PROCURE TO PAY CYCLE ACCOUNTING

Creation of Requisition
No Accounting

Creation of Purchase Order
No Accounting

Receiving of Goods 
Receiving A/c----------------------Dr At PO Price
                 Receiving Option Setup
To AP Accrual A/c------------------Cr At PO Price
                 Inventory Org Setup

Delivery of Goods 
Raw Material Sub Inventory A/c-----Dr At Standard Cost
                  Sub-inventory Material A/c Setup
Po Price VarianceA/c ----------------Dr Diff between PO-Stnd
                  Inventory Org Setup
To Receiving A/c----------------------Cr At PO Price
                  Receiving Option Setup

Invoice matching with PO
AP Accrual Liability A/c------------Dr At PO Price
                  Receiving Option Setup
Invoice Price Variance A/c---------Dr Diff btw Invoice-PO
                  Inventory Org Setup
To AP Liability A/c-------------------Cr At Invoice Price
                  Financial Options/Supplier Site

On making Payment
Liability A/c-----------------------Dr At Invoice Price
                  Financial Options/Supplier Site
To Cash-----------------------------Cr At Invoice Price
                  Bank A/c Setup


Enter purchase order
When you enter a purchase order, accounts are created and stored with the purchase order distribution. The accounts will eventually be used as a basis for creating accounting that is sent to the general ledger. Creating a purchase order in and of itself generates no accounting that is sent to the general ledger.

Receive
When you process a receipt, no accounting is created for period end accruals.Receipts that are accrued at period end will always be for a destination type ofexpense.

Deliver and cost
When you deliver a receipt to its final destination, no accounting is created.The expense will be recorded after matching to the purchase order, running the Payables Accounting process and subsequently running the Payables Transfer to General Ledger process.

Period end accrual
If an invoice is not entered by period end, the Receipt Accruals - Period End process will generate accruals and transfer the accounting for them to the GL Interface. Use the Journal Import program to create unposted journals. This journal is created with a reversal date in a subsequent period. The journal must be reversed so your receipt liability is not overstated.

Reverse accrual in the general ledger
In the subsequent period, reverse the prior period accrual.

Invoice and match
Entering an invoice and matching creates a debit to the Inventory AP Accrual account to clear the liability for the uninvoiced receipt. The entire credit is to the AP Liability account that defaults from the supplier site if the invoice unit price is the same as the purchase order line unit price. Any difference is charged to the Invoice Price Variance account.For items with destination type of Expense, the Invoice Price Variance account will be the same as the charge account. The AP Liability account is cleared when a payment is processed.