The following scenario illustrate a short example of a Revenue / COGS matching for a sales order where Accounting rule

used is: 3 Months, Deferred

Navigation 1. nventor!" tem #aster"$efine item ##% T&#'( )*urchase tem+

Figure 1

,. #iscellaneous Receipt Navigation- #iscellaneous Transactions"Receive ##% T&#'( in Su.inventor! Store. /t! 10011(2S$

3.4iew #aterial Transactions

Figure 2

5. 4iew #aterial $istri.ution

Figure 3

(. Review the tem cost - Costs" tem Cost

Figure 4

'. $efine 6ccounting Rules in 6ccount Receiva.les 6ccount Receiva.les"Setup"Transactions"6ccounting Rules There are two *redefined 6ccounting rules a%3 #onths 7 $eferred .% mmediatel!

Figure 5

Figure 6

8. &nter a SO )eg '395:+

Figure 7

9. SO '395: .oo;ed with Ordered item ##% T&#'(/<t!=(/ price=1(/ 6ccounting rule=3 #onths7 $eferred Shipping warehouse=#3

Figure 8

:. *ic; Release the SO

Figure 9

10. Ship Confirm the SO

Figure 10

11. tem is shipped

1,. >ine is closed

13. Review the #aterial Transactions form

15. $istri.ution of the SO issue ?hen a Sales order is shipped the following accounting ta;es placenventor! 4aluation 6ccount- Credit. $eferred COGS account- $e.it

1(. Run the ?or;flow @ac;ground *rocess re<uest

1' . Create the nvoice with the 6utoinvoice re<uest Sales Order 6ccounts Receiva.les" nterfaces"6utoinvoice

18.Chec; the nvoice in 6R 6ccounts Receiva.les"Control"6ccounting

19. nvoice generatednvoice= 10033809

1:. RecogniAe the revenue in 6R

,0. 6fter recogniAing the revenue. ?e need to accept it. #anage Revenue-

,1. Now the revenue has .een recogniAed according to our accounting rule- 3 #onths7 $eferred (0B 6ugust ,(BSeptem.er ,(BOcto.er Cor 6ugust (0B of the revenue has .een recogniAed

,,. Now we run a set of concurrent processes to record sales order and revenue
recognition transactions and to create and cost COGS recognition transactions. These COGS recognition transactions adDust deferred and earned COGS in an amount that s!nchroniAes the B of earned COGS to earned revenue on sales order shipment lines.

,3. Record Order Management Transactions- records new sales order transaction
activit! such as shipments and R#6 returns in Oracle Order #anagement.

24. Collect Revenue Recognition Information- determines the percentage of recogniAed or earned revenue related to invoiced sales order shipment lines in Oracle Receiva.les.

,(. Generate COGS Recognition Events- creates and costs COGS recognition
events for new sales order shipments/returns and changes in revenue recognition and credits for invoiced sales order shipment lines.

,'. 6 non%ph!sical transaction has .een generated Transaction T!pe= COGS Recognition

The distri.ution for the COGS Recognition transaction associated with the Sales Order transaction now would .e as follows$effered COGS - $e.it ! revenue percentage COGS - Credit )6ctual revenue percentage + Thus7 essentiall! the recogniAed COGS .alance is to move the value from $eferred COGS to COGS. This particular COGS recognition transaction actuall! corresponds to a revenue recognition percentage change.