Valuation Accounts
You
choose a default valuation account when you define organization
parameters. Under standard costing, these accounts are defaulted when
you define subinventories and can be overridden. Under average
costing, these accounts (except for Expense) are used for
subinventory transactions and cannot be updated.
| Material | An asset account that tracks material cost. For average costing, this account holds your inventory and intransit values. Once you perform transactions, you cannot change this account. |
| Material Overhead | An asset account that tracks material overhead cost. |
| Resource | An asset account that tracks resource cost. |
| Overhead | An asset account that tracks resource and outside processing overheads. |
| Outside processing | An asset account that tracks outside processing cost. |
| Expense | The expense account used when tracking a non-asset item. |
Other Accounts
| Sales | The profit and loss (income statement) account that tracks the default revenue account. |
| Cost of Goods Sold | The profit and loss (income statement) account that tracks the default cost of goods sold account. |
| Purchase Price Variance | The variance account used to record differences between purchase order price and standard cost. This account is not used with the average cost method. |
| Inventory A/P Accrual | The liability account that represents all inventory purchase order receipts not matched in Accounts Payable, such as the uninvoiced receipts account. |
| Invoice Price Variance | The variance account used to record differences between purchase order price and invoice price. This account is used by Accounts Payable to record invoice price variance. |
| Encumbrance | An expense account used to recognize the reservation of funds when a purchase order is approved. |
| Average Cost Variance |
Under
average costing with negative quantity balances, this account
represents the inventory valuation error caused by issuing your
inventory before your receipts.
|
Note:
For
standard costing, only the Purchase Price Variance, Inventory A/P
Accrual, Invoice Price Variance, Expense, Sales and Cost of Goods
Sold accounts are required. The other accounts are used as defaults
to speed your set up.
Note:
For
average costing, only the Material, Average Cost Variance, Inventory
A/P Accrual, Invoice Price Variance, Expense, Sales and Cost of Goods
Sold accounts are required. The other accounts are used as defaults
or are not required.
Inter-Organization Transfer Accounts
You
define default inter-organization transfer accounts in the
Organization Parameters window. These accounts are defaulted when you
set up shipping information in the Inter-Organization Shipping
Networks window.
Transfer
Credit
The
default general ledger account used to collect transfer charges when
this organization is the shipping organization. This is usually an
expense account.
Purchase
Price Variance
The
default general ledger account used to collect the purchase price
variance for inter-organization receipts into standard cost
organizations. This is usually an expense account.
Payable
The
default general ledger account used as an inter-organization clearing
account when this organization is the receiving organization. This is
usually a liability account.
Receivable
The
default general ledger account used as an inter-organization clearing
account when this organization is the shipping organization. This is
usually an asset account.
Intransit
Inventory
The
default general ledger account used to hold intransit inventory
value. This is usually an asset account. For average cost
organizations, this account is the default material account.
Defining Other Account Parameters
To define Receiving Account information:
2.
Select the Other Accounts alternative region.
3.
Enter a general ledger account to accumulate Purchase Price Variance
for this organization.
This
is the variance that you record at the time you receive an item in
inventory, and is the difference between the purchase order cost and
an item's standard cost. Purchase price variance is calculated as:
Purchase
price variance is not used for average costing.
4.
Enter a general ledger account to accumulate Invoice Price Variance
for this organization. This is usually an expense account.
Invoice
price variance is the difference between the purchase order price for
an inventory item and the actual invoice price multiplied by the
quantity invoiced. Oracle Inventory passes this account to Oracle
Purchasing when the requisition or purchase order is created. When
Oracle Payables matches and approves the invoice, Oracle Payables
uses the invoice price variance account from the purchase order to
record invoice price variance entries. In addition, if you have
exchange rate variances, Oracle Payables also records invoice price
variance for exchange rate gains and losses.
5.
Enter a general ledger account to accumulate Inventory Accounts
Payable Accrual for this organization.
This
is the account used by Oracle Purchasing to accrue your payable
liabilities when you receive your items. This account represents your
uninvoiced receipts and is usually part of your Accounts Payable
Liabilities in the balance sheet. Oracle Payables relieves this
account when the invoice is matched and approved.
6.
Enter a default general ledger account to accumulate Encumbrance for
this organization. This is the default account when you define your
subinventories.
To define Profit and Loss Account information:
1.
Select the Other Accounts alternative region.
2.
Enter a default Sales revenue account.
When
you define your items, this account is defaulted to the item's sales
account in the Invoicing attribute group.
3.
Enter a default Cost of Goods Sold account.
When
you define your items, this account is defaulted to the item's cost
of goods sold account in the Costing attribute group.
To define Average Cost Account information:
1.
Select the Other Accounts alternative region.
2.
Under average costing with negative quantity balances, this account
represents the inventory valuation error caused by issuing your
inventory before processing your receipts. This account is required
only when using average costing.
3.
Save your work.
Subinventory General Ledger Account Fields
Material
Enter
a general ledger account to accumulate material costs for items
received into this subinventory. This is usually an asset account
used for the value of goods stored in this subinventory.
For
asset items, you use this account as a default when you generate
purchase requisitions from MRP, min-max organization level planning,
or reorder point planning. However, when you receive the purchase
order, you use the appropriate valuation or expense account.
Outside
Processing
Enter
a general ledger account to accumulate outside processing costs for
this subinventory. This is usually an asset account. Oracle Work in
Process charges this account at standard cost when you receive items
for a job or schedule in Oracle Purchasing. Oracle Work in Process
relieves this account at standard cost when you issue components to a
job or schedule.
Material
Overhead
Enter
a general ledger account to accumulate material overhead or burden
costs for this subinventory. This is usually an asset account.
Overhead
Enter
a general ledger account to accumulate resource or department
overhead costs for this subinventory. This is usually an asset
account. Oracle Work in Process charges this account at standard cost
when you complete assemblies from a job or schedule. Oracle Work in
Process relieves this account at standard when you issue components
to a job or schedule.
Resource
Enter
a general ledger account to accumulate resource costs for this
subinventory. This is usually an asset account. Oracle Work in
Process charges this account at standard cost when you complete
assemblies from a job or schedule. Oracle Work in Process relieves
this account at standard cost when you issue components to a job or
schedule.
Expense
Enter
a general ledger account to accumulate expenses for this
subinventory. For expense subinventories, this account is charged
when you receive any item. For asset subinventories, this account is
charged when you receive an expense item.
Encumbrance
ORACLE
PURCHASING ONLY
Enter
a general ledger account to hold the value of encumbrances against
items in this subinventory. This account is used for purchase order
receipts and returns.
Back Orders
Drop Shipment
Back to Back Orders
