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Oracle Payables finally closes purchase order shipments under certain conditions. When you enter an invoice and match it to one or more purchase order shipments, you can indicate that it is a final match. Oracle Payables automatically marks for closure the purchase order shipments to which you final match. When you approve the invoice using AutoApproval, AutoApproval calls the final close process in Oracle Purchasing. The purchase order close process creates reversing entries (credit entries) for all outstanding encumbrances associated with the purchase order distributions on the shipment. The purchase order close process also updates the closed status of the purchase order.
Example
You enter a purchase order with two shipments. One shipment is for five Item A at $100 each. The second shipment is for 3 Item A at $100 each. You receive all of the first shipment and you pay the vendor. You receive 1 item in the second shipment, and a note from the vendor explaining that the item has been discontinued and he will not ship the remaining items. You match the invoice you receive from the vendor for $100 to the second purchase order shipment, indicating it is a final match. When you approve the invoice, the system creates reversing encumbrances (credit entries) for $200. When you post the invoice, Oracle Payables creates a journal entry reversing the encumbrance for $100 and another journal entry recording actual expenses of $100.
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