When an item is received in purchasing, what is the proper split that should occur behind the scenes?
Hello Murray,
The proper ledger splits that occur when an item is received on a PO is a Debit to Inventory account, Credit to Accrued Liabilities account. Accrued Liabilities account is where Receipts accumulate until the PO (PO line) is Vouchered. That ledger impact is a DR to Accrued Liabilities and CR Accounts Payable.
Hope this answers your question.
Best,
CETEC ERP Customer Support
So what happens if the PO is not vouchered? As in it’s not picked up when the voucher is created?
We have a large build up of these items that are inflating our inventory and the accrued liability.
Murray…yes, this is the accumulation I was referring to in Accrued Liabilities…if the PO lines do not get Vouchered, the Receipts just linger in Accrued Liabilities ongoing. There are a couple of options to address this…I will check with another accounting support team member to be sure I am relating the most helpful information to address this and will get right back to you. It would be helpful to know in what context you all would be creating a Voucher to a Vendor for items purchased but not including the PO line? is this prior to actual receipt of the Inventory purchase? perhaps a pre-payment situation? Also, I do want to clarify though that Inventory moving from the Balance Sheet to COGS happens when the customer is Invoiced for the sale of the goods, so I’ll address Accrued Liabilities accumulation first and then look at why Inventory would be inflated.
Best,
CETEC ERP Customer Support
Thank you for your support, but not to worry. I reached out and arranged a Web meeting with an accounting support member (Arlene) who was fantastic. I think I have it wrangled.
Very good! I am glad Arlene was able to assist you, and yes she is wonderful!
Best,
CETEC ERP Customer Support
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