COST ACCOUNTING
COST MANAGEMENT SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Manage Common Options for Payables and Procurement > Select the business unit > Expense Accruals > Set Accrue Expense Items to At Receipt.
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Configure Procurement Business Function > Select the business unit > Set Select Receipt Close Point to Accrue at At Receipt.
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Product Information Management > Search and select the expense item > Specifications > Manufacturing > Verify that Inventory Asset Value is set to “Yes".
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Configure Procurement Business Function > Select the business unit > Set Select Receipt Close Point to Accrue at Period End.
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Product Information Management > Search and select item > Specifications > Manufacturing > Verify that Inventory Asset Value is set to “No".
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Detailed explanation-1: -This is the account used by Purchasing to accrue your payable liability when you receive your items. This account represents your uninvoiced receipts and is usually part of your accounts payable liabilities in the balance sheet. Payables relieves this account when the invoice is matched and approved.
Detailed explanation-2: -Under the accrual method (sometimes called the accrual basis of accounting), businesses record revenues when the transaction occurs, not when the actual cash payment for the sale is received.
Detailed explanation-3: -Purchase Order Receipt Accruals If goods are entered as received, but they have not been paid yet, the system will record the expense as an accrued expense. The expense associated with the invoice is booked when Accounts Payable enters the invoice, not when the invoice payment is sent to the supplier.