Post to charge account accounting principle

Článok
06/07/2024

The post to charge account accounting principle lets you account for and more easily reconcile any differences that occur in the unit price between a physical posting and financial posting, indirect costs on purchased items, or charges on a purchase order.

Two configurations for Accounts payable charges codes on the Charges code page (Accounts payable > Charges setup > Charges code) can cause a purchase order to affect the valuation of inventory assets:

For charges codes where the Debit type field is set to Item and the Credit type field is set to Ledger account, the ledger account that is selected as the absorption account acts as a stock variation account.
For charges codes where the Debit type field is set to Item and the Credit type field is set to Customer/Vendor, the charge will be accounted as material cost, and the stock variation account of the item will be used.

European special accounting rule

In Europe, the post to charge account accounting principle is often used to incorporate a special accounting rule. For example, one of the following methods is typically used to account for inventory changes:

Cost of sales method – The standard inventory posting profile configuration supports this method. The post to charge account accounting principle isn't required.
Nature of expense method – Smaller organizations often use this method. It typically involves the following steps:
1. Goods or services are fully expensed at the time of receipt.
2. At the end of the period, a cycle count is performed.
3. A manual adjustment for the quantity and value is posted into inventory. (The offset account is a stock variation account that offsets the expense that was posted in step 1. Therefore, you see the variation in the stock value only on this account.)

The post to charge account principle lets you fully automate the two postings. In this way, you can eliminate a manual period-end closing adjustment posting.

Enable the post to charge account accounting principle

To enable the post to charge account accounting principle, follow these steps.

Go to Accounts payable > Setup > Accounts payable parameters.
On the Invoice tab, on the Invoice FastTab, set the Post to charge account in ledger option to Yes.
Close the page.

Prerequisites and recommended parameters for the post to charge account accounting principle

If you plan to account for purchase charges and stock variations, the following prerequisites must be in place:

On the Invoice tab of the Accounts payable parameters page (Accounts payable > Setup > Accounts payable parameters), the Post to charge account in ledger option must be set to Yes.
On the Item model groups page (Cost management > Inventory accounting policies setup > Item model groups), all the following options must be set to Yes for every relevant model group that contains items that are included on a purchase order:
- Post physical inventory
- Post financial inventory
- Accrue liability on product receipt
On the Delivery tab of the Procurement and sourcing parameters page (Procurement and sourcing > Setup > Procurement and sourcing parameters), the Generate charges on product receipt option must be set to Yes.
On the Inventory accounting tab of the Inventory and warehouse management parameters page (Inventory management > Setup > Inventory and warehouse management parameters), the Post packing slip in ledger option must be set to Yes.
On the Purchase order tab of the Posting page (Inventory management > Setup > Posting > Posting), main accounts that apply to every relevant item must be specified for each of the following posting types:
- Purchase expenditure, un-invoiced
- Purchase expenditure for product
- Stock variation

Example scenario 1: Change in unit cost price

This example scenario has the following prerequisites:

First in, first out (FIFO) costing model

The following procedure provides an example that shows what happens when you change the unit cost price on a purchase order.

Create a purchase order for a quantity of 1 of an item that has a unit price of 100.00.
Confirm the purchase order.
Post the product receipt for the purchase order.

Validate the voucher on the product receipt. The following table shows a sample voucher.

Posting type	Main account	Main account name	Account type	Debit/Credit?	Clearing account	Physical/Financial?	Amount
Purchase, stock variation	600170	Stock variation materials	Expense	Credit	No	Physical	-100.00
Cost of purchased materials received	140100	Materials Inventory	Asset	Debit	Yes	Physical	100.00
Purchase expenditure, un-invoiced	600180	Material Receipts	Expense	Debit	Yes	Physical	100.00
Purchase, accrual	200140	Accrued Purchases	Liability	Credit	Yes	Physical	-100.00

Post the invoice for the purchase order that has an updated unit price of 110.00.

Validate the voucher on the invoice. The following table shows a sample voucher.

Posting type	Main account	Main account name	Account type	Debit/Credit?	Clearing account	Physical/Financial?	Amount
Purchase, stock variation	600170	Stock variation materials	Expense	Credit	No	Financial	-10.00
Cost of purchased materials received	140100	Materials Inventory	Asset	Debit	Yes	Financial	-100.00
Purchase expenditure, un-invoiced	600180	Material Receipts	Expense	Debit	Yes	Financial	-100.00
Purchase, accrual	200140	Accrued Purchases	Liability	Credit	Yes	Financial	100.00
Cost of purchased materials invoiced	140100	Materials Inventory	Asset	Debit	No	Financial	110.00
Purchase expenditure for product	600180	Materials Receipt	Expense	Credit	No	Financial	110.00
Vendor balance	211000	Accounts Payable Trade	Liability	Credit	No	Financial	-110.00

Example 2: Charges and indirect costs on the purchase order

This example scenario has the following prerequisites:

FIFO costing model
Charges code 1: Debit item and credit ledger account for 10%
Charges code 2: Debit item and credit customer/vendor for 10.00 proportional
Indirect cost: 2.00% added to the purchase price

The following procedure provides an example that shows what happens when you include charges and indirect costs on a purchase order.

Create a purchase order for a quantity of 1 of an item that has a unit price of 100.00.
Add one charges code for 10 percent that debits the item and credits the ledger.
Add one charges code for 10.00 that debits the item and credits the customer/vendor.
Allocate the charges to the purchase order lines.
Confirm the purchase order.
Post the product receipt for the purchase order.