Accounting Methods for Nonmerchandise Charges

There are three methods of accounting for nonmerchandise charges, such as freight, sales tax, use tax, and miscellaneous charges:

• Prorate.

• Allocate.

• Expense (non-prorate and non-allocate).

Prorate

If you prorate nonmerchandise amounts, the amounts charged to the distribution lines are added to merchandise amounts on the distribution lines and the total is posted to the distribution ChartFields.

Prorated discounts and late interest charges do not generate separate accounting lines during the Voucher Posting process.

Allocate

If you allocate nonmerchandise amounts, the amounts charged to the distribution lines are posted to the appropriate nonmerchandise accounts from the accounting template, and the other ChartField values are populated based on the inheritance rules. ChartField inheritance is defined at the ledger group level and on the ChartField Inheritance page.

Allocated nonmerchandise amounts generate separate accounting lines during the Voucher Posting process.

Expense (non-prorate and non-allocate)

If you are using Summary Control posting, you have two options for nonprorated charges. You can either expense the charges at the header or allocate them to the distribution lines. Allocate them by selecting the Allocate check box on the Non-Merch Charges page in the Procurement Control component (BUS_UNIT_INTFC2). If you expense the charges at the header, the nonmerchandise accounting entry is shown in summary and is charged to the PeopleSoft General Ledger business unit related to the voucher's PeopleSoft Payables business unit. The account and alternate account are derived from the accounting template. The other ChartFields are derived from the ChartField inheritances defined for the SetID associated with the PeopleSoft General Ledger business unit related to the voucher's PeopleSoft Payables business unit.

If you are using Detail Offset posting, you have only one option for nonprorated charges. You must allocate them. For this reason, the Allocate check box is selected and unavailable for entry on the Non-Merch Charges page in the Procurement Control component.