Invoice Match General Ledger Transactions Version

Contents

Overview

This sections describes the General Ledger transactions that the system records as a result of matching purchase orders/receipts and invoices.

Purchase Order

No general ledger transactions created.

Receipts

Receipts and issues occur for both stock and non-stock items. All items, regardless of whether they are stock or non-stock, increase inventory at the time of receipt. The receipt and issue for non-stock items occur simultaneously.

When items are received, the item expense is written to the appropriate account. The PO Liability is accrued. PO Liability contains the dollar amount of items received but not yet invoiced. This amount may be different from the invoiced amount because of freight, taxes, or purchase order pricing errors.

Requisitions

When a requisition is created, approved, or released, no general ledger transactions are created. When a requisition is released, it is included on a Pick. When a Pick is confirmed (see below), the items are issued and general ledger transactions are created.

Confirm Pick

When an item is issued, a departmental expense is booked and inventory is relieved. Expenses can be tracked to each department through the department expense report. Departmental expenses are no longer booked when the invoice is entered into accounts payable.

Credit Requisition (Return)

From a Department to Inventory for file items -- stock and non-stock:

A credit requisition returns items from a Department to Inventory. When a credit requisition is submitted for approval, it is completed and the general ledger transactions are created.

From Inventory to a Vendor for file items -- stock and non-stock:

When a credit purchase order is completed, Inventory and the PO Liability accounts are decreased. The credit memo received from the vendor should be matched to the credit purchase order.

From a Department to a Vendor for non-file items

When a credit purchase order is completed, Department Expense and the PO Liability accounts are decreased. The credit memo received from the vendor should be matched to the credit purchase order.

Inventory Adjustment

Inventory adjustments set system on-hand quantity to actual on-hand quantity. There are three adjustment types: Add, Remove, and Set To. The "add" type increases the Inventory and Inventory Adjustment expense. The "remove" type decreases the Inventory and Inventory Adjustment expense. The "set to" type either increases or decreases the Inventory and Inventory Adjustment expense, depending on whether the "set to" quantity is greater or less than the system on-hand quantity.

Add:

Remove:

Set to:

Quantity Exception: Stock items:

If the invoice quantity is greater than the receipt quantity, and the invoice quantity is correct, when the invoice exception is cleared, a receipt is created for the invoice quantity in excess of the receipt quantity. The receipt is a regular receipt and creates the same general ledger transactions.

Quantity Exception - Non-stock items:

If the invoice quantity is greater than the receipt quantity, and the invoice quantity is correct, when the invoice exception is cleared, a receipt is created for the invoice quantity that is in excess of the receipt quantity. The receipt is a regular receipt and creates the same general ledger transactions. Any remaining quantity on the backorder for the item and the purchase order is issued. If no quantity is on backorder to a department, the quantity remains on hand in inventory -- nothing is issued. A requisition would need to be created to issue the quantity to a department.

Price Exception - Stock items where on-hand quantity is greater than or equal to receipt quantity:

If the invoice price is greater or less than the receipt price, and the invoice price is correct, when the exception is cleared, an adjustment receipt is created for the difference between the invoice and receipt prices. This receipt is an adjustment receipt and creates the same general ledger transactions as a regular receipt. Inventory is increased or decreased by the amount of the adjustment receipt. The average cost is changed to reflect the adjustment. Therefore, future issues include a price adjustment.

Invoice price greater than receipt price:

Invoice price less than receipt price:

Price Exception - Stock items where on-hand quantity is less than receipt quantity:

If the invoice price is greater or less than the receipt price, and the invoice price is correct, when the exception is cleared, an adjustment receipt is created for the difference between the invoice and receipt prices. This receipt is an adjustment receipt and creates the same general ledger transactions as a regular receipt. Inventory is increased or decreased by the amount of the adjustment for the quantity on hand, and the average cost is changed to reflect the adjustment. Therefore, future issues include the price adjustment. For the quantity previously issued, the price adjustment is posted to the inventory adjustment account since stock issues cannot be traced to a particular purchase order.

Invoice price greater than receipt price:

Invoice price less than receipt price:

Price Exception - Non-stock and non-file items:

If the invoice price is greater or less than the receipt price, and the invoice price is correct, when the exception is cleared, an adjustment receipt is created for the difference between the invoice and receipt prices. This is an adjustment receipt and creates the same general ledger transactions as a regular receipt. The amount of the adjustment is passed on to the department that the non-stock or non-file item was issued to. Therefore, the department expense is increased or decreased by the amount of the price adjustment.

Invoice price greater than receipt price:

Invoice price less than receipt price:

Invoice

When an invoice is received and is matched with receipts, the liability is moved from the PO Liability Account to the AP Liability. The AP Liability account holds the dollar amount of open invoices. This account balance is reconciled using reports from accounts payable.

Invoice with Price Variance

To correct small purchase order pricing discrepancies and facilitate invoice processing, an invoice tolerance can be set. When an invoice is received and is matched with receipts, the liability is moved from the PO Liability account to the AP Liability account. The difference between the invoice cost and receipt, if within the invoice tolerance, is booked to the purchase price variance account. If the difference between the invoice cost and receipt cost is greater than the invoice tolerance, the invoice is in exception and the exception must be cleared to complete the invoice matching.

Invoice price greater than receipt price:

Invoice price less than receipt price:

Credit Memo

When a credit memo is received for goods returned to a vendor, and is matched to the credit purchase order's receipt, the PO Liability and AP Liability accounts are decreased.

Cash

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