Accounting in Oracle R12

By
Kiyasudeen Aliyar, PMP

Oracle Consultant

kiyasudeena@gmail.com
Accounts setup in Oracle from po/inventory side

1. Item

2.

3. Inventory org level

 System uses this
ac during
receiving as
accrual ac for
inventory item
type for CR, DR
will be inv,
valuation ac

4. During resource definition

5. Suppliers
 At PO system options
Finance option: Purchase option Receiving option

Invoicing PO
Inv. AP Accrual DR
Receipt of raw materials AP liability CR
1.During Receipt Invoice price variance DR/CR
Receive (if any difference between PO price and invoice price)
Material inspection Ac DR Payment (when we do create ac before cash recon)
Inv. AP Accrual ac AP liability DR
CR Cash clearing CR
2.During Deliver Cash management recon
Inv. Valuation Ac DR (Do create accounting of same payment after
PO price variance ac matching and clearing trx in cash mgmt)
DR/CR Cash clearing DR
(if there is any difference in po unit price and cost of
item) Cash CR
Material inspection Ac CR (System will create additional entries to the same
payment entry

Inventory item purchase

Purchase the raw materials *Receive accounting , you can see in po

1.During PO(no accounting,if *Deliver acc

encombarace enabld then encom

entries)
 System uses this ac
during receiving for
Expense item purchase accrual ac for expense
non inventory items
How to set expense period end PO accounting
Purchasing system option set below (you have a option of period end or at receipt
only for expense items for inventory , only one option which is at rct)

Distributions you will see destination type expense and will require charge account
when you create PO with no inventory item

At receipt accounting took place as I setup accrue expense at receipt just for testing
At receipt -- Receiving, system only did receiving and below is accounting
Entered during po
creation at
destination type

At receipt Deliver

So basically, for non-inv item, inventory valuation ac gets cleared and expense is
finally booked to charge ac at po dist.
At the time of invoicing ( I reduced the unit price just to see the invoice price
variation )
 Accounting

Inventory Item PO with expense destination type:

When I entered the item po, and in the distribution window, it defaulted as
inventory and got charge ac as 1410 (inv. Valuation ac) but I was able to change the
type to Expense and then system allowed me to change the charge ac,interestingly
it defaulted expense ac setup at item setup (see above)

Let us receive and see what happens (if destination=Exp, then system is hitting
accrual ac set at purchase expense accrual)

Deliver ( item expense ac got dr)

And whenever the expense type =Inv. ,system picks accrual from org level

Expense item invoice without PO ( system dr expense ac ( entered in the invoice line
distribution) instead of accrual acs)

*Also in AP invoice window, if you say item, you cant give inventory item id instead can select po line or leave blank

**** will test this tomorrow

Receipt of raw materials Invoicing PO
1.During Receipt Inv. AP Accrual
Purchase the raw materials
Receive
1.During PO(no accounting,if
Accounts setup in WIP
encombarace enabld then encom
( you define forinspection
Material each type Ac of
DRjob)
Inv. AP Accrual ac
entries)
CR
2.During Deliver
Inv. Valuation Ac DR
PO price variance ac
DR/CR
Scrap account is required then you need to provide during materials movement to
scrap operation
Item Cost setup (setup from inv. Resp. item cost screen)

Resource cost ( Bill of Materials resp. Routing screen-> resource setup

screen)
From overhead button enter the type of costs ( initially, you enter cost for pending, then from bill of materials, do
tools-> rollup,it will delete the old costing then from inv. Do cost update,it will roll all the new pending cost to frozen cost)

Enter rate from rates button

No overhead cost for packing

Department overhead cost

You define all the cost for pending or any type then run rollup from bill
and cost update from inv.
Bill of materials

Routing

Coffie Bite is finished item and so cost will roll up from bill & routing
 WIP JOB 9009 completed and below are the accounting
Resource Accounting

Material trx accounting

Sugar has material cost of 50,material overhead (PO cost)
52,overhead 2
milk has material cost of 100
cocoa has material cost of 100
Resource: condensing 200+packaging 50
Depart - condensing has indirect overhead of 100 Total :material :250;Resourse:250 ;overhead:5.1 +52 =
department - packaging has eqp/tool cost of 3.1/hr and 557.1
indirect overhead of 50/hr Indirect overhead of 100+50 = 150
Total of all cost :557.1+150 = 707.1
Sugar:

Milk

Cocoa

Coffie bite

Org parm

For

Comparison

Wip class
setup
For
Comparison

Intransit Accounting:
Transferd from M2 to M1

Created sales order 66398,pick relasing it, so it will create material transfers
After pick confirm, I didnt see any accounting before pick confirm

After ship confirm

After invoicing

After payment

940 goes to unapplied cahs account because total receipt was for 2000 and we only applied 1060.
Applied another invoice for the rest of the amount.re-run create accounting and below is the
accounting for the same receipt
 If you just unapply the addition invoice and run create acconting then below

What happens if we create write off instead of applying to another invoice

Write off a/c
4150 comes
from
receivable
activity

When I unapply from claim and applied to on account

Application looks as below

After applying invoice to receipt and running Generate COGs events, system transferd amount from
deferred ac to COGS ac

PO write off:
So when you receive goods, we have accrual entries either at receipt or at period end that entries
again here are
For inventory destionation For Expense destination
Receiving inspection A/c DR Charge a/c entered at the po creation DR
AP Accrual Account CR AP expense accrual setup at purchase system option CR

So write off is, we are saying we dont invoice for that value and we are writing off so we have to clear the accrual
entries

AP accrual Account or AP expense accrual ac DR

Write off off set which is invoice price variace setup at org level CR

* Miscellaneous Write-Offs - allow you to select an offset account

* AP and PO Write-Offs - use invoice price variance account as a offset account
i