Tuesday, November 25, 2014

Purchase Order Accounting For Product Receipts and Vendor Invoices


We all already have concept of Purchase order processing and its accounting but how the Dynamics AX will do its accounting for a Standard Purchase Order processing we can see the Dynamics AX accounting according to event wise.

The purpose of the posting accounts is to allow Microsoft Dynamics AX to write an accounting entry for the whole value of the purchase, without any variances, and thus allow it to handle the variances in a separate voucher. This new posting account temporarily records the cost in control account and then moves the cost into ledger account.

Let’s see the effects and nature of accounting according to purchase order posting.

Purchase Order Accounting For Product Receipts:
Voucher No.
Posting Type
Dr.
Cr.
Purpose
Voucher # 1
Purchase Expenditure Un-invoiced
Dr.
 
To account for Accrued Liability.
 
Purchase Accrual
 
Cr.
Voucher # 2
Product Receipt
Dr.
 
Capitalizing the Cost in Inventory Assets Ledger Account.
 
Purchase Expenditure - Un-invoiced
 
Cr


Nature of Purchase Expenditure Un-invoiced

This is a control Account and used as the offset main account for accrued liability amounts when a product receipt is recorded. This account can be used for both stocked & Non-Stocked products. But as a user, you might want to assign a different account for non-stocked item to see any product receipts that are not invoiced yet.




Purchase Order Accounting For Vendor Invoices:

Voucher No.
Posting Type
Dr.
Cr.
Purpose
Voucher # 3
Purchase Accrual
Dr.
 
Reversal of accrued liability i.e. Voucher # 1.
 
Purchase Expenditure Un-invoiced
 
Cr.
Voucher # 4
Purchase Expenditure for Product
Dr.
 
To record the liability for the vendor invoice
 
Vendor Balance
 
Cr.
Voucher # 5
Purchase Expenditure Un-invoiced
Dr.
 
Reversal of Capitalizing inventory cost i.e. Voucher # 2.
 
Product Receipt
 
Cr.
Voucher # 6
Purchase, Inventory Receipt
Dr.
 
Accounting entry to record the actual inventory cost.
 
Purchase Expenditure for Product
 
Cr.


Nature of Purchase Expenditure for Product
This is a control account and is used as an offset main account for liability amounts when a vendor invoice is recorded. It is used for stocked Items.


Conclusion:
The value of inventory will increase (for a normal purchase) and where a standard cost item is being
Used, if there is a variance this will be recorded in the PPV account and liability to pay the vendor will be generated in the vendor balance account. 

Enjoy the DAXING !!!

2 comments:

  1. Thanks for sharing the important task with us..
    This is really very nice blog....

    Vat Purchase

    ReplyDelete
  2. " Investment Club Accounting has never been easier. Discover a step-by-step process to running the accounts for your investment club"

    ….How to free up time, save headaches and make your life easier!

    Find out here: Investment Club Accounting?

    Thanks again

    ReplyDelete