Setting Up WIP Accounts for Location Accounting

If you are using location accounting to provide financial visibility based on where the items reside, you must:

• Indicate that location accounting is required for the business unit.

• Define a set of account ChartFields for each storage area including WIP and inventory locations.

• Define production area accounts for regular, rework, and teardown production.

Note:

You should indicate that location accounting is required and define a set of account ChartFields when you set up the business units and inventory storage areas.

To use location accounting, define a set of account ChartFields, such as account, operating unit, department, product, and project ID for each storage area and production area. These are the accounts that the accounting line generation process debits or credits for material movement, earned conversion costs, and variance transactions. This tables lists some examples:

Transaction	System Debits	System Credits
Issue material to production	WIP storage area or location account	Inventory storage area or location from which material is issued
Backflushing of an item in the production area	Production area account for all material consumption	WIP storage area or location account
Kit item issued to production	Production area account	Material storage area account
Accounting for earned labor, machine costs, and applied overhead	Production area account	Earned labor or applied overhead accounts when you set up the account distribution
End items completed to stock	Account associated with the storage area where the completed items are sent	Production area account

The ChartField functionality provides the necessary features to write debit and credit transactions to the appropriate accounts depending on the type of production taking place.