Cost Accounting Period Statuses and Transaction Accounting

Cost period statuses enable you to manage the timing for processing and accounting of transactions.

The following describes rules that apply under each cost period status, and how transactions are slotted into cost accounting periods.

Cost Accounting Period Statuses

The cost period statuses are listed here:

Never Opened: Default status for new periods assigned to a cost organization and cost book. This status doesn't allow creation of distributions for transactions. You can change the status to Open, but you can't change it to Closed, or Permanently Closed.
Open: A period status can be changed to Open only if the corresponding general ledger accounting period is open. You can open several periods at a time, so long as they're contiguous. However, for a periodic average cost enabled cost book, you've only one Open period. You can't change the current period to Open if the prior period status is Never Opened. When a period status is Open, inventory transactions can be accounted in that period; when the period isn't open, inventory transactions can't be accounted in that period, but they will be accounted in the next open period. Both costing and general ledger periods must be open for a transaction to be accounted; if the costing period is open but the corresponding general ledger period is closed, the transaction can't be accounted and is held pending further user action. You can change an Open period status to Closed or Pending Close.
Pending Close: The Pending Close status works similar to the Open status and doesn’t include any additional validations. However, when a period is in the Pending Close status, any new transaction that falls in or before the period won't be staged in Cost Accounting or Receipt Accounting. After the period is closed or reopened, these new transactions will be processed. You can use the Pending Close status to hold transactions from being accounted in a given period.

Any transactions entered before the pending close date will be processed, even if they're in an error state. Transactions created after the pending close date, even if they relate to a current or prior period, won't be processed. Revenue lines, COGS recognition, and manual cost adjustments will continue to be processed even after the period is set to Pending Close.

If you set the Transaction Date Validation Enabled (INV_TRANSACTION_DATE) profile option to Yes in Inventory Management, then new inventory transactions aren't created for periodic average cost enabled cost books when the period is in the Pending Close, Closed, or Permanently Closed status. Also, if this profile option is enabled, then no new transactions are created for all cost books when the period is in the Closed or Permanently Closed status.

You can set the Pending Close status back to Open status and then process the transactions, so that those which fall into the period will be staged for accounting in that period. Alternately, you can set the status of the period to Permanently Close and set the next period to Open, in which case the transactions will be accounted in the next open period.

Note:
As a best practice, set only one period to the Pending Close status at a point of time. If multiple periods are in Pending Close, the latest pending close date will be used. This could cause multiple periods' transactions to be held until the latest period is closed.
Closed: You can change this status to Permanently Closed or you can revert it to Open. When you set a period status to Closed, you've the option of configuring the processor to allow closing even if all validations don't pass; this enables you to decide when discrepancies aren't material enough to delay period close. You can also configure the processor to prevent closing a period until all selected validations pass. You set your preferences for period close validations when you associate cost books with cost organizations, on the Manage Cost Organization Relationships page, Cost Books tab.
Permanently Closed: Closes the period for all types of transactions irreversibly. You can't change the period status to Permanently Closed without first changing the prior period status to Closed.

Transaction Accounting Dates

The costing application is designed to set the proper accounting date for inventory transactions, even when they aren't entered into the application promptly or in the correct order. It does this by enabling backdating of transactions that are entered on a date later than the physical transaction date. For example, suppose the physical transaction date is November 30, and the transaction is entered into the costing application on December 2. In this case, you can backdate the transaction and, under certain conditions, the application will post that transaction into the prior period.

The application orders your transactions by setting the cost date. To preserve the integrity of previous calculations and to ensure that inventory balances tie with general ledger balances, the cost date can't be set to a date prior to transactions that are already processed. The cost processor parameters that you define include a cost cutoff date, which lets you control the transactions that you want to process, including backdated transactions. In this example, as long as you haven't processed any transactions after November 30, the processor will set the cost date to November 30 for transactions entered after November 30 with a backdated transaction date that's in November.

Once the cost date is established, the processor performs cost accounting calculations for the transaction, creates accounting distributions, and sets the accounting date based on the following logic:

If the cost date falls in a Never Opened period, the accounting date becomes the same as the cost date when that period status is Open. In the rare case where the transaction date is in a period that precedes the first period used in the application, the accounting date is set to a date in the first subsequent period that's Open.
If the cost date falls in a Pending Close or Closed period, you're alerted by an error message. You can reopen the period and the processor will attempt to set the accounting date to a date in that period; or you can permanently close the period to let the transaction accounting date move into the next Open period.
If the cost date falls in a period that's Permanently Closed and the next period isn't Open, an error message warns you that the transaction will remain unaccounted until a subsequent period is opened. Once the subsequent period is Open, the accounting date of the transaction will move into that Open period.

When accounting distributions are staged within the costing subledger, the accounting distribution accounting date in the costing subledger becomes the proposed accounting date for posting into the general ledger through the subledger. If the general ledger application accepts the proposed accounting date, the transaction is posted with that date. If the proposed accounting date isn't accepted (for example if the general ledger period has already closed), then the general ledger application returns an error and the cost processor sets the proposed accounting date to a date in the next open general ledger period.