Defining the Accounting Structure

Verify that the PeopleSoft financial structure has been defined, including ChartFields and combination editing. Note whether ChartField combination edits are being used. ChartField combination editing displays an error message when incorrect combinations are used. Combo edits are always based on the COMBO_DATA_TBL record. When the combo rules are changed, the new rules are not used until the Build Combo Data process is run to repopulate the record.

Use the Cost Elements page to define or maintain cost elements, that you use to categorize different components of an item's cost. When you perform a cost roll-up, you maintain an item's standard cost by cost element. You can use cost element categories to define the costs at a summarized or very detailed level by using one or many cost elements. Cost elements also help define the ChartField combinations that you used to create accounting entries during the Accounting Line Creation process. Once you define the cost elements, attach the appropriate cost elements to the different costs that PeopleSoft Cost Management generates including:

• Attach a default cost element to each item on the Define Business Unit Item page.

• Use landed cost elements to categorize landed costs on the Misc Charge/Landed Cost Definition page.

• For make items, use the cost elements to define costing conversion rates, costing conversion overhead rates, additional item costs, and forecasted purchase costs.

Each transaction, with a financial impact, is embedded with a predetermined transaction group. The transaction group identifies the type of transaction entered and determines what records are populated, how costing is calculated, and what ChartFields are used to record accounting entries. PeopleSoft Cost Management maintains a transaction history for all transactions with a transaction group. This table lists the transaction group codes and descriptions:

*Indicates a transaction group that is related to transactions generated in PeopleSoft Manufacturing.

To define distribution types, use the Distribution Type (CM_DISTR_TYPE) component. Use the Distribution Type component interface (CM_DISTR_TYPE_CI) to load data into the tables for this component.

Use the Distribution Type page (CM_DISTR_TYPE) to use to define debit and credit account ChartFields at a finer level of granularity.

Navigation:

Set Up Financials/Supply Chain > Product Related > Cost Accounting > Distribution Type

In most instances, the transaction determines the debit and credit account to charge. For example, a customer shipment typically debits a cost of goods sold account and credits inventory. For some transactions, like a miscellaneous issue from stock, the transaction accounting rule can depend on the party to whom you issue the material. You could charge different departmental expense accounts for the receipt of inventory, depending on who requisitions the material from stock. Use distribution types to have the option to define different departments or cost centers.

When used in conjunction with the transaction group, distribution types enable you to define debit and credit ChartFields at a finer level of granularity. A manufacturing organization, for example, can set up a distribution type for each of its production departments. You assign these distribution types to the appropriate work center when you define the manufacturing data. When you record assembly completions at an operation or to stock, the system records the earned labor, machine, and overhead costs. If you have assigned a distribution type to the work center, the system records this distribution type along with the costs. This identifies the department or cost center that earned the labor, machine, and overhead costs. You can then set up transaction accounting rules for the transaction group Earned Labor (240) and the distribution type (for example, one of the assembly departments). Debit the production area account for the value of costs added to WIP and credit each department expense for the earned labor and applied overhead.

You can set up distribution sets in PeopleSoft Order Management with a distribution type that can be transferred to PeopleSoft Inventory and PeopleSoft Cost Management. This enables you to use the distribution type to classify costs of sales appropriate to the sales account.

To define default distribution types, use the Default Distribution Types (CM_TRANS_GROUP) component.

Use the Default Distribution Type page (CM_TRANS_GROUP) to assign default distribution types for transactions.

Navigation:

Set Up Financials/Supply Chain > Product Related > Cost Accounting > Distribution Type Default > Default Distribution Type

Once you define at least one distribution type, you can also assign a default distribution type that appears whenever you process a transaction. It is not required that you define a default distribution type for every transaction group; however, it can reduce entry errors. For example, you can assign a distribution type to the transaction group User Adjustments (050). Then, if an inventory adjustment occurs, the distribution type associated with the transaction appears as the default. You can override the default distribution type on a transaction by transaction basis. The use of distribution types for a transaction group is optional.

You can assign transaction accounting rules to a grouping of items by using item groups.

To use item groups for defining transaction accounting rules:

1. Define the item groups using the Item Group page.

2. Attach the item groups to the corresponding items using the Item Definition - General: Common page.

3. Use the item groups on the Accounting Rules page to define the ChartField combinations to be used for the accounting entries.

To define accounting distribution, use the Account Distribution component (CM_ACCTG_DIST). This component is also know as the Transaction Accounting Rules component.

Use the Accounting Rules page (CM_ACCTG_DIST) to create the debit and credit lines for the accounting entries based on the business unit, transaction group, distribution type, item or item group, and cost element.

Navigation:

Set Up Financials/Supply Chain > Product Related > Cost Accounting > Transaction Accounting Rules > Accounting Rules

This example illustrates the fields and controls on the Accounting Rules page (partial page). You can find definitions for the fields and controls later on this page.

On this page, create a template of the ChartField combinations (chart of accounts) to be used for creating accounting entries. Use separate rows for the debit and credit entries. Create a separate page (or template) for each type of transaction. Once you determine how you want to model accounting entries, you can assign the debit and credit ChartFields for any combination of business Unit, Transaction Group, Distrib. Type (distribution type), either Item ID or Item Group, and Cost Element. Business Unit and Transaction Group are the only required fields.

To save maintenance time, three of the transaction groups do not need to be created or maintained on the Accounting Rules page. The transaction group 206 uses the account distribution setup defined for the transaction group 205. The transaction groups 211 and 212 use the account distribution setup defined for the transaction group 210.