The following cost transactions can occur in distribution organizations:
Inter-Organization Transfer Transactions
Standard Costing Order Management/Shipping Execution Transactions
Standard Costing Purchasing Transactions
Note: For purchasing related transactions, this table applies to inventory destinations. See: Overview of Receipt Accounting.
See: Standard and Average Costing Compared
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.
| Account | Debit | Credit |
|---|---|---|
| Receiving Inspection account @ PO Cost | XX | - |
| Inventory A/P Accrual account @ PO Cost | - | XX |
Next, the Subinventory and Receiving Inspection accounts are, respectively, debited and credited based on the transaction quantity and standard cost of the received item.
| Account | Debit | Credit |
|---|---|---|
| Subinventory accounts @ standard cost | XX | - |
| Receiving Inspection account @ PO Cost | - | XX |
| Debit/Credit Purchase Price Variance |
If your item has material overhead(s), then the subinventory entry is debited for the material overhead and the material overhead absorption account(s) is credited.
| Account | Debit | Credit |
|---|---|---|
| Subinventory accounts | XX | - |
| Material Overhead Absorption account | - | XX |
Attention: If the subinventory account is combined with the above entry, then the material overhead absorption account adds one additional entry.
See: Delivery From Receiving Inspection to Inventory
See: Overview of Receipt Accounting
Use the Receiving Returns and Receiving Corrections windows to return material to suppliers. If you use receiving inspection and have delivered material into inventory, then you must first return the goods to receiving before you can return to your supplier. When items are returned to a supplier from receiving inspection, the Inventory A/P Accrual account is debited and the receiving inspection account is credited, thus reversing the accounting entry created for the original receipt.
See: Entering Returns
See: Outside Processing Charges.
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.
As with the purchase order receipt to inventory transaction, the system converts the purchase order price to the ledger currency and uses this converted value for the return to supplier accounting entries.
See: Entering Returns.
Ship material on a sales order using Oracle Shipping Execution. Here are the accounting entries generated by a sales order shipment:
| Account | Debit | Credit |
|---|---|---|
| Deferred Cost of Goods Sold account | XX | - |
| Subinventory accounts @ standard cost | - | XX |
Attention: You do not create any accounting information when you ship from an expense subinventory or ship an expense inventory item.
You can receive items back from a customer using the return material authorization (RMA) Receipts window. An RMA receipt results in a credit to total COGS (split appropriately between deferred COGS and COGS if necessary), and a debit to inventory.
| Account | Debit | Credit |
|---|---|---|
| Subinventory accounts at standard cost | XX | - |
| Cost of Goods Sold Account | - | XX |
| Deferred Cost of Goods Sold Account | - | XX |
This example 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 subinventory.
See: Return Material Authorizations.
You can return items received into inventory through an RMA back to the customer using the RMA Returns window. For example, you can send back (return) an item that was returned by the customer to you for repair.
This example transaction reverses an RMA receipt. It also mimics a sales order shipment and updates the same accounts as a sales order shipment.
| Account | Debit | Credit |
|---|---|---|
| Cost of Goods Sold Account | XX | - |
| Deferred Cost of Goods Sold Account | XX | - |
| Subinventory accounts @ standard cost | - | XX |
The return amount is split between COGS and Deferred COGS. The application returns non-referenced RMA's at the current standard COGS. Referenced RMA's are returned at the original sales order issue cost. This leaves an unallocated balance (variance) that is due to one or more standard cost updates that must have occurred since the original sales order issue. This variance is created using the item COGS account, but the line type is the standard cost update adjustment account. The COGS account should be replaced in subledger accounting (SLA) with an actual standard cost update adjustment account.
Attention: Do not create any accounting entries when you return material for an RMA for an expense item or expense subinventory.
See: Return Material Authorizations.
Using the Miscellaneous Transaction window, you can issue material from a subinventory to a general ledger account (or account alias) or receive material to a subinventory from an account or alias. An account alias identifies another name for a general ledger account.
Suggestion: Use account aliases for account numbers that you use frequently. For example, use the alias SCRAP for your general ledger scrap account.
Issuing material from a subinventory to a general ledger account or alias generates the following accounting entries:
| Account | Debit | Credit |
|---|---|---|
| Entered General Ledger Account @ standard cost | XX | - |
| Subinventory accounts @ standard cost | - | XX |
Receiving material to a subinventory from an account or an alias generates the following accounting entries:
| Account | Debit | Credit |
|---|---|---|
| Subinventory accounts @ standard cost | XX | - |
| Entered General Ledger Account @ standard cost | - | XX |
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, then you can issue to an account or to an asset subinventory if the INV:Allow Expense to Asset Transfer profile option in Oracle Inventory is set to Yes. If issued to an account, then the system assumes the material is consumed at the expense location and moves the quantity without any associated value. If transferred to an asset subinventory, the material moves at its current cost.
When you perform a miscellaneous transaction to receive an expense item to either an asset or expense subinventory, no accounting occurs. Because the account balance could involve different costs over time, the system assumes that the cost of the expense item is unknown.
See: Performing Miscellaneous Transactions
This transaction increases the accounts of the to subinventory and decreases the from subinventory, but has no net effect on overall inventory value.
If you specify the same subinventory as the fFrom and to subinventory, then you can move material between locators within a subinventory.
| Account | Subinventory | Debit | Credit |
|---|---|---|---|
| Subinventory accounts | To | XX | - |
| Subinventory accounts | From | - | XX |
You can issue from an asset to an expense subinventory, but you can transfer from an expense subinventory only 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.
See: Transferring Between Subinventories
You can use the internal requisitions to replenish inventory. You can source material from a supplier, a subinventory within your organization, or from another organization. Depending upon the source that 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.
See: Overview of Internal Requisitions
See: Purchase Order Receipt To Inventory
See: Inter-Organization Transfers
Use cycle counting and physical inventory to correct inventory on-hand balances. A cycle count updates the accounts of the affected subinventory and offsets the adjustment account you specify. If you physically count more than your on-hand balance, then here are the accounting entries:
| Account | Debit | Credit |
|---|---|---|
| Subinventory accounts @ standard cost | XX | - |
| Adjustment account @ standard cost | - | XX |
If you count less than your on-hand balance, then here are the accounting entries:
| Account | Debit | Credit |
|---|---|---|
| Adjustment account @ standard cost | XX | - |
| Subinventory accounts @ standard cost | - | XX |
Like a cycle count, a physical inventory adjustment also updates the accounts of the affected subinventories 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 application does not record accounting entries for expense subinventories or expense items for either physical inventory or cycle count adjustments. However, the on-hand balance of an expense subinventory is corrected if you track the quantities.
See: Overview of Cycle Counting
See: Overview of Physical Inventory