Receipt Accounting basically deals with procurement activities or events like purchase accruals and expense accounting. Oracle Fusion Receipt Accounting recognizes the liability to the supplier and creates accruals for receipts destined for inventory or expense. These accrual balances are reconcile against the corresponding invoices from accounts payable by receipt accounting and clears them to inventory valuation.
Receipt accounting creates accrued liability balances for the estimated cost of purchase order receipts, at time when goods are received and delivered to inventory or expense destination.
When we creates actual supplier invoice, Accounts Payable creates the actual supplier liability and clear/offset the accrual balances
Now when we are talking about receipt accruals, there are two ways we can accrue liability:
- Accrue at Receipt
- Accrue at Period end
Accrue at Receipt
When the business process designed to create receipt accrual at the time of receiving, Receipt accounting creates accruals as soon as receipt has been entered and confirmed in the oracle fusion application.
Receipt Accounting creates or credit the Accrual account and debit the Receiving Inspection account when receipt has been entered in the oracle fusion application. And when receipt is confirmed or delivered, receipt accounting offset or clears the Receiving Inspection and debit the inventory or expense charge account. Hence, summarized accounting captured in the oracle fusion is liability has been accrued and charge account has been debited.
Now once actual supplier invoice is created, accounts payable application clears or offset the accrual account balances and creates the actual supplier liability
Accrue at Receipt Option
The first question comes up when you start setting up receipt accounting, where to setup the receipt accrual option, i.e., accrue at receipt or accrue at period end. One point that you need to keep note of is for inventory items the receipt accounting always performs accrue at receipt. And for expense items the oracle fusion provides the option to setup either you want accrue at receipt or accrue at period end.
Hence, whenever you are receiving the inventory items the system always creates accrual at the time of receipt and for expense items you have to setup the option. Navigate to Setup and Maintenance area and search for “Common Options for Payable and Procurement”
Oracle Fusion also provides you the flexibility to override the receipt accrual option at the time of purchase order creation.
Transfer Receiving Transactions to Costing
Before the receipt accounting creates the receipt accrual, oracle fusion requires to transfer the eligible transactions to costing. That means you have to transfer Receiving transactions to costing to create receipt accounting entries. To transfer the receiving transactions, navigate to scheduled processes and search for “Transfer Transactions from Receiving to Costing”, the process will transfer all the eligible transactions from receiving to costing for receipt accounting.
Transfer Inventory Transactions to Costing
In addition to transferring the receiving transactions to costing, you have to transfer the inventory transactions to costing also in case on inventory items. Because when you delivered the item to warehouse, the oracle fusion application raises an event for inventory that is subscribed by costing. To transfer the inventory transactions, navigate to scheduled processes and search for “Transfer Transactions from Inventory to Costing”, the process will transfer all the eligible transactions from inventory to costing for cost accounting.
Receipt Accrual Creation
Once all the eligible transactions has been transferred to costing, you are ready to create receipt accrual. Navigate to Costing > Receipt Accounting and click on “Create Receipt Accounting Distributions”
Once “Create Receipt Accounting Distributions” process is completed, go to “Review Receipt Accounting Distributions”
Complete the Receipt Accounting
To complete the receipt accounting, navigate to Costing > Cost Accounting and click on “Create Cost Accounting Distribution”
Once the “Create Cost Accounting Distribution” process is completed, go to “Review Cost Accounting Distribution” to view the accounting distribution.