Receivables let you update accounting information for your credit memo
after it has posted to your general ledger.
Receivables keep the original accounting information as an audit trail while it creates an
offsetting entry and the new entry.
Commitments
Deposits
When you enter a deposit, Receivables creates the following journal entry:
DR Receivables (Deposit)
CR Unearned Revenue
These accounts come from the deposit’s transaction type. When you enter an invoice against this
deposit, Receivables creates the following journal entries:
DR Receivables (Invoice)
CR Revenue
DR Unearned Revenue
CR Receivables (Invoice)
When you apply an invoice to a deposit, Receivables creates a receivable adjustment against the
invoice. Receivables use the account information you specified in your Auto Accounting
structure. When cash is received against this deposit, Receivables creates the
Following journal entry:
DR Cash
CR Receivables (Deposit)
Guarantees
When you enter a guarantee, Receivables creates the following journal entry:
DR Unbilled Receivables
CR Unearned Revenue
These accounts come from the guarantee’s transaction type.When you enter an invoice against
this guarantee, Receivables creates the following journal entry:
CR Revenue
DR Unearned Revenue
CR Unbilled Receivables
When you apply an invoice to a guarantee, Receivables creates a receivable adjustment against
the guarantee. These accounts come from your guarantee’s transaction type.
When cash is received against this guarantee, Receivables creates the following journal entry:
DR Cash
Receipts
When you enter a receipt and fully apply this receipt to an invoice, Receivables creates the
DR Cash
CR Receivables
When you enter an unapplied receipt, Receivables creates the following journal entry:
DR Cash
CR Unapplied
When you enter an unidentified receipt, Receivables creates the following journal entry:
DR Cash
CR Unidentified
When you enter an on–account receipt, Receivables creates the following journal entry:
DR Cash
CR On–Account
When your receipt includes a discount, Receivables creates the following journal entry:
DR Receivables
CR Revenue
DR Cash
CR Receivables
DR Earned/Unearned Discount
CR Receivables
Receivables uses the default Cash, Unapplied, Unidentified, On–Account, Unearned, and Earned
accounts that you specified in the Remittance Banks window for this receipt class. When you
enter a receipt and combine it with an on–account credit, Receivables creates the following
journal entry:
DR Cash
DR On–Account
When you enter a receipt and combine it with a negative adjustment, Receivables creates the
following journal entries:
DR Cash
DR Write–Off
You set up a Write – Off account when defining your Receivables Activity.
When you enter a receipt and combine it with a positive adjustment, Receivables creates the
following journal entries:
DR Cash
CR Write–Off
When you enter a receipt and combine it with a Chargeback, Receivables creates the following
journal entries:
DR Cash
DR Receivables (Chargeback)
DR Chargeback
CR Receivables (Chargeback)
You set up a Chargeback account when defining your Receivables Activity.
Remittances
When you create a receipt that requires remittance to your bank, Receivables debits the
Confirmation account instead of Cash. An example of a receipt requiring remittance would be a
check before it was cashed. Receivables creates the following journal entry when you enter such a
receipt:
DR Confirmation
CR Receivables
You can then remit the receipt to your remittance bank using one of the two remittance methods:
Standard or Factoring. If you remit your receipt using the standard method of remittance,
DR Remittance
CR Confirmation
When you clear the receipt, Receivables creates the following journal entry:
DR Cash
DR Bank Charges
CR Remittance
If you remit your receipt using the factoring remittance method, Receivables creates the following
journal entry:
DR Factor
CR Confirmation
When you clear the receipt, Receivables creates a short-term liability for receipts, which mature at
a future date. The factoring process let you receive cash before the maturity date, and assumes
that you are liable for the receipt amount until the customer pays the balance on maturity date.
When you receive payment, Receivables creates the following journal entry:
DR cash
DR Bank Charges
CR Short Term Debt
On the maturity date, Receivables reverses the short term liability and creates the following
journal entry:
DR Short Term Debt

CR Factor
Adjustments
When you enter a negative adjustment against an invoice, Receivables creates the following
journal entry:
DR Write–Off
When you enter a positive adjustment against an invoice, Receivables creates the following
journal entry:
CR Write–Off
Debit Memos
When you enter a debit memo in the Transaction window, Receivables creates the following
journal entries:
DR Receivables
CR Revenue (If you enter line amounts)
DR Receivables
CR Finance Charges
On–Account Credits
When you enter an on–account credit in the Credit Memo or the Transaction window,
DR Revenue (If you credit line amounts)

DR Tax (If you credit tax)
DR Freight (If you credit freight)
CR Receivables
Receivables use the Freight, Receivable, Revenue, and Tax accounts that you specified in your
Auto Accounting structure.
Home
Payables
Accounting for Transactions

This essay describes the accounting entries created when you enter transactions in Payables using
the Accrual method of accounting.
Invoices
When you enter a regular invoice through the Transaction window, Payables creates the
DR Expenses
DR Tax (If you charge tax)
DR Freight (If you charge freight)
CR Liability
Credit Memos / Debit Memo

When you create credit memo, debit memo, transaction window, Payables creates the following
journal entry:
DR Liability
CR Expenses
Prepayment Invoice
When you create Prepayment Invoice through transaction window, Payables creates the
DR Prepayment Account
CR Liability Account
Payments
When you create Payment for Standard and Prepayment Invoice through transaction window,
Payables creates the following journal entry:
DR Liability Account
CR Cash Clearing Account
A payment when cleared and reconciled, Cash Management creates the following journal entry:
DR Cash Clearing Account
CR Cash \ Bank
When you create Payment for Credit / Debit Note through transaction window, Payables creates
the following journal entry:
DR Cash Clearing Account
A payment when cleared and reconciled, Cash Management creates the following journal entry:
DR Cash \ Bank Account
CR Cash Clearing Account
Prepayment Invoice when Applied to Standard Invoice

When you apply Prepayment Invoice through transaction window, Payables creates the
DR Liability Account
CR Prepayment Account
Invoice is capitalized
When you create Invoice and capitalize it through transaction window, Payables creates the
DR Asset Clearing Account

Accounting Entries in Various Modules

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Accounting Entries in Various Modules

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Accounting Entries in all modules – Inventory , Purchasing ,

Payables , Receivables ,Assets.

Dr. Depreciation Expense 200.00

Example: The recoverable cost is $4,000 and the method is

Current and Prior Period Addition

(Oracle Assets – PRIOR PERIOD ADDITION)

Dr. Asset Cost 4,000.00

Merge Mass Additions

Dr. Asset Cost 4,000.00

Cr. Asset Clearing 3,000.00

Cr. Asset Clearing 1,000.00

Construction–In–Process (CIP) Addition

You add a CIP asset. (CIP assets do not depreciate)

Deleted Mass Additions

Oracle Assets – CAPITALIZED IN PERIOD ADDED

Dr. Asset Cost 4,000.00

Oracle Assets – CAPITALIZED AFTER PERIOD ADDED

Dr. Asset Cost 4,000.00

Asset Type Adjustments

Oracle Assets – CHANGE TYPE FROM CAPITALIZED TO CIP (CURRENT PERIOD)

Cost Adjustments to Assets Using a Life–Based Depreciation Method

Dr. Asset Clearing 800.00

Dr. Asset Cost 800.00

Oracle Assets – AMORTIZED

Dr. Depreciation Expense 311.53

Cost Adjustments to Assets Using a Flat–Rate Depreciation Method

Dr. Asset Clearing 800.00

Dr. Asset Cost 800.00

Dr. Depreciation Expense 240.00

Oracle Assets – AMORTIZED

Dr. Depreciation Expense 240.00

Cost Adjustments to Assets Using a Diminishing Value Depreciation Method

Dr. Asset Clearing 800.00

Dr. Asset Cost 800.00

Dr. Depreciation Expense 192.00

Dr. Depreciation Expense 200.00

Cost Adjustments to Assets Depreciating Under a Units of Production

Dr. Asset Clearing 5,000.00

Dr. Asset Cost 5,000.00

Dr. Depreciation Expense 3,000.00

Dr. Depreciation Expense 3,666.67

Cost Adjustments to Capitalized and CIP Source Lines

Transfer Source Lines Between Assets (Prior Period)

Oracle Assets – TRANSFER LINE FROM ASSET #1 TO ASSET #2

Dr. Asset Cost 400.00

Oracle Assets – ADJUST DEPRECIATION ON ASSET #1

Dr. Depreciation Expense 55.00

Oracle Assets – TRANSFER LINE FROM ASSET #1 TO ASSET #2

Dr. Asset Cost 300.00

Cost Adjustment by Adding a Mass Addition to an Existing Asset

Oracle Assets – ADD MASS ADDITION TO AN EXISTING ASSET

Dr. Asset Cost 2,500.00

Depreciation Method Adjustments

Oracle Assets – EXPENSED

Dr. Depreciation Expense 250.00

Oracle Assets – AMORTIZED

Dr. Depreciation Expense 166.67

Oracle Assets – EXPENSED

Dr. Depreciation Expense 200.00

Dr. Depreciation Expense 183.33

Rate Adjustments – Flat–Rate Depreciation Method

Dr. Depreciation Expense 250.00

Dr. Depreciation Expense 187.50

Oracle Assets – AMORTIZED