Accounting distributions and journal entries for vendor invoices

Accounting distributions are used to define how an amount will be accounted for, such as how the expense, tax, or charges will be accounted for on a vendor invoice. Every amount that must be accounted for when the vendor invoice is journalized will have one or more accounting distributions.

Accounting distributions

You can use the following buttons in the Vendor invoice page to view, and possibly modify, the accounting distributions for each amount on the vendor invoice.

• Distribute amounts – View and modify the accounting distributions for an individual line and any child lines, such as taxes or charges. You can also view and modify the accounting distributions for the child line directly from the Sales tax transactions page or the Charges transactions page.
  • Modify vendor invoice header amounts, such as charges or currency rounding amounts.
  • Modify vendor invoice line amounts.
• View distributions – View the accounting distributions for all lines on the document. You cannot modify the accounting distributions from this view.
  • View header and line amounts.

If the vendor invoice references a purchase order, you can split and modify the accounting distributions for lines that contain an item that is not stocked. If the vendor invoice line does not reference a purchase order line, you can also delete an accounting distribution. You cannot split or delete lines for charges, taxes, and line discounts. You can modify the ledger account, but you cannot change the amounts or percentages.

Note

If the parent line contains an item that is not stocked and the accounting distributions are split, the child line will be split automatically to match the financial dimensions of the parent line. The accounting distributions for the child line cannot be additionally split or deleted, but depending on the setup of the child line, you might be able to modify the ledger account for the accounting distributions of the child line.

Distributing amounts

When you enter a vendor invoice, each amount will be distributed as follows.

Type of vendor invoice line	Order of priority that determines where the main account is displayed from	Order of priority that determines which default financial dimension is displayed
Stocked product	The accounting distribution for the purchase order line. The Main account field when Purchase expenditure for product is selected on the Posting page. Cost management > Ledger integration policies setup > Posting > Purchase order.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the default financial dimension values on the vendor invoice.
A procurement category or a product that is not stocked	The accounting distribution for the purchase order line, if the vendor invoice line references a purchase order line. The Main account field when Purchase expenditure for expense is selected on the Posting page. Cost management > Ledger integration policies setup > Posting > Purchase order.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. If the main account is an allocation account, use the default value from the allocation account definition. Use the default financial dimension values on the vendor invoice. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Fixed asset	The accounting distribution for the purchase order line, if the vendor invoice line references a purchase order line. If Acquisition is selected in the Transaction type field on the Vendor invoice page, the Main account field when Acquisition is selected on the Fixed asset posting profiles page. If Acquisition adjustment is selected on the Transaction type field, the Main account field when Acquisition adjustment is selected on the Fixed asset posting profiles page.	Use the account distribution for the purchase order line, if the invoice line references a purchase order line. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Project defined on the vendor invoice line	The accounting distribution for the purchase order line, if the invoice line references a purchase order line. If Balance is selected in the Post costs - item field in the Project groups page, the Main account field when Cost is selected on the Ledger posting setup page. If Profit and loss is selected in the Post costs - item field in the Project groups page, the Main account field when Cost - item is selected on the Ledger posting setup page.	If the invoice line references a purchase order line, use the account distribution for the purchase order line.
Line discount	The accounting distribution for the purchase order line, if the invoice line references a purchase order line. The Main account field when Discount is selected on the Posting page. If a main account for a discount is not defined on the posting profile, the accounting distribution of the extended price on the purchase order line.	If the invoice line references a purchase order line, use the accounting distribution for the purchase order line. Use the financial dimensions from the accounting distributions for the extended price on the vendor invoice line. Use the financial dimension values for the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Purchase charge, which is entered on the Price and discount tab of the purchase order line	The accounting distribution for the purchase order line, if the invoice line references a purchase order line. The accounting distribution of the extended price on the purchase order line.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the financial dimensions from the accounting distributions for the extended price on the vendor invoice line.
Line charge	The accounting distribution for the purchase order line, if the invoice line references a purchase order line. If Ledger account is selected in the Debit type field on the Charges code page, the Debit Account field on the Charges code page. If Item is selected in the Debit type field on the Charges code page, the accounting distribution for the extended price on the purchase order line. If Customer/Vendor is selected in the Debit type field on the Charges code page, the Credit account field on the Charges code page.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the financial dimensions from the accounting distributions for the extended price on the vendor invoice line. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Tax, with the following condition: The Apply U.S. taxation rules option is selected on the General ledger parameters page.	The accounting distribution for the purchase order line, if the invoice line references a purchase order line. The accounting distribution of the extended price or charge.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the financial dimensions from the accounting distributions for the extended price on the vendor invoice line. Use the financial dimension values from the vendor invoice line.
Tax, with the following conditions: The Apply U.S. taxation rules option is cleared on the General ledger parameters page. The Use tax field for the sales tax group is cleared on the Sales tax groups page.	If the tax amount is recoverable, the Sales tax receivable field on the Ledger posting groups page. If the tax amount is not recoverable, the extended price or the accounting distribution for the charge.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the financial dimensions from the extended price or the accounting distributions for the charge on the vendor invoice line. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Tax, with the following conditions: The Apply U.S. taxation rules option is cleared on the General ledger parameters page. The Use tax field for the sales tax group is selected on the Sales tax groups page.	If the tax amount is recoverable, the Sales tax receivable field on the Ledger posting groups page. If the tax amount is not recoverable, the Use tax expense field on the Ledger posting groups page.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the financial dimensions from the extended price or the accounting distributions for the charge on the vendor invoice line. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Header charge	If Ledger account is selected in the Debit type field on the Charges code page, the Debit account field on the Charges code page. If Customer/Vendor is selected in the Debit type field on the Charges code page, the Credit account field on the Charges code page.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. If the main account is an allocation account, use the default value from the allocation account definition. Use the financial dimension default template values from the vendor invoice header. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.
Header discount	The Main account field for the Vendor invoice discount posting type on the Accounts for automatic transactions page.	If the invoice line references a purchase order line, use the account distribution for the purchase order line. Use the financial dimensions from the accounting distributions for the extended price on the vendor invoice line. Use the financial dimension values from the vendor invoice line. Use the default financial dimension values from the main account on the Chart of accounts page.

Distributing taxes

Accounting distributions for taxes cannot be created until taxes are calculated. To calculate sales taxes, you must complete one of the following tasks on the Vendor invoice page:

• View the invoice total.
• View the sales tax.
• View the subledger journal.
• View accounting distributions for the complete vendor invoice.
• Place the vendor invoice on hold.
• Post the vendor invoice.

Subledger journals for vendor invoices

Before you post a vendor invoice, you can view the full accounting entry of the invoice, which includes debits and credits, to verify that the invoice is being posted to the correct accounts. This view of the full accounting entry is called a subledger journal.

If the subledger journal entry is incorrect when you preview it before you journalize the vendor invoice, you cannot modify the subledger journal entry. Instead, you must modify the accounting distributions or the posting profile. The accounting distributions are used to define one side of the accounting entry, the debit or the credit. The offsetting subledger journal account entry is created by using the posting profiles, such as from the vendor account or tax.

Split vendor invoice posting

During the posting of pending vendor invoices, the posting process involves a substantial transaction flowing into the source document account framework first and the General ledger subsequently. When the invoice data flows into the source document account framework, massive derivations and validations are applied before the subledger is updated. A performance and memory overflow issue might occur with invoices that contain a lot of lines.

The Enable the vendor invoice to be posted in two stages feature creates two batches for pending vendor invoice posting. The first batch posts uses the original invoice posting except creating the subledger journals. The second batch posting creates subledger journals to generate accounting. After the second batch is posted, transferring the subledger to general ledger can be done. This reduces the likelihood of memory overflow and enhance overall performance when the invoice contains thousands of lines. When posting pending vendor invoices has dependencies on other modules or subsequent processes, the original invoice posting process is used.

The following situations use the original posting process:

• Prepayment invoice posting
• Invoice posting with prepayment application
• Invoice posting with budget control enabled
• Project invoice posting
• PO/invoice with Terms of payment of Cash
• Invoice posting with AP parameter auto-settlement enabled