Cost Accounting Transactions from Deliveries and Invoices
Nominal Ledger Transactions for outward cost accounting postings can be created when Deliveries are
approved, or when Invoices are
approved.
Deliveries
To create Nominal Ledger Transactions when Deliveries are approved, switch on the Deliveries check box in the Sub Systems setting in the Nominal Ledger (see step 5 on the Switching Cost Accounting On page). Ensure that the Goods Receipts option in the same setting is also on, so that cost accounting postings are made for both outward and inward stock movements.
The values posted are calculated using the Cost Model, Delivery defined in the Cost Model setting in the Sales Ledger. The Cost Models in the Item Groups are not used.
The Account credited by such Transactions is determined as follows:
- The Stock Account for the specified Location will be credited.
- If this is blank, or no Location has been specified, and if the Use Item Groups for Cost Accounts option in the Cost Accounting setting is on, the Stock Account for the Item Group to which the Item belongs will be credited.
- If this is blank, the Item does not belong to an Item Group or the Use Item Groups for Cost Accounts option is not in use, the Stock Account on card 5 of the Account Usage S/L setting will be credited.
The Account debited by such Transactions is determined as follows:
- The Cost Account for the Item will be debited.
- If this is blank and the Use Item Groups for Cost Accounts option in the Cost Accounting setting is on, the Cost Account for the Item Group to which the Item belongs will be debited.
- If this is blank, the Use Item Groups for Cost Accounts option in the Cost Accounting setting is off, or the Item does not belong to an Item Group, the Stock Cost Account specified on card 5 of the Account Usage S/L setting will be debited.
Deliveries can only be
created from Sales Orders, and an Invoice usually cannot be
created from a Sales Order until the Delivery has been
approved. However, Invoices can also be entered directly to the
Invoice register, without reference to Sales Orders. When it has been determined that outward cost accounting transactions will be created on Delivery, it is recommended that such Invoices (those without a related Sales Order) should also create cost accounting transactions, because there is no Delivery to carry out this task.
For this to happen, ensure that the Inv Update Stock option is switched on in the Account Usage S/L setting (card 1).
! | If you find that Nominal Ledger Transactions are not created from Deliveries despite this having been specified in the Sub Systems setting, the likely cause is that the default Cost Model has been set to None. |
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Invoices
To ensure that outward cost accounting postings are only included in Nominal Ledger Transactions created when Invoices are approved, switch off the Deliveries check box in the Sub Systems setting in the Nominal Ledger (see step 5 on the Switching Cost Accounting On page). Ensure that the Goods Receipts option in the same setting remains on, so that balancing inward cost accounting postings are made.
Next, check that the Inv Update Stock option is switched on in the Account Usage S/L setting (card 1).
The values posted are calculated using the Cost Model specified for the Item Group to which the Item belongs. If the Item is not a member of an Item Group, or the Item Group has a blank Stock or Cost Account, the Cost Model, Invoice defined in the Cost Model setting in the Sales Ledger is used.
The Account credited by such Transactions is determined as follows:
- The Stock Account for the specified Location will be credited.
- If this is blank, or no Location has been specified, and if the Use Item Groups for Cost Accounts option in the Cost Accounting setting is on, the Stock Account for the Item Group to which the Item belongs will be credited.
- If this is blank, the Item does not belong to an Item Group or the Use Item Groups for Cost Accounts option in the Cost Accounting setting is off, the Stock Account on card 5 of the Account Usage S/L setting will be credited.
The Account debited by such Transactions is determined as follows:
- If the Use Item Groups for Cost Accounts option in the Cost Accounting setting is off, the Cost Account for the Item will be debited. If this option is on, the Cost Account for the Item Group to which the Item belongs will be debited.
- In all other cases, the Stock Cost Account specified on card 5 of the Account Usage S/L setting will be debited.
Nominal Ledger Transactions created when Invoices are
approved will contain a cost accounting element in the following circumstances:
- When an Invoice is entered directly to the Invoice register (i.e. it does not relate to a Sales Order or a Delivery); and
- When an Invoice is raised from a Sales Order and no Nominal Ledger Transaction was created from the Delivery (i.e. the Deliveries option in the Sub Systems setting is switched off).
The FIFO Cost Model can only be used in the first situation (i.e. when you are not using the Sales Order register). In the second situation, FIFO values are calculated when the Delivery is
approved and are not transferred to the Invoice. If you are using the FIFO Cost Model, this means the Nominal Ledger Transaction created from the Invoice will not contain a cost accounting element because the FIFO values are not known to the Invoice. If you want to use the FIFO Cost Model and are likely to create Invoices from Sales Orders, you must choose to have the cost accounting transaction created on Delivery as described earlier on this page (i.e. the Deliveries option in the
Sub Systems setting should be switched on, and the Cost Model, Delivery should be set to FIFO).
