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Design details: accounts in the general ledger

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To reconcile inventory and capacity ledger entries with the general ledger, the related value entries are posted to different accounts in the general ledger. For more information, see Design Details: Reconciliation with the General Ledger.

From the Inventory Ledger

The following table shows the relationship between different types of inventory value entries and the accounts and balancing accounts in the general ledger.

Item Ledger Entry Type Value Entry Type Variance Type Expected Cost Account Balancing Account
Purchase Direct Cost Yes Inventory (Interim) Invt. Accrual Acc. (Interim)
Purchase Direct Cost No Qty. on Hand Direct Cost Applied
Purchase Indirect Cost No Qty. on Hand Overhead Applied
Purchase Variance Purchase No Qty. on Hand Purchase Variance
Purchase Revaluation No Qty. on Hand Inventory Adjmt.
Purchase Rounding No Qty. on Hand Inventory Adjmt.
Sale Direct Cost Yes Inventory (Interim) COGS (Interim)
Sale Direct Cost No Qty. on Hand COGS
Sale Revaluation No Qty. on Hand Inventory Adjmt.
Sale Rounding No Qty. on Hand Inventory Adjmt.
Positive Adjmt.,Negative Adjmt., Transfer Direct Cost No Qty. on Hand Inventory Adjmt.
Positive Adjmt.,Negative Adjmt., Transfer Revaluation No Qty. on Hand Inventory Adjmt.
Positive Adjmt.,Negative Adjmt., Transfer Rounding No Qty. on Hand Inventory Adjmt.
(Production) Consumption Direct Cost No Qty. on Hand WIP
(Production) Consumption Revaluation No Qty. on Hand Inventory Adjmt.
(Production) Consumption Rounding No Qty. on Hand Inventory Adjmt.
Assembly Consumption Direct Cost No Qty. on Hand Inventory Adjmt.
Assembly Consumption Direct Cost No Direct Cost Applied Inventory Adjmt.
Assembly Consumption Indirect Cost No Overhead Applied Inventory Adjmt.
(Production) Output Direct Cost Yes Inventory (Interim) WIP
(Production) Output Direct Cost No Qty. on Hand WIP
(Production) Output Indirect Cost No Qty. on Hand Overhead Applied
(Production) Output Variance Material No Qty. on Hand Material Variance
(Production) Output Variance Capacity No Qty. on Hand Capacity Variance
(Production) Output Variance Subcontracted No Qty. on Hand Subcontracted Variance
(Production) Output Variance Capacity Overhead No Qty. on Hand Cap. Overhead Variance
(Production) Output Variance Manufacturing Overhead No Qty. on Hand Mfg. Overhead Variance
(Production) Output Revaluation No Qty. on Hand Inventory Adjmt.
(Production) Output Rounding No Qty. on Hand Inventory Adjmt.
Assembly Output Direct Cost No Qty. on Hand Inventory Adjmt.
Assembly Output Revaluation No Qty. on Hand Inventory Adjmt.
Assembly Output Indirect Cost No Qty. on Hand Overhead Applied
Assembly Output Variance Material No Qty. on Hand Material Variance
Assembly Output Variance Capacity No Qty. on Hand Capacity Variance
Assembly Output Variance Capacity Overhead No Qty. on Hand Cap. Overhead Variance
Assembly Output Variance Manufacturing Overhead No Qty. on Hand Mfg. Overhead Variance
Assembly Output Rounding No Qty. on Hand Inventory Adjmt.

From the Capacity Ledger

The following table shows the relationship between different types of capacity value entries and the accounts and balancing accounts in the general ledger. Capacity ledger entries represent labour time consumed in assembly or production work.

Work Type Capacity Ledger Entry Type Value Entry Type Account Balancing Account
Assembly Resource Direct Cost Direct Cost Applied Inventory Adjmt.
Assembly Resource Indirect Cost Overhead Applied Inventory Adjmt.
Production Machine Centre/Work Centre Direct Cost WIP Account Direct Cost Applied
Production Machine Centre/Work Centre Indirect Cost WIP Account Overhead Applied

Assembly costs are always actual

As shown in the table above, assembly postings are not represented in interim accounts. This is because the concept of work in process (WIP) does not apply in assembly output posting, unlike in production output posting. Assembly costs are only posted as actual cost, never as expected cost.

For more information, see Design Details: Assembly Order Posting.

Calculating the amount to post to the general ledger

The following fields in the Value Entry table are used to calculate the expected cost amount that is posted to the general ledger:

  • Cost Amount (Actual)
  • Cost Posted to G/L
  • Cost Amount (Expected)
  • Expected Cost Posted to G/L

The following table shows how the amounts to post to the general ledger are calculated for the two different cost types.

Cost Type Calculation
Actual Cost Cost Amount (Actual) – Cost Posted to G/L
Expected Cost Cost Amount (Expected) – Expected Cost Posted to G/L

See also

Design Details: Inventory Costing
Design Details: Inventory Posting
Design Details: Expected Cost Posting
Managing Inventory Costs
Finance
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