This section shows accounting entries for average costing purchasing transactions.

Purchase Order Receipt to Receiving Inspection

You can use the Receipts window in Oracle Purchasing to receive material or outside processing items from a supplier into a receiving location (destination type = receiving). You can also use this window to receive material directly to inventory. See: Purchase Order Receipt To Inventory.

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.

See: Receipt Accounting,

Overview of the Account Generator,

Using the Account Generator in Oracle Purchasing.

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 average cost. The accounting entries are as follows:

The average cost is recalculated using the transaction value of the purchase order cost times the transaction quantity.

Material Overhead

If your item has material overhead(s), you earn material overhead on deliveries from receiving inspection. The accounting entries are as follows:

Foreign Currencies

If the purchase order uses a foreign currency, the purchase order cost is converted to the functional currency before the accounting entries are generated. This converted value is used for receiving accounting purposes.

The average cost is recalculated using the transaction value of the purchase price converted to the inventory functional currency times the transaction quantity.

Expense Subinventories and Expense Inventory Items

With Oracle Purchasing and Inventory, there are two types of expense items. Purchasing has non-inventory purchases, such as office supplies or capital equipment. These items use an expense destination type for the purchase order's distribution information. You can inspect these purchasing items in receiving, but you cannot deliver these items into inventory.

However, expense inventory items can be stocked in a subinventory, but cannot be valued. Expense inventory items use an inventory destination type for the purchase order's distribution information. Expense inventory items can be delivered into both expense or asset subinventories.

When you receive to expense locations or receive expense inventory items the accounting entries are as follows:

When you receive into an expense subinventory or receive an expense (non-asset) inventory item, the system debits the subinventory expense account instead of the valuation accounts.

Entering Receiving Transactions,

Defining Ledgers and

Organization Parameters Window.

Purchase Order Receipt to Inventory

You can use the Receipts window to receive material directly from a supplier to inventory (destination type = inventory).

When you receive material from a supplier directly to inventory, a receipt and delivery transaction are performed in one step.

The accounting entries for the receipt portion of the transaction are as follows:

Material Overhead

If your item has material overhead(s), you earn material overhead on the delivery portion of the transaction. The accounting entries are as follows:

Foreign Currencies

The average cost is recalculated using the transaction value of the purchase price converted to the inventory functional currency times the transaction quantity.

Delivery From Receiving Inspection to Inventory and

Overview of Receipt Accounting.

Invoice Variance Transfer

You can transfer variances between purchase order price and invoice price back to inventory, from your user-defined adjustment account, usually an IPV account.

The accounting entries for this transaction varies depending on which account goes negative:

or

Transferring Invoice Variance

Return To Supplier From Receiving

Use Receiving Returns and Receiving Corrections windows to return material from receiving inspection or from inventory to a supplier. If you use receiving inspection and you have delivered the material into inventory, you must first return the goods to receiving before you can return to the supplier. For a return from inspection, the application decreases the receiving inspection balance and reverses the accounting entry created for the original receipt. To decrease the inventory balance, the return to supplier transaction uses the purchase order cost, not the current average unit cost.

See: Entering Returns and Outside Processing Charges

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. To decrease the inventory balance, the return to supplier transaction uses the purchase order cost.

Foreign Currencies

As with the purchase order receipts to inventory, if the purchase order uses a foreign currency, the purchase order cost is converted to the functional currency before the accounting entries are generated.

Entering Returns.