Receipt Accounting (Chapter 2) R20C

Overview of Receipt Accounting

Oracle Fusion Receipt Accounting is used to create, manage, review, and audit purchase accruals. It includes the following features:

Create Receipt Accounting Distributions. Create accounting distributions for receipts of accrue at receipt purchase orders.
Review Receipt Accounting Distributions. Review the accrual accounting distributions created by receipt accounting for purchase order transactions, such as receipts, returns, corrections, and matches of uninvoiced receipts to purchase orders. You can also review the accounting distributions created by receipt accounting for deliveries that are expensed rather than stored as inventory.
Manage Accrual Clearing Rules. Define business rules for the automatic clearing of balances in the purchase order accrual accounts, set the conditions for each rule, and set the order in which rules must be applied.
Match Receipt Accruals. Match purchase order receipt accruals with invoices from the payables application.
Clear Receipt Accrual Balances. Automatic clearing of accrual balances based on predefined rules.
Review Receipt Accrual Clearing Balances. Review the General Ledger accounted accrual balances on a periodic basis.
Adjust Accrual Clearing Balances. Review uncleared accrual balances and perform adjustments. Manually adjust or clear accrual balances to inventory valuation for accounts not covered by automatic clearing rules, or reverse such clearing adjustments.
Run reports and analytics for Receipt Accounting. The reports available include the following:
- Accrual Clearing
- Accrual Reconciliation
- Uninvoiced Receipt Accrual
- Receipt Accounting Period Close
- Landed Costs

Note: You can run the Create Receipt Accounting Distributions, Match Receipt Accruals, and Match Receipt Accruals process jobs for either all your business units or for a selected business unit.

If you want to trigger these jobs using the ERP integration service, ESS web service, or job sets then use the following job definitions:

Job Name	ESS Job Definition
Create Receipt Accounting Distributions	ReceiptAccrualProcessMasterEssJobDef
Match Receipt Accrual	MatchReceiptAccrualMasterEssJobDef
Clear Receipt Accruals	AccrualClearRulesMasterEssJobDef

Related Topics

Accrual Reversals

Considerations for Accrual Settings

The key policy decision that you need to make for receipt accounting is whether or not you want to accrue at receipt. The following table outlines the points to consider for each accrual option.

Accrual Setting	Points to Consider
Accrue at Receipt	Purchases are accrued at receipt. An accrued liability account is credited when the goods are received. Optional for expense destination purchases, and mandatory for inventory purchases. More accounting and more reconciliation than when accruing at period end. The receipt accounting application provides tools to help reconcile the accrued liability clearing account. Accounting is more timely than when accruing at period end.
Accrue at Period End	The accounts payable account is credited when the supplier invoice is processed in accounts payable. Receipt accounting has a function to accrue uninvoiced receipts at period end. Less accounting and less reconciliation than when accruing at receipt. Accounting may be less timely than when accrued at receipt, but will be accrued by period end.

Accrue at Receipt

Purchases are accrued at receipt. An accrued liability account is credited when the goods are received.
Optional for expense destination purchases, and mandatory for inventory purchases.
More accounting and more reconciliation than when accruing at period end. The receipt accounting application provides tools to help reconcile the accrued liability clearing account.
Accounting is more timely than when accruing at period end.

Accrue at Period End

The accounts payable account is credited when the supplier invoice is processed in accounts payable. Receipt accounting has a function to accrue uninvoiced receipts at period end.
Less accounting and less reconciliation than when accruing at receipt.
Accounting may be less timely than when accrued at receipt, but will be accrued by period end.

The accrual options are configured in the Procurement offering. For more information on configuring the accrual options, see the related topics section.

Related Topics

Receipt Accounting Tasks and Accounting Events

Use Receipt Accounting to:

Create accruals for purchase order receipts that are expensed or shipped to inventory.
Create accruals for intercompany trade flows.
Create receipt inspection accounting for purchase order and interorganization receipt flows.
Support budgetary control and encumbrance accounting

Receipt Accounting also has tools to help you reconcile the accrual clearing accounts as the accruals are offset by the accounts payable accounting when invoices are processed.

Receipt Accounting Tasks and Accounting Events

The following table describes the Receipt Accounting tasks and processes to support receipt, inventory, and manufacturing accounting, and the sequence in which the tasks should be executed.

Task	Navigation	Resulting Events
Transfer receipt transactions and tax determinants from Receiving to Receipt Accounting.	Scheduled Processes work area > Schedule New Process > Transfer Transactions from Receiving to Costing	All receiving transactions are transferred from the Receiving application to the Receipt Accounting application, along with the tax determinants and related information that is present on receipts. Receipt transactions are then ready in the Receipt Accounting application for further processing.
Transfer accounts payable transactions from Payables to Receipt Accounting.	Scheduled Processes work area > Schedule New Process > Transfer Costs to Cost Management	All payable invoices that are accounted are transferred from the Accounts Payable application to the Receipt Accounting application. Payable Invoices are then ready in the Receipt Accounting application for further processing.
Create accounting distributions for receipts of accrue at receipt purchase orders.	Receipt Accounting Work Area > Create Receipt Accounting Distributions	Accruals for all types of purchases Accrual accounting distributions at the time of receipt or return of goods and services Trade accrual distributions for global procurement, interorganization transfers, and cross-business unit shipments to customers Accounting distributions for expense destination deliveries of purchases marked for accrual at receipt. These purchases are typically for services procurement, one-time item purchases, and expense usage purchases. Accounting distributions for invoice variances for IPV, ERV, TRV, TERV, and TIPV Staging of variances into receiving inspection for subsequent wash by the inventory and expense revaluation processes Accounting distributions for inventory and expense revaluations Tax amounts are recalculated for all receipt transactions. Taxes are calculated by calling the Tax application programming interface. Tax accounting distributions Budgetary control and encumbrance accounting. You can enable and perform budgetary control, encumbrance accounting, or both. Budgetary control and encumbrance accounting are optional tasks, and are enabled in Financials.
Create period end uninvoiced receipt accruals.	Receipt Accounting work area > Create Uninvoiced Receipt Accruals	Provisional expense accruals for purchases not marked for accrual at receipt
Create subledger accounting.	Receipt Accounting work area > Create Accounting	Journal entries for receipt accounting distributions
Review accrual distributions and tax calculations.	Receipt Accounting work area > Review Receipt Accounting Distributions	Review accrual distributions and tax calculations.
Clear receipt accruals.	Receipt Accounting work area > Clear Receipt Accrual Balances	Automatic clearing of accrual balances based on predefined rules Staging of information for revaluation of inventory and expenses by cost accounting and receipt accounting processes
Generate and view reconciliation reports.	Scheduled Processes work area > Schedule New Process > Accrual Reconciliation report Scheduled Processes work area > Scheduled Processes > Accrual Clearing report	Accrual Reconciliation report Accrual Clearing report
Create receipt accounting distributions.	Receipt Accounting work area > Create Receipt Accounting Distributions	Accounting distributions for cleared accrual balances Revaluation and expense adjustment entries for invoice variances or accrual clearing events that modify acquisition costs for purchases
Review uncleared accrual balances and perform adjustments.	Receipt Accounting work area > Adjust Receipt Accrual Balances	Staging for manual intervention for exceptions of high material value Manual accrual clearing Manual adjustments and reversals of prior accrual clearing adjustments Automatic creation of accounting distributions for these adjustments
Match purchase order receipt accruals with invoices from payables.	Receipt Accounting work area > Match Receipt Accruals	Manual reconciliation of accrual balances Review and audit accrual balances that were final accounted.
Review accrual clearing balances.	Receipt Accounting work area > Audit Receipt Accrual Clearing Balances	Audit the General Ledger accounted accrual balances on a periodic basis.

Related Topics

Accrual Reversals

Receipt Accrual, Reconciliation, and Clearing

When goods are interfaced from Receiving to Oracle Fusion Receipt Accounting, Receipt Accounting recognizes the liability to the supplier, and creates accruals for receipts destined for inventory or expense. For consigned purchases, the supplier accrual is booked upon change of ownership.

Receipt Accounting then reconciles these accrual balances against the corresponding invoices from accounts payable and clears them to inventory valuation.

The following discusses receipt accruals, their reconciliation, and clearing.

Receipt Accrual Creation

When goods are received and delivered to inventory or expense destinations, the receipt accounting application creates accrued liability balances for the estimated cost of purchase order receipts. The application creates accruals for:

Inventory destination receipts, which are always accrued on receipt
Expense destination receipts, which are accrued on receipt, or at period end if the supplier invoice has not yet been processed

When it processes the supplier invoice, Accounts Payable creates the actual supplier liability and offsets the accrual balances. The accrued liability account typically has high volumes of entries going through it, and may have remaining balances that must be justified if the account payable invoice has not yet been processed; or if the Account Payable invoice has been processed, any remaining balance must be resolved and cleared. Receipt Accounting provides tools to help with this reconciliation.

Receipt Accrual Reconciliation and Clearing

Some of the remaining balance in the accrued liability account can be automatically cleared by Receipt Accounting and Cost Accounting to the appropriate purchase expense or asset account, based on your predefined clearing rules. However, some of this balance will represent uninvoiced quantities, or other discrepancies which you will want to resolve and clear manually.

Example 1: Assume that the purchase order receipt is for 100 units at $5 each; the application creates a credit to the accrued liability account in the amount of $500. When the corresponding invoice arrives from the supplier, it reflects 100 units at $6 each; the application debits the accrued liability account in the amount of $600. The difference of $100 automatically clears and flows to inventory valuation.

Example 2: Assume that the quantity received is 99.4, and the quantity on the supplier invoice is 100. The processor does not always know if that is the final invoice or if more invoices are pending for the uninvoiced quantity. If small variations are normal, you can set up rules to automatically clear small variations, while large variations are verified manually. If there is a predefined rule for the treatment of such a discrepancy, the application automatically clears the difference to inventory valuation. However if no such rule exists, then you must clear it manually.

Audit Receipt Accrual Clearing Balances

After accrual balances are cleared to the appropriate expense or asset account, you can review and audit the final accounting distributions generated by Receipt Accounting.

Receipt Accrual Clearing Rules

Define accrual clearing rules to clear accrual balances automatically. Accrual balances are often of unknown origin and unpredictable. With accrual clearing rules you can specify when accrual balances should be cleared and written off. The Clear Receipt Accrual process scans for applicable rules on the transactions, and clears the balances when rule criteria are met.

The following discusses the creation of accrual clearing rules using predefined attributes, and illustrates the results with an example.

Predefined Attributes

The following table describes the attributes that are available in the Accrual Line tree in the Conditions browser:

Attribute Name	Description
Purchase Order Distribution Identifier	Purchase order structure is based on the hierarchy of purchase order header > purchase order line > purchase order schedule > purchase order distribution. The accounting for purchase order transaction is at the lowest level of purchase order distribution. The accrual and charge account codes are defined at this level. Invoices are matched and accrual is offset at the PO distribution level. This attribute represents the PO distribution ID on the PO document.
Percentage Over-Invoiced	At each purchase order distribution level, receipt accounting tracks the original ordered quantity, total received quantity, and total invoiced quantity. Percentage Over-Invoiced Quantity represents the condition: `IF (Net Rct qty - Invoice Qty) < 0 then ABS(NetRecptQty - InvoiceQty)/ NetRecptQty`
Percentage Uninvoiced	At each purchase order distribution level, receipt accounting tracks the original ordered quantity, total received quantity, and total invoiced quantity. Percentage Uninvoiced Quantity represents the condition: `IF (Net Rct qty - Invoice Qty) > 0 then ABS(NetRecptQty - InvoiceQty)/ NetRecptQty`
PO Status	Status of the purchase order document. If the PO status is Finally closed, then it's treated as Closed. You can define the accrual clearing rules based on the PO Status.
PO Match Option	Invoice match option defined on the purchase order schedule. It can be PO or Receipt.
Invoice Age	Days or time since the latest invoice was recorded for a purchase order distribution.
Receipt Age	Days or time since the latest receipt was recorded for a purchase order distribution.
Over-Invoiced Quantity	When the invoiced quantity is greater than the ordered quantity, it represents the difference between the two: `IF (Net Rct qty - Invoice Qty) < 0 then Over Invoiced Quantity = ABS(InvoiceQty - NetRecptQty)`
Under-Invoiced Quantity	When the invoiced quantity is less than the ordered quantity, it represents the difference between the two: `IF (Net Rct qty - Invoice Qty) > 0 then Under Invoiced Quantity = ABS(NetRecptQty - InvoiceQty)`
Percentage PO Accrual Amount	The balance in the accrual account for a PO distribution divided by the accrual value for the ordered quantity: `Sum(accruals in CMR and AP)/PO amount` `PO amount = Net Order Qty * PO Price`
Accrual Clear Amount	Value of balance in an accrual account for a PO distribution. Net of accrual amount credited in Receipt Accounting and that debited in Accounts Payable. To clear debit balance enter a positive number and for credit balance enter a negative number.
Total Invoice Accrual Amount	Absolute value of balance (net of invoices and debit memos) in an accrual account in Payables Subledger for a PO distribution.
Total Receipt Accrual Amount	Absolute value of balance (net of receipts, corrections and returns) in an accrual account in Receipt Accounting Subledger for a PO distribution.
PO Distribution Number	This attribute represents the PO distribution number on the PO document, such as 1, 2, and so on, and is different from the Purchase Order Distribution Identifier.
Supplier	Supplier name on the purchase order document.
Supplier Site	Supplier site code on the purchase order document.
Item	Item on the purchase order line.
Item Category	Item category on the purchase order line.
Accrual Amount Difference	Difference in accrual amount credited in Receipt Accounting and that debited in Accounts Payable.
Purchase Order Schedule Identifier	The identifier of the PO Schedule that uniquely identifies a PO Schedule number of PO.
Invoice Accrual Amount	Accrual amount debited on invoice in Accounts Payable for the item price.
Invoice Nonrecoverable Tax Amount	Accrual amount debited on invoice in Accounts Payable for the nonrecoverable tax.
PO Line Number	Line number on the Purchase Order Line.
Nonrecoverable Tax Amount Difference	Difference in the nonrecoverable tax amounts booked in Receipt Accounting and Accounts Payable for a PO Distribution.
Inventory Organization Code	Code that uniquely identifies a Inventory Organization.
PO Total Amount	Total amount on the Purchase Order.
PO Number	Unique identifier for the Purchase Order.
PO Quantity	Quantity ordered from the Purchase Order.
Purchase Basis	The basis on which the purchase is done.
Received Accrual Amount	Amount received for PO distribution.
Received Nonrecoverable Tax Amount	Nonrecoverable tax in the amount received for PO distribution.
PO Shipment Number	Schedule in purchase order indicating place of delivery.
Invoice Quantity	Quantity invoiced for PO Distribution.
Invoice Recoverable Tax Amount	Recoverable tax amount on the invoice for a PO distribution.
Received Quantity	Quantity received for a PO distribution.
Received Recoverable Tax Amount	Recoverable tax amount on the receipt for a PO distribution.
Procurement Business Unit	Business unit performing procurement business function.
Purchase Order - Deliver to Location	Delivery location on the purchase order schedule indicating place of delivery.
Profit Center Business Unit	Indicates the business unit which serves as the profit center.
PO Destination Type	Destination type on the PO which can be inventory, expense, manufacturing or drop ship.
Item Description	Description of the item on the purchase order line.

Example

This example illustrates the distributions for a purchase order with associated receipts and invoices.

The following table describes the purchase order details:

PO Header	Supplier	Supplier Site	Status
PO#1234	Advanced Network Devices	New York	Open/Close/Final Close

The following table describes the purchase order lines:

Item	Item Category	PO Price	Ordered Quantity
AS54888	Raw Materials	100 USD	100 EA

The following table describes the purchase order schedules:

Schedule	Order Quantity	Match Option	Status
1	100 EA	Order or Receipt	Open

The following table describes the receipts and invoices:

Receipts	Ordered Quantity	Received Quantity	Invoiced Quantity	Accrual Account	Status
Receipt 1	60	58	55	01-2210	Open
Receipt 2	40	40	45	01-2220	Open

The following table describes the purchase order distributions and accrual balances:

PO Distribution	CMR Accrual Amount (A)	AP Accrual Account (B)	Accrual Clear Amount (C) = (A-B)	Under-Invoiced Quantity	Over-Invoiced Quantity	Percentage Under-Invoiced	Percentage Over-Invoiced	Percentage PO Accrual Amount (C)/Ordered Quantity*PO Price
Distribution 1	58*100 USD = 5800 USD	55*100 USD = 5500 USD	300 USD	60 - 55 = 5	Not Applicable	5/58*100 = 8.62%	Not Applicable	300 USD/60*100 = 5%
Distribution 2	40*100 USD = 4000 USD	45*100 USD = 4500 USD	(500) USD	Not Applicable	45-40 = 5	Not Applicable	5/40*100 = 12.50 %	500 USD/40*100 = 12.50 %

The following table describes the Rule 1:

Attribute	Operator	Value	Conditions
PO Status	=	OPEN	And
Percentage Under-Invoiced	Less Than	10%	Not Applicable

Results: The PO Status and the Percentage Under-Invoiced values meet the criteria of Rule 1; therefore the accrual balance of 300 USD is automatically cleared.

The following table describes the Accrual Amounts Cleared Based on Rule 1:

PO Distribution	CMR Accrual Amount (A)	AP Accrual Account (B)	Accrual Clear Amount (C) = (A-B)	Under-Invoiced Quantity	Over-Invoiced Quantity	Percentage Under-Invoiced	Percentage Over-Invoiced	Percentage PO Accrual Amount (C)/Ordered Quantity*PO Price
Distribution 1	58*100 USD = 5800 USD	55*100 USD = 5500 USD	300 USD	60 - 55 = 5	Not Applicable	5/58*100 = 8.62%	Not Applicable	300 USD/60*100 = 5%

The following table describes the Rule 2:

Attribute	Operator	Value	Conditions
PO Status	=	OPEN	And
Accrual Clear Amount	Less Than	Absolute (1000) USD	Or
Percentage Under-Invoiced	Less Than	10%	Or
Percentage Over-Invoiced	Less Than	10%	Not Applicable

Results: The PO Status, Percentage Under-Invoiced, and Accrual Clear Amount Absolute values meet the criteria of Rule 2; therefore the accrual balances of 300 USD and (500) USD are automatically cleared.

The following table describes the Accrual Amounts Cleared Based on Rule 2:

PO Distribution	CMR Accrual Amount (A)	AP Accrual Account (B)	Accrual Clear Amount (C) = (A-B)	Under-Invoiced Quantity	Over-Invoiced Quantity	Percentage Under-Invoiced	Percentage Over-Invoiced	Percentage PO Accrual Amount (C)/Ordered Quantity*PO Price
Distribution 1	58*100 USD = 5800 USD	55*100 USD = 5500 USD	300 USD	60 - 55 = 5	Not Applicable	5/58*100 = 8.62%	Not Applicable	300 USD/60*100 = 5%
Distribution 2	40*100 USD = 4000 USD	45*100 USD = 4500 USD	(500) USD	Not Applicable	45-40 = 5	Not Applicable	5/40*100 = 12.50 %	500 USD/40*100 = 12.50 %

Receipt Accounting Cutoff Dates

The accrual cutoff date enables you to control when backdated receipts are accounted.

The following describes how Receipt Accounting uses offset days to determine the accrual cutoff date for processing backdated receipts.

Using Offset Days

Offset days define the grace period for processing backdated transactions in the prior GL period. You can indicate the number of offset days for a business unit in the Receipt Accounting work area, on the Manage Accrual Clearing Rules page, Manage Accrual Cutoff Rules tab. Receipt Accounting uses the offset days to calculate the accrual cutoff date.

For example, assume the number of offset days is 3, then the accrual cutoff date for processing receipts in the October GL period is November 3:

A receipt that is backdated to October 31 but is processed on November 3 is accounted in October
A receipt that is backdated to October 31 but is processed on November 4 is accounted in the November GL period

If the offset days are not defined, then the backdated receipts are processed in the prior GL period until the period is closed.

Overview of Accrual Reversal

Use the Create Accrual Reversal Accounting process in the Scheduled Processes work area to reverse accrual journal entries. You can schedule this process to run automatically at predefined intervals, or run it on demand. You can define how and when accrual reversals are automatically performed by:

Indicating that an accounting event is eligible for accrual reversal.
Determining when the accrual is reversed.
Scheduling the Create Accrual Reversal Accounting process to generate the reversal entries.

For more information on accrual reversal, prerequisites, and step-by-step instructions, see the links in the Related Topics section.

Related Topics

Close a Receipt Accounting Period

Video

Watch: This video tutorial shows you how to process receipt accruals in preparation for the closing of a receipt accounting period. It also shows you how to schedule receipt accounting processes to run automatically. The content of this video is also covered in text topics.

Procedure

This procedure shows you how to process receipt accruals in preparation for the closing of a receipt accounting period. You can schedule Receipt Accounting to automatically process receipts that are set to be accrued on receipt. If receipts aren't marked for automatic accrual on receipt, you can run the Create Uninvoiced Receipt Accruals process. This will accrue all receipts that aren't yet invoiced in Accounts Payable.

You can access the following Receipt Accounting processes in the Scheduled Processes work area:

Transfer Costs to Cost Management
Transfer Transactions from Receiving to Costing
Accrual Clearing Report
Accrual Reconciliation Report
Create Accrual Reversal Accounting

You can access the following Receipt Accounting processes in the Receipt Accounting work area:

Create Receipt Accounting Distributions
Clear Receipt Accrual Balances
Create Uninvoiced Receipt Accruals
Create Entries for Receipt Accounting
Match Receipt Accruals

You can schedule the processes, or you can run them on demand.

This procedure covers the following tasks:

Transferring Cost Data to Receipt Accounting
Creating Receipt Accounting Distributions
Creating Uninvoiced Receipt Accruals

Transferring Cost Data to Receipt Accounting

This task covers processes that should be run in the Scheduled Processes work area before closing a receipt accounting period.

To transfer cost data to Receipt Accounting, complete the following steps.

From the Navigator menu, select Scheduled Processes.
Select the processes that you want to run or schedule. The following receipt accounting processes should be completed before closing a receipt accounting period:
- Transfer Costs to Cost Management. This process transfers invoice information to Receipt Accounting.
- Transfer Transactions from Receiving to Costing. This process transfers receipt information to Receipt Accounting.
Review the Status column to confirm that the processes have completed successfully.

Creating Receipt Accounting Distributions

This task creates receipt accounting distributions in preparation for the closing of a receipt accounting period. You can schedule this process, or run it on demand.

To create receipt accounting distributions, complete the following steps.

Navigate to the Receipt Accounting work area, and select the Create Receipt Accounting Distributions task.
To run the receipt accounting processes for all the business units that you have access to, leave the Bill-to Business Unit empty. However, if you want to run them only for a particular business unit, select it from the Bill-to Business Unit drop-down list.

Note: When you run this process, the application creates one master job and a child job for each of the profit center BU that's associated with the Bill to Business Unit.
Click on the Schedule tab, and select the option Run Using a Schedule.
Complete the Frequency, Start Date, and End Date fields, and click Submit.
From the tasks menu, select the Review Receipt Accounting Distributions task to view the receipt accounting distributions that were created.
On the Review Receipt Accounting Distributions page, search for transactions that have a Transaction Status of Final Accounted and a Transaction Type of Receipt into Receiving Inspection.
Click on the Distributions tab, and click the Detach button to view the details on a new page.
Click on the Journal Entries tab to view the journal entries for the accounting distributions. Click the Detach button to view the details on a new page.

Creating Uninvoiced Receipt Accruals

If receipts aren't marked for automatic accrual on receipt, you can run the Create Uninvoiced Receipt Accruals process. This will accrue all receipts that aren't yet invoiced in Accounts Payable. You can run this job more than once during the period close process. At a minimum it should be run after the Accounts Payable period is closed and all the Accounts Payable invoices are interfaced to Cost Management, and before the General Ledger period is closed. For period end accrual, the accounted date always falls on the last date of the period selected.

You can specify a cutoff date within the accounting period for accounting purposes. Then, period end accrual for uninvoiced receipts is created on the cutoff date. This enables you to ensure that when you have multiple ledgers with different calendar period end dates, the period end accrual is booked in the same period that they're accrued.

When you have a primary general ledger and multiple secondary ledgers with different calendar periods, do the following:

If there are two ledgers running on different calendar period end dates, choose the lesser period end date as the cutoff date. For example, if the secondary ledger ends on the 27th day of the month and the fiscal ledger ends on the 30th day, choose the 27th day as the cutoff date.
If you're specifying a cutoff date, ensure that it's set to a date that's before the period end date. Else, you will get errors.
If you have configured the application to automatically reverse and post in general ledgers, the reversal accounting entries are automatically posted to the journals. However, if you haven't opted for automatic reversal, you must manually reverse the period-end accrual that was already booked and post it in the next period. For more information about configuring automatic reversal in general ledgers, see the Oracle Financials Cloud Using General Ledger guide on the Oracle Help Center.
Once the accounting period is closed, in all ledgers, move the cutoff date to a date that's in the next period.

To create uninvoiced receipt accruals, complete the following steps.

Navigate to the Receipt Accounting work area, and select the Create Uninvoiced Receipt Accruals task.
On the Create Uninvoiced Receipt Accruals page, complete the Bill-to Business Unit and Accounting Period fields.
Select a Period End Accrual Cutoff and Accounting Date. If you don't select any date, the last date of the accounting period is taken as the cutoff and accounting date.
Click Submit.
On the Review Receipt Accounting Distributions page, search for transactions with a Transaction Type of Period End Accrual.
Scroll down and select the Distributions and Journal Entries tabs to view the accounting details.

Related Topics

Cost Management for Internal Material Transfers

Cost Management supports receipt accounting and cost accounting for requisition based internal transfers for items going to either an expense or an inventory destination, with or without a receipt at the destination.

Self-Service Procurement, Supply Chain Financial Orchestration, and Cost Management have been integrated to provide an estimated transfer price based on the internal cost of the items on the requisition. A transfer price is required on the internal material transfer requisition line for approval, budgetary control, and encumbrance accounting.

Cost Management supports requisition-sourced transfer orders going to expense destinations with multiple distributions and different expense accounts. Based on the account defined at the distribution level, Cost Management will book the expense for the appropriate account. In the case of transfers to expense destinations where a receipt is not required, new logical receipt and delivery transactions are created in Cost Management, similar to the physical events created with receipt expense destination transfers when a receipt is required. Budgetary control and encumbrance accounting are supported for expense destination internal transfer orders.

Budgetary Control

You can ensure that budget funds are available before a requisition for an internal transfer is submitted for approval. Depending on your budgetary control configuration, the funds will be reserved either at the time the requisition is submitted for approval, or when the requisition is approved. Insufficient funds override rules and approvers can be configured as part of budgetary control setup. Cost Management liquidates the commitment and books an expenditure at the time of delivery when a receipt is required, or at the time of shipment by creating a virtual receipt when the receipt is not required. The Requisition for Internal Material Transfer transaction subtype has been added to enable budgetary control of requisitions for internal material transfers.

Encumbrance Accounting

Encumbrance accounting entries are created for transactions subject to budgetary control and encumbrance accounting when the Create Accounting process is run. Cost Management liquidates the reserve for the encumbrance account and creates journal entries for the actual expense value.

Receipt Accounting for Outside Processing

Receipt Accounting supports manufacturing outside processing, where one or more work order operations are outsourced to a supplier who provides specialized manufacturing services. Outside processing transactions are accounted in Receipt Accounting under the Destination Type of Manufacturing.

Accounting Distributions Created for Outside Processing

Cost Accounting supports the Purchase Order Receipt into Manufacturing transaction type for the costing of outside processing items delivered to Manufacturing. The transaction processing depends on the cost method, as follows.

Actual or Average cost method. The purchase price multiplied by the number of items received is added to the work in process valuation.
Standard cost method. The standard cost multiplied by the number of items received is added to the work in process valuation. The difference between the purchase price and the purchase order is accounted as a purchase price variance.

Related Topics

Receipt Accounting for Manual Procurement of Items for Work Orders

Receipt Accounting supports creating accruals and processing of purchase order receipts for items directly procured from a maintenance or manufacturing work order and are received against the Work Order destination type.

Accounting Distributions for Manual Procurement of Items for Work Orders

For all purchase orders with the Work Order destination type, these accounting entries are created for the Receipt transaction.

Accounting Line Type	Transaction Type
Receiving Inspection	Debit
Accruals	Credit

Receipt Accounting for Drop Shipments

Global drop shipment is an order fulfillment strategy where the seller does not keep products in the inventory. The seller relies on suppliers or contract manufacturers to build, store, and ship orders to the customers. When a customer places an order for a drop shipped product, the seller issues a purchase order for the item. The seller also provides instructions to the suppliers to ship directly to the customer. The supply chain financial orchestration process routes the orchestration flow of drop shipments through one or more business units within the corporation. These business units can belong to the same legal entity or may occur across legal entities.

The financial flow starts when the supplier sends the advanced shipment notice, or when the supplier matches the invoice with the purchase order for the drop shipment. The flow creates cost accounting distributions and intercompany invoices for the ownership transfers that occur between parties, including supplier, one or more organizations, and the customer. Supply Chain Financial Orchestration sends a request to the receiving system to create a drop ship receipt on the supplier invoice that references the purchase order. Receiving creates a logical receipt, and then notifies Order Management to start customer billing. This automation helps to reduce billing cycle time.

Receipt Accounting Distributions for Drop Shipments

You can review the receipt accounting distributions for drop shipments on the Review Receipt Accounting Distributions page. The following accounting line types are created for drop shipment events.

Event	Application Source	Accounting Line Type	Transaction Type
Drop Ship Receipt	Receiving	Receiving Inspection	Debit
Drop Ship Receipt	Receiving	Accrual	Credit

Global Procurement

Overview of Global Procurement Trade Accounting

Companies often design their legal structure for financial efficiency as well as efficiency in the physical flow of goods through the supply chain. Typically, the most optimal financial movement of goods is different from the most optimal physical movement of goods. For example, the purchase requisitions from a group of subsidiary companies could be routed through a single international purchasing company who deals with the suppliers. As a result, the legal owners of the purchasing organizations will be different from the legal owners of the receiving organizations. This form of purchasing is known as global procurement.

The following discusses:

Global procurement trade flows
Trade agreements and accounting rule sets
Agreements converted to purchase orders
Commonly used terms

Global Procurement Trade Flows

This figure illustrates a typical global procurement trade flow, in this case between a US corporation and its China supplier. The US corporation has a central procurement business unit which creates trade agreements and purchase orders on behalf of its subsidiaries.

The China supplier drop ships the goods directly to the US receiving inventory organization M1. However for legal and accounting purposes, the trade flows from the China supplier through the China sold-to legal entity (China Ltd), to the US receiving legal entity (US Inc). For management and profit tracking purposes, the trade flows from the China sold-to profit center business unit CN BU to the US receiving profit center business unit US West.

Financial Trade Agreements and Accounting Rule Sets

A trade agreement defines the parties in the trade relationship. In this example the trade agreement is between the US corporation and the China supplier, and it defines the buying, selling, sold-to, and receiving legal entities, profit center business units, inventory organizations, and trade organizations.

The accounting rule sets define source documents and accounting that is required in the legal and financial flow, also known as the ownership change event flow. A rule set is associated with a financial route, and financial routes can have different accounting rule sets.

The following illustrates a trade agreement setup for the US corporation:

Agreement #: GP001
Type: Procurement
Supplier Ownership Change: ASN (Advance Shipment Notice)
Primary Trade Relationship #: PTR1
Sold-to Legal Entity: China Ltd.
Sold-to Business Unit: CN BU
Deliver-to Legal Entity: US Inc.
Deliver-to Business Unit: US West
Financial Trade Relationship #: FTR1
From Legal Entity: China Ltd.
From Business Unit: CN BU
From Organization: CN INV ORG
To Legal Entity: US Inc.
To Business Unit: US West
To Organization: M1
Profit Tracking: Yes
Invoicing: Yes
Obligation Currency: CNY
Rate Type: Corporate
Transfer Pricing: Purchase Order - 10%
Purchase Order/Sales Order: No

Trade Agreement Converted to Purchase Orders

The trade agreement is used to create purchase orders. The following illustrates a purchase order created under the US Corporation trade agreement # GP001:

Document Type: Purchase Order
Document #: PO-GP001
Document Line #: 1
Document Line Detail: 1.1
Document Line Distribution #: 1.1.1
Item: SFO-CST_ASSET
Quantity: 100
UOM: Each
Currency: CNY
Price: 650
Sold-to Legal Entity: China Ltd.
Trade Organization: CN INV ORG
Deliver-to Organization: M1
Primary Trade Relationship #: PTR1

Global Procurement Common Terms

The following table describes the terms commonly used in global procurement trading:

Terms	Definitions and Rules
buy-sell relationship	Relationship between two business units where one acts as a buyer and the other as a seller of goods or services. The seller records the revenue, cost of sale, and receivables. The buyer records the payables and inventory or expense. A buy-sell trade between internal business units is settled through the transfer price.
asset item	Inventory item where the cost of acquisition is valued as an asset on the balance sheet. The inventory cost is expensed when it is consumed or sold.
expense item	Inventory item whose cost of acquisition is booked as an expense.
transfer price	The unit price that one business unit charges another for goods or services traded within the enterprise. The transfer price is typically based on the price list, cost plus or minus, or purchase price plus or minus.
financial route	Designates how financial transactions are settled, can be different from the physical route, and may involve one or more intermediary nodes. The intermediary nodes are internal business units that are not part of the physical supply chain transaction but are part of the financial route.
Incoterms	A series of sales terms in international trade, used to define the rights and obligations of the trade partners with respect to the delivery of goods sold. Incoterms are used to divide transaction costs and responsibilities between buyer and seller, and to reflect transportation practices.
intercompany profit and loss	The internal profit or loss arising out of trade among business units in the enterprise. These internal profits and losses are used for internal management but are typically eliminated when producing the enterprise consolidated financial statements for external stakeholders.
intercompany trade	The trade of goods and services between organizations belonging to different legal entities within a conglomerate.
intracompany trade	The trade of goods or services between two internal organizations within a legal entity.
ownership change event	The transfer of title of goods and services from one party to another. This results in accounting and the creation of financial documents such as Accounts Receivable and Accounts Payable invoices.
price list	Contains the basic list information and pricing attributes for items or product groups.
pricing option	A method to compute the transfer price based on cost, source document price, or price list.
profit center	A business unit that operates with its own income statement and reports to the legal entity.
purchasing trade organization	The inventory organization reporting to the sold-to legal entity identified in the purchase order. This organization is used for cost accounting the transactions in the sold-to legal entity.
qualifiers	Business attributes of a supply chain document or transaction that determine the applicability of the trade agreement.
supply chain financial orchestration agreement	An agreement between the legal entities, business units, and trade organizations of a corporate group. The agreement defines the parties in the trade relationship and the financial settlement process.
trade distributions	Subledger entries created by Oracle Fusion Receipt Accounting and Oracle Fusion Cost Accounting for Oracle Fusion Supply Chain Financial Orchestration trade transactions.
procurement business unit	Has central responsibility for the creation of trade agreements and purchase orders on behalf of legal entities and business units under the holding company.

Profit Center Business Units and Bill-to Business Units

Oracle Fusion Receipt Accounting and Oracle Fusion Cost Accounting create accounting distributions for trade transactions in the supply chain. These accounting distributions are associated with two kinds of business units: profit center business units and bill-to business units.

The following explains the different business units associated with trade transactions and the assumptions used to derive them.

Profit Center Business Unit

A profit center business unit reports to a single legal entity and is responsible for measuring the profitability of inventory organizations under that legal entity. All trade transactions are associated with a profit center business unit which, in turn, is derived from the inventory organization that owns the trade transaction. Cost Accounting uses the profit center business unit to process all inventory transactions.

Bill-to Business Unit

A bill-to business unit is used to process receipt accruals in a trade transaction, and is the same business unit that processes the invoice in Accounts Payable. For supplier accruals, the bill-to business unit is derived from the purchase order. For intercompany accruals, the bill-to business unit is derived from the profit center business unit.

Related Topics

How Cost Organizations, Inventory Organizations, and Cost Books Fit Together

Review Item Cost and Global Procurement Trade Transaction Accounting

Receipt Accounting and Cost Accounting process and create accounting distributions for trade transactions in the supply chain.

The following explains how to review the results of global procurement trade transactions processed by Receipt Accounting and Cost Accounting.

Receipt Accounting Results

In the Receipt Accounting work area, access the Review Receipt Accounting Distributions page. On this page you can view accounting details by Source Document Number and Source Document Line Number. Source documents are purchase order schedules, transfer orders, and sales orders.

Cost Accounting Results

In the Cost Accounting work area:

Access the Review Item Costs page. On this page you can view a breakdown of the cost of items, cost comparisons of items across organizations, and cost trends over time.
Access the Review Cost Accounting Distributions page. On this page you can view accounting details of trade transactions by Reference Document Number.

Related Topics

Review Item Costs

Receipt Accounting Examples

Example of Consigned Inventory Accounting in a Simple Purchase Order

When an organization receives a shipment of goods under a consignment purchase order, the ownership of the goods remains with the supplier even after they are in the custody of the buyer. Ownership passes from the supplier to the buyer when the inventory is consumed.

When the inventory is consumed, two events occur: First there is a transfer of ownership to the buyer and the consigned goods become owned inventory for a brief period of time, then the owned inventory is depleted.

The following example illustrates:

The physical and financial flow of consigned inventory under a consigned purchase order (PO).
The transaction that flows from Oracle Fusion Inventory Management into Oracle Fusion Cost Accounting and Oracle Fusion Receipt Accounting.
Accounting entries that Cost Accounting and Receipt Accounting generate for the forward flow.
Accounting entries that Cost Accounting and Receipt Accounting generate for the return flow.

Scenario

Supplier Advanced Network Devices (AND-Fresno) ships the goods under a consigned purchase order to inventory organization M1-Seattle.

The following diagram illustrates the flow of consigned inventory:

The diagram describes the consigned inventory flow
for a simple purchase order. The process flow is fully described in
the surrounding text.

Transaction from Oracle Fusion Inventory Management

Cost Accounting and Receipt Accounting receive the following transaction from Inventory:

Supplier Advanced Network Devices (AND-Fresno).
Consignment Purchase Order #1000.
Purchase Order price USD 100.
Ship-to organization is M1-Seattle which is the contingent owner. Contingent owner assumes ownership from the supplier when inventory is consumed.
Receipt and put away transactions performed in M1-Seattle inventory organization in consigned status.
When the goods are consumed ownership changes from supplier AND-Fresno to inventory organization M1-Seattle.

Analysis

Receipt Accounting and Cost Accounting create accounting distributions for the forward and return shipment of goods.

Accounting Entries

The following diagram illustrates the accounting entries for the forward flow from supplier AND-Fresno to inventory organization M1-Seattle.

Receipt Accounting and Cost Accounting generate accounting entries under inventory organization M1-Seattle for the receipt of goods.

The following table describes those accounting entries:

Subledger	Event Type	Accounting Line Type	Transaction Type	Amount in Functional Currency	Functional Currency	Basis of Amount
Receipt Accounting	PO Receipt	Consigned Clearing	Debit	100	USD	PO Price
Receipt Accounting	PO Receipt	Consigned Accrual	Credit	100	USD	PO Price
Cost Accounting	PO Delivery	Consigned Inventory	Debit	100	USD	PO Price
Cost Accounting	PO Delivery	Consigned Clearing	Credit	100	USD	PO Price

Receipt Accounting and Cost Accounting generate accounting entries under inventory organization M1-Seattle for the change of ownership from supplier AND-Fresno to M1-Seattle.

The following table describes those accounting entries:

Subledger	Event Type	Accounting Line Type	Transaction Type	Amount in Functional Currency	Functional Currency	Cost Element	Basis of Amount
Cost Accounting	Transfer to Owned Issue	Consigned Inventory Offset	Debit	100	USD	Material	PO Price
Cost Accounting	Transfer to Owned Issue	Consigned Inventory	Credit	100	USD	Material	PO Price
Receipt Accounting	Consigned Receipt Consumption	Consigned Accrual	Debit	100	USD	Not applicable	PO Price
Receipt Accounting	Consigned Receipt Consumption	Consigned Clearing	Credit	100	USD	Not applicable	PO Price
Receipt Accounting	Trade Receipt Accrual	Trade Clearing	Debit	100	USD	Not applicable	PO Price
Receipt Accounting	Trade Receipt Accrual	Accrual	Credit	100	USD	Not applicable	PO Price
Cost Accounting	Trade In-Transit Receipt	Trade In-Transit	Debit	100	USD	Material	PO Price
Cost Accounting	Trade In-Transit Receipt	Trade Clearing	Credit	100	USD	Material	PO Price
Cost Accounting	Transfer to Owned (Receipt)	Inventory Valuation	Debit	100	USD	Material	PO Price
Cost Accounting	Transfer to Owned (Receipt)	Trade In-Transit	Credit	100	USD	Material	PO Price

Organization M1-Seattle returns goods to supplier AND-Fresno.

This figure illustrates the accounting entries for the return flow from M1-Seattle to AND-Fresno.

Accounting entries for the return flow of consigned
inventory

Receipt Accounting and Cost Accounting generate accounting entries under inventory organization M1-Seattle for the change of ownership from M1-Seattle to supplier AND-Fresno.

The following table describes the accounting entries for the change in ownership.

Subledger	Event Type	Accounting Line Type	Transaction Type	Amount in Functional Currency	Functional Currency	Cost Element	Basis of Amount
Cost Accounting	Transfer to Consigned (Receipt)	Consigned Inventory	Debit	100	USD	Material	PO Price
Cost Accounting	Transfer to Consigned (Receipt)	Consigned Inventory Offset	Credit	100	USD	Material	PO Price
Receipt Accounting	Consigned Receipt Consumption	Consigned Clearing	Debit	100	USD	Not applicable	PO Price
Receipt Accounting	Consigned Receipt Consumption	Consigned Accrual	Credit	100	USD	Not applicable	PO Price
Receipt Accounting	Trade Return Accrual	Accrual	Debit	100	USD	Not applicable	PO Price
Receipt Accounting	Trade Return Accrual	Trade Clearing	Credit	100	USD	Not applicable	PO Price
Receipt Accounting	Trade In-Transit Return	Trade Clearing	Debit	100	USD	Not applicable	PO Price
Receipt Accounting	Trade In-Transit Return	Trade In-Transit	Credit	100	USD	Not applicable	PO Price
Cost Accounting	Transfer to Consigned Issue	Trade In-Transit	Debit	100	USD	Material	PO Price
Cost Accounting	Transfer to Consigned Issue	Cost Variance*	Debit	5	USD	Not applicable	Inventory is received at the current cost, and the difference between transfer price and cost is booked as cost variance.
Cost Accounting	Transfer to Consigned Issue	Inventory Valuation	Credit	105	USD	Material	Current Cost

* Inventory is received at the current cost, and the difference between transfer price and cost is booked as cost variance.

Receipt Accounting generates accounting entries under inventory organization M1-Seattle for the return of consigned goods from M1-Seattle to AND-Fresno.

The following table describes those accounting entries:

Subledger	Event Type	Accounting Line Type	Amount in Functional Currency +Dr/-Cr	Functional Currency	Basis of Amount
Receipt Accounting	PO Return to Supplier	Consigned Accrual	100	USD	PO Price
Receipt Accounting	PO Return to Supplier	Consigned Clearing	-100	USD	PO Price
Receipt Accounting	PO Return to Receiving	Consigned Clearing	100	USD	PO Price
Receipt Accounting	PO Return to Receiving	Consigned Inventory	-100	USD	PO Price

Related Topics

Example of Consigned Inventory Accounting of an Interorganization Transfer Across Business Units

An interorganization transfer is a trade transaction involving the movement of goods or services between organizations in the supply chain. The following is an example of accounting performed by Oracle Fusion Cost Accounting and Oracle Fusion Receipt Accounting in a simple purchase order with an interorganization transfer of goods across profit center business units. The goods remain in consigned status until ownership changes in the receiving organization.

This example illustrates:

Transactions captured in Oracle Fusion Inventory and interfaced to Cost Accounting and Receipt Accounting.
Transactions captured in Oracle Fusion Supply Chain Financial Orchestration and interfaced to Cost Accounting and Receipt Accounting.
Accounting entries that Cost Accounting and Receipt Accounting generate for the forward flow.
Accounting entries that Cost Accounting and Receipt Accounting generate for the return flow.