Accounting for Transactions (Oracle Receivables Help)


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Accounting for Transactions

This essay describes the accounting entries created when you enter transactions in Receivables using the Accrual method of accounting.

Receivables creates default accounts for revenue, receivable, freight, tax, unearned revenue, unbilled receivable, finance charges, and AutoInvoice clearing (suspense) accounts using the information specified in your AutoAccounting structure.

Invoices

When you enter a regular invoice through the Transactions window, Receivables creates the following journal entry:

	DR Receivables

			CR Revenue

			CR Tax (if you charge tax)

			CR Freight (if you charge freight)

If you enter an invoice with a Bill in Arrears invoicing rule, Receivables creates the following journal entry:

In the first period of Rule:

	DR Unbilled Receivables

			CR Revenue

In all periods of Rule, for the portion that is recognized:

	DR Receivables

			CR Unbilled Receivables

			CR Tax (if you charge tax)

			CR Freight (if you charge freight)

If you enter an invoice with a Bill in Advance invoicing rule, Receivables creates the following journal entries.

In the first period of the rule:

	DR Receivables

			CR Unearned Revenue

			CR Tax (if you charge tax)

			CR Freight (if you charge freight)

In all periods of the rule for the portion that is recognized.

	DR Unearned Revenue

			CR Revenue

Credit Memos

When you credit an invoice, debit memo, or chargeback through the Credit Transactions window, Receivables creates the following journal entry:

	DR Revenue

	DR Tax (if you credit tax)

	DR Freight (if you credit freight)

			CR Receivables (Credit Memo)

	DR Receivables (Credit Memo)

			CR Receivables (Invoice)

When you credit a commitment, Receivables creates the following journal entries:

	DR Revenue

			CR Receivables

When you enter a credit memo against an installment, Receivables lets you choose between the following methods: LIFO, FIFO, and Prorate. When you enter a credit memo against an invoice with invoicing and accounting rules, Receivables lets you choose between the following methods: LIFO, Prorate, and Unit. See: Crediting Transactions.

If the profile option AR: Use Invoice Accounting for Credit Memos is set to Yes, Receivables credits the accounts of the original transaction. If this profile option is set to No, Receivables uses AutoAccounting to determine the Freight, Receivables, Revenue, and Tax accounts. Receivables uses the account information for on-account credits that you specified in your AutoAccounting structure to create your journal entries.

Receivables lets you update accounting information for your credit memo after it has posted to your general ledger. Receivables keeps the original accounting information as an audit trail while it creates an offsetting entry and the new entry.

Commitments

When you enter a deposit, Receivables creates the following journal entry:

	DR Receivables (Deposit)

			CR Unearned Revenue

When you enter an invoice against this deposit, Receivables creates the following journal entries:

	DR Receivables (Invoice)

			CR Revenue

			CR Tax (if you charge tax)

			CR Freight (if you charge freight)

	DR Unearned Revenue

			CR Receivables (Invoice)

When you apply an invoice to a deposit, Receivables creates a receivable adjustment against the invoice. Receivables uses the account information you specified in your AutoAccounting structure to create these entries.

When cash is received against this deposit, Receivables creates the following journal entry:

	DR Cash

			CR Receivables (Deposit)

When you enter a guarantee, Receivables creates the following journal entry:

	DR Unbilled Receivables

			CR Unearned Revenue

When you enter an invoice against this guarantee, Receivables creates the following journal entry:

	DR Receivables (Invoice)

			CR Revenue

			CR Tax (if you charge tax)

			CR Freight (if you charge freight)

	DR Unearned Revenue

			CR Unbilled Receivables

When you apply an invoice to a guarantee, Receivables creates a receivable adjustment against the guarantee. Receivables uses the account information you specified in your AutoAccounting structure to create these entries.

When cash is received against this guarantee, Receivables creates the following journal entry:

	DR Cash

			CR Receivables (Invoice)

Receipts

When you enter a receipt and fully apply this receipt to an invoice, Receivables creates the following journal entry:

	DR Cash

			CR Receivables

When you enter an unapplied receipt, Receivables creates the following journal entry:

	DR Cash

			CR Unapplied

When you enter an unidentified receipt, Receivables creates the following journal entry:

	DR Cash

			CR Unidentified

When you enter an on-account receipt, Receivables creates the following journal entry:

	DR Cash

			CR On-Account

When your receipt includes a discount, Receivables creates the following journal entry:

	DR Receivables

			CR Revenue

	DR Cash

			CR Receivables

	DR Earned/Unearned Discount

			CR Receivables

Receivables uses the default Cash, Unapplied, Unidentified, On-Account, Unearned, and Earned accounts that you specified in the Remittance Banks window for this receipt class.

When you enter a receipt and combine it with an on-account credit (which increases the balance of the receipt), Receivables creates the following journal entry:

	DR Cash

			CR Unapplied Cash

To close the receivable on the credit memo and increase the unapplied cash balance, Receivables creates the following journal entry:

	DR Receivables

			CR Unapplied Cash

When you enter a receipt and combine it with a negative adjustment, Receivables creates the following journal entries:

	DR Cash

			CR Receivables (Invoice)

	DR Write-Off

			CR Receivables (Invoice)

You set up a Write-Off account when defining your Receivables Activity.

When you enter a receipt and combine it with a positive adjustment, Receivables creates the following journal entries:

	DR Cash

			CR Receivables (Invoice)

	DR Receivables (Invoice)

			CR Write-Off

When you enter a receipt and combine it with a Chargeback, Receivables creates the following journal entries:

	DR Cash

			CR Receivables (Invoice)

	DR Receivables (Chargeback)

			CR Receivables (Invoice)

	DR Chargeback

			CR Receivables (Chargeback)

You set up a Chargeback account when defining your Receivables Activity.

Remittances

When you create a receipt that requires remittance to your bank, Receivables debits the Confirmation account instead of Cash. An example of a receipt requiring remittance would be a check before it was cashed. Receivables creates the following journal entry when you enter such a receipt:

	DR Confirmation

			CR Receivables

You can then remit the receipt to your remittance bank using one of the two remittance methods: Standard or Factoring. If you remit your receipt using the standard method of remittance, Receivables creates the following journal entry:

	DR Remittance

			CR Confirmation

When you clear the receipt, Receivables creates the following journal entry:

	DR Cash

	DR Bank Charges

			CR Remittance

If you remit your receipt using the factoring remittance method, Receivables creates the following journal entry:

	DR Factor

			CR Confirmation

When you clear the receipt, Receivables creates a short-term liability for receipts that mature at a future date. The factoring process let you receive cash before the maturity date, and assumes that you are liable for the receipt amount until the customer pays the balance on the maturity date. When you receive payment, Receivables creates the following journal entry:

	DR Cash

	DR Bank Charges

			CR Short-Term Debt

On the maturity date, Receivables reverses the short term liability and creates the following journal entry:

	DR Short-Term Debt

			CR Factor

Adjustments

When you enter a negative adjustment against an invoice, Receivables creates the following journal entry:

	DR Write-Off

			CR Receivables (Invoice)

When you enter a positive adjustment against an invoice, Receivables creates the following journal entry:

	DR Receivables (Invoice)

			CR Write-Off

Debit Memos

When you enter a debit memo in the Transactions window, Receivables creates the following journal entries:

	DR Receivables

			CR Revenue (if you enter line amounts)

			CR Tax (if you charge tax)

			CR Freight (if you charge freight)

	DR Receivables

			CR Finance Charges

On-Account Credits

When you enter an on-account credit in the Applications window, Receivables creates the following journal entry:

	DR Revenue (if you credit line amounts)

	DR Tax (if you credit tax)

	DR Freight (if you credit freight)

			CR Receivables (On-account Credit)

Receivables uses the Freight, Receivable, Revenue, and Tax accounts that you specified in your AutoAccounting structure to create these entries.

Once the on-account credit is applied to an invoice, the following journal entry is created:

	DR Receivables (On-account Credit)

			CR Receivables (Invoice)