Oracle Inventory, Purchasing and Order Entry

In this chapter accounting issues are described for Oracle Purchasing and Inventory.
Only actual journal entries are included in this chapter. Encumbrances are handled in
a separate chapter.

Assumptions
1. Inventory is not used in a manufacturing environment. Goods are received,
moved between organizations and sold.
2. Receiving of goods is done in two steps. The first step is receiving the goods
for inspection. The second step is to deliver the goods to the inventory or
other department.

Events

INV Event name GL Source GL Category Remarks

Event
nr.

INV-1 Receipt of inventory Purchasing Accrual/ Receiving The category depends on the way receipt
item accounting is handled. The category accrual
is used when the method is period end.
Receiving is used when the receipt journal is
generated directly.
INV-2 Receipt of expense Purchasing Accrual/ Receiving As Above
item
INV-3 Deliver Purchasing Accrual/ Receiving As Above
INV-4 Return to vendor Purchasing Accrual/ Receiving As Above
(goods not in stock)
INV-5 Return to vendor Purchasing Accrual/ Receiving As Above
(goods in stock)
INV-6 Sales order shipment Inventory Inventory
INV-7 Cycle count Inventory Inventory
adjustment
INV-8 Miscellaneous Inventory Inventory
Transfer
INV-9 Interorg. Transfer Inventory MTL
INV- Subinventory Inventory MTL
10 Transfer
Accounts
Use of accounts per Event;

Events  INV INV INV INV INV INV INV INV INV INV
-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

Account Account Type

Receiving Inspection Asset X X X X

Purchase Price Variance Expense X X
Receivable Asset X
Payable Liability X
In transit Inventory Asset X
Material Asset X X X X X X X
Outside Processing Asset
Material Overhead Asset
Overhead Asset
Resource Asset
Expense Expense X
Invoice Price Variance Expense
Inventory AP Accrual Liability X X X X
Sales Revenue
Cost of Goods Sold Expense X
(COGS)
Cost Variance Account Expense
Cycle count adjustment Expense X
Scrap Expense X
 Account Other Organization Subinventory

Receiving Inspection X
Purchase Price Variance X X
Receivable X X
Payable X X
In trasit Inventory X
Material X X
Outside Processing X X
Material Overhead X X
Overhead X X
Resource X X
Expense PO-line X X
Invoice Price Variance X
Inventory AP Accrual X
Sales X
Cost of Goods Sold X
Cost Variance Account X
Cycle count adjustment Account
Alias
Scrap Account
Alias
PO & INV Purchasing & Inventory Journal Transactions
Expense
Account
(PL:E)

INV-5: Receive and

Expense Item
Liability
Account Inventory Receiving Material
Payables AP Accrual Inspection (B:A)
(B:L) (B:L:T) (B:A:T)
INV-4
INV-2:
INV-1: Receive to inspect Delivery to
On matchng in AP Inventory Purchase
Price
INV-3: Return to Vendor (goods Variance
Invoice not in stock) (P&L:E)
Price
Variance
(P&L:E)
INV-4: Return to
vendor (Goods
INV-4 in Stock)

Remark: the Material isdrawn more than once for clarity of the drawing, logicaly it is the same account

Material (B:A)
COGS (P&L:E)
INV-6: Sales Order
Shipment
Cycle Count Adjustment (P&L:E)
INV-7: Cycle count
Adjustments
Scrap (P&L:E)

INV-8: Misc. transfer

Inter Org
Purches Material
Price Var. (org-Y)
Material
INV-9a tm INV-9h: Inter 9c
(Org-x) @STD @STD @STD
Organization transfer 9f
(X-Y) (X-Y) (B)
Org.X=> Org. Y 9g

Sub inv.
Intransit Sub inv.
Freigt Cost Intransit
@STD
(X) 9a (s) 9e (s) 9f (s)

Inter org. Inter org.

9b (r) Receivebles Payables
Transfer Cost 9b (r)

9e (s)
9b (r) 9c( r)

9g
9d (s)
9d (s)
9g (s)
Material PS for INV -9
(Sub.inv A2 (r) / (s) = on ship / on receipt
Org-A) 9a, 9b en 9c =Intransit;
Accounting entries

INV-1 Receive to Inspect

Accounting entry Debit Credit

Receiving inspection X
Inventory AP Accrual* X

* This account will be posted Debit when matching an AP Invoice to the

related Purchase order.

INV-2 Deliver to Inventory

Accounting entry Debit Credit

Material* X
Receiving inspection X
Purchase Price Variance (X) (X)

* In case of the use of an expense item on the related Purchase order, this
account will be an expense item.

INV-3 Return to Vendor (Goods not in stock)

Accounting entry Debit Credit

Inventory AP Accrual X
Receiving inspection X

INV-4 Return to Vendor (Goods in stock)

Accounting entry Debit Credit

Inventory AP Accrual X
Receiving inspection X

Accounting entry Debit Credit

 Receiving inspection X
Material X
Purchase Price Variance (X) (X)

INV-5 Receive an Expense Item

Accounting entry Debit Credit

Expense account X
Inventory AP Accrual X

INV-6 Sales Order Shipment

Accounting entry Debit Credit

COGS X
Material X

INV-7 Cycle count adjustments

Accounting entry Debit Credit

Cycle count adjustment (X) (X)

Material (X) (X)

INV-8 Misc. transfer

Accounting entry Debit Credit

Scrap X
Material X

INV-9g Interorg transfer (Direct)

Accounting entry Sub Ship / Debit Credit

no. Receiv
e

Material (Organization Y) 9g s X
Inter Org Payables 9g s X
Inter Org Receivables 9g s X
Accounting entry Sub Ship / Debit Credit
no. Receiv
e

Material (Organization X) 9g s X
Inter Org Purchase price variance 9g s (X) (X)
 INV-9a t/m 9c Interorg transfer (in transit, FOB point in sending
Organization)

Accounting entry Sub Ship / Debit Credit

no Receiv
e

In transit Account 9a s X
Material (Organization X) 9a s X
Inter Org Receivables 9b r X
In transit Account 9b r X
Transfer Cost 9b r X
Freight Cost 9b r X
Material (Organization X) 9c r X
Inter Org Payables 9c r X
Inter Org Purchase price variance 9c r (X) (X)

INV-9d t/m 9f Interorg transfer (in transit, FOB point in receiving

Organization)

Accounting entry Sub Ship / Debit Credit

no Receiv
e

Inter Org Receivables 9d S X

Transfer Cost 9d S X
Material (Organization X) 9d S X
In transit Account 9e S X
Inter Org Payables 9e S X
Freight Cost 9e r X
Material (Organization X) 9f r X
In transit Account 9f r X
Inter Org Purchase price variance 9f r (X) (X)

INV-10 Subinventory transfers

Accounting entry Debit Credit

Material (A) X
Material(B) X

Notes