Accounts
Payables Accounting Flow
Below are few of the key concepts about Accounts Payables
Accounting. Accounts Payables have multiple Flows which will be elaborated below.
Even though the accounting engine has been moved to Sub Ledger accounting in
r12, the Core Concepts of Payables accounting remain same.
Standard
Accounts Payable Invoice/ Payment Accounting
One of the most commonly seen scenarios in Accounts payables
is Standard Invoice and Payment. Below are the accounting entries for them
Standard invoice creation:
Dr. Expense / Item Expense / Misc. Expense
Cr. Supplier / Liability
The “Expense / Item
Expense / Misc. Expense” are derived from the Payables Invoice
Distribution where as “Supplier / Liability” Account id derived
from Supplier’s Site, from the liability account code combination on that
particular site. Although the liability account is defaulted from Payables’
Financial Setup, but you can change the account code according to your need. We
can even change the liability account code combination on the Invoice Workbench by
enabling the Column from Folders option.
Payment of the Standard invoice:
Dr. Supplier / Liability
Cr. Bank / Cash / Cash Clearing
Now comes the payment, the
liability account is fetched from the supplier whose invoice is being paid, the
cash clearing or cash account is fetched from the bank you
select during the payment. This account is defined during the Bank Account Setup.
PREPAYMENTS / ADVANCES:
Prepayment Invoice creation:
Dr. Prepaid Expense / Advance Paid
Cr. Supplier /
Liability
Prepayment invoice Payment:
Dr. Supplier / Liability
Cr.
Bank / Cash / Cash Clearing
Standard Invoice creation:
Dr. Expense / Item Expense / Misc. Expense
Cr. Supplier / Liability
Prepayment Application to Standard invoice
Dr. Supplier / Liability
Cr. Prepaid Expense
/ Advance Paid
INVOICES
with “TRACK AS ASSETS”:
Track as Asset” is a
functionality for moving the items from Oracle Payables to Oracle Assets. It is
a check box on the Invoice Line TAB and can be enabled on Distribution Line
using the Folder View option. When you check this box and run the “Mass Addition Create Report” from Payables, the items on
invoice line or distribution line moves to Oracle Assets.
Invoice creation:
Dr. Asset Clearing
Dr. Supplier / Liability
Dr. Supplier / Liability
Invoice transferred to oracle Assets:
Dr. Asset
Cr. Asset Clearing
INVOICE with WITHHOLDING TAX
In the Payables invoices
with Withholding tax Scenarios, accounting entry for the WHT payables or
Liability account is selected from the supplier defined as a Tax Authority. The
WHT expense is picked from the WHT setup.
Taking an example of
withholding at time of Payment
Invoice Creation:
Dr. Expense / Item Expense / Misc. Expense
Cr. Supplier
/ Liability
Payment
with Withholding Tax
Dr.
Supplier / Liability
Cr. Bank / Cash / Cash Clearing
Cr. Withholding Tax
WITHHOLDING TAX INVOICE
Dr. WHT
Expense
Cr. Withholding Liability
