Variance Accounts

The accounts to which Payables records invoice distributions and any related variance distributions depend on your accrual method (receipt or period end), and the item type (expense or inventory).

If you use the receipt accrual method, (also known as perpetual accrual), the system automatically records an accrual when you record an item as received in Oracle Purchasing. When you create accounting entries for the invoice, Payables reverses this accrual and records the AP liability. If you use period end accruals, you run the Accrual Process for Period End Accruals and enter a reversing manual journal entry for the AP accrual. When you create accounting entries for the invoice, Payables records the expense and the AP liability. For inventory items you must use the receipt accrual method. For expense items you select your Accrue Expense Items Purchasing option, either On Receipt or Period End.

If you use Period End Accrual, and if the CCID segments are the same, then the system summarizes IPV and ERV expenses with the distribution and nonrecoverable tax expenses in a single expense entry. Any lines with different CCIDs appear as separate entries.

Payables creates all variance distributions at invoice validation time.

Expense Items

The following table shows the variance accounts used for expense items:

Accrual Method Purchase Order Expense Quantity Variance Invoice Price Variance Exchange Rate Variance
On Receipt Expense AP Accrual Account Expense AP Accrual Account Charge Account Charge Account
Period End Charge Account Charge Account Charge Account Charge Account

Inventory Items

The following table shows the variance accounts used for inventory items:

Accrual Method Purchase Order Expense Quantity Variance Invoice Price Variance Exchange Rate Variance
On Receipt Inventory AP Accrual Account Inventory AP Accrual Account Invoice Price Variance Account Exchange PO Rate Variance Gain or Loss Account