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   To define Receiving Account information:

1. Navigate to the Organization Parameters window.

2. Select the Other Accounts alternative region.

3. Enter a general ledger account to accumulate Purchase Price Variance for this organization.

This is the variance that you record at the time you receive an item in inventory, and is the difference between the purchase order cost and an item's standard cost. Purchase price variance is calculated as:

PPV = (PO unit price - standard unit cost) X quantity received

Purchase price variance is not used for average costing.

4. Enter a general ledger account to accumulate Invoice Price Variance for this organization. This is usually an expense account.

Invoice price variance is the difference between the purchase order price for an inventory item and the actual invoice price multiplied by the quantity invoiced. Oracle Inventory passes this account to Oracle Purchasing when the requisition or purchase order is created. When Oracle Payables matches and approves the invoice, Oracle Payables uses the invoice price variance account from the purchase order to record invoice price variance entries. In addition, if you have exchange rate variances, Oracle Payables also records invoice price variance for exchange rate gains and losses.

5. Enter a general ledger account to accumulate Inventory Accounts Payable Accrual for this organization.

This is the account used by Oracle Purchasing to accrue your payable liabilities when you receive your items. This account represents your uninvoiced receipts and is usually part of your Accounts Payable Liabilities in the balance sheet. Oracle Payables relieves this account when the invoice is matched and approved.

6. Enter a default general ledger account to accumulate Encumbrance for this organization. This is the default account when you define your subinventories.

   To define Profit and Loss Account information:

1. Select the Other Accounts alternative region.

2. Enter a default Sales revenue account.

When you define your items, this account is defaulted to the item's sales account in the Invoicing attribute group.

3. Enter a default Cost of Goods Sold account.

When you define your items, this account is defaulted to the item's cost of goods sold account in the Costing attribute group.

   To define Average Cost Account information:

1. Select the Other Accounts alternative region.

2. Under average costing with negative quantity balances, this account represents the inventory valuation error caused by issuing your inventory before processing your receipts. This account is required only when using average costing. See: Average Costing and Cost Structure: page .

3. Save your work.

See Also

Defining Costing Information

Defining Revision, Lot, Serial Parameters

Defining ATP, Pick, Item-Sourcing Parameters

Defining Inter-Organization Information