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In the following examples, US Dollars is the functional currency for your set of books and you use accrual basis accounting.
Example 1
You enter and approve an invoice for $100 with payment terms that allow you to take a 10% discount on the invoice if paid within 10 days. When you post the invoice, Payables transfers accounting distributions for the invoice expense and liability transactions.
You pay the invoice five days later, taking the 10% discount. When you post the invoice payment, Payables records the liability and cash transactions along with the appropriate discount transaction.
Example 2
You enter and approve a $100 invoice for a supplier site. You then enter and approve a $25 prepayment for the same supplier site. When you post the invoice and prepayment, Payables records the expense and liability transactions for the invoice.
You then pay the prepayment and apply the prepayment to the invoice, reducing the amount due on the invoice. You pay the remaining amount of the invoice and initiate posting to transfer payment information for the prepayment and the invoice. The prepayment journal entry credits your cash account and debits the prepayment account for the amount of the prepayment. The invoice payment journal entry credits your cash account for the reduced invoice amount and debits your liability account.
Reconciling Payments with Oracle Cash Management
Payables Transfer to General Ledger Program (Posting)
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