Accounting Entries Effect in Procurement Cycle Concepts- SAP MM&FI:
As we studied in previous post regarding accounting determination, here we are discussing how the accounting determination is going to work based on the settings you done and which are all the GL accounts its getting hitting based on which scenario and why is the reason behind that.
We have N number of activities in procurement cycle and one of the main thing is Inventory and to know the spend, goods inbound and outbound will take place in plant, we need to depend on reports in SAP and even the reports we will be taken on -which accounting entry for which type of movement or else goods inside and outside will be calculated full based on accounting entries.
While we are defining account determination, we have something called modifiers, many things were surrounded to modifiers.
Each entry in procurement where stock and price are involving then automatically accounting entries will come into picture.
We are doing many activities in Inventory by ordering stock from vendor, Normal order from vendor, Consumables, Subcontracting, Pipeline, Consignment, Physical Inventory, Stock movements like STO/Inter and Intra, return PO, service PO.
Here we will study which accounting entry will affect on what scenario and the reason.
1.Standard PO Order-
This is the normal order where we use to procure from vendor and vendor mainly materials like Raw-materials and finished goods, which are physically used for production purpose.
Once the vendor delivers the goods to plant, based on invoice we need to make a payment to the vendor and APAY will release the payment – Here from which GL account the payment should release.
Because we cannot use some other GL account for these types of materials, as per the company its already predefined in OBYC like which GL account should hit for which type of orders-----these settings are predefined by SAP.
While paying amount to the vendor few accounts will hit automatically with the help of transaction event key.
If anything like stock is getting crediting to plant or withdrawal of stock from plant will reduce or increase the quantity, in those cases BSX will hit automatically.
And for clearing the invoice always WRX will hit and from this vendor account will get paid automatically.
Inventory Posting- BSX +
Clearing GR/IR entry- WRX –
Here we have 1 more scenario, where material master price is coming into picture and it is Standard price and moving average price.
Standard price- S
Moving price- V
For every material we have price indicator and S means standard price- Where price will not fluctuate normally.
For material with moving average price then price may change as per the market.
Accounting entries for moving average price is same as explained above like BSX and WRX.
(!)Moving price in Material master: for moving price if we are doing MIGO/MIRO and payment to the vendor then one more accounting entry will come into picture that is PRD.
Inventory Posting- BSX +
Clearing GR/IR entry- WRX –
Price difference account- PRD –
2.Indirect PO/Service PO:
As above if we have material then with the help of valuation class and account category reference the GL account will hit, and accounting entries will be displayed while payment.
In indirect PO, there will be no material and there is no Material master/valuation class, so in this case how the accounting entries will be recorded.
Note: Indirect PO’s are always consumable materials and services and for now just consider as Consumable material.
Now we need to maintain GL account in OBYC and without valuation class and here is the procedure for that.
In this case accounting entries will be KBS and WRX
But when you see in OBYC- KBS, there are no GL accounts in that modifier.
But when you enter material in PO, based on the account assignment the direct effect will be on VBR and we can see these settings in _____
Here it’s an SAP recommended setting, where it explains which account assignment should hit which modifier.
Now in this case, VBR is an account modifier but for consumption it’s showing KBS and WRX, but the GL account will be taken from VBR modifier and in that search for blank valuation class GL account.
We all know the sub-contracting process and in these many scenarios, but accounting entries will be same for financial point of view.
( ! ) Stock transfer to vendor
(!!!) Buying components and service from vendor
(!!!!) Vendor to Sc. vendor
We have above 4 scenarios and process are different, but payment is same we need to pay to vendor finally and accounting entries will be same.
Here main activity we are doing is transferring stock to vendor and vendor is consuming that and providing full finale material to us, so let’s think what type of inventory effects are involving.
While stock transfer the inventory stock will get reduce
Vendor will consume and prepare final material, so service payment should be done.
Accounting Entries: BSX, WRX, FRL, BSV
BSX- the stock we are transferring to vendor, so stock will get reduced
WRX- we need to pay to vendor
FRL- Service done by vendor like manufacturing or something fittings
(!!) Scrap ----------!
(!!!) Buying components and service from vendor--! BSX, WRX, FRL and BSV
(!!!!) Vendor to Sc. vendor ----------!
Here we use to procure from vendor as bulk quantity and once it’s received, we ill place in vendor consignment stock- Non billable for company.
Once we shift from consignment stock to own stock then we should do MRKO- Billing to the vendor for payment.
Biased on the usage, it may be 10% or 50%- we will do invoice (MRKO) for the used quantity.
Accounting entries hit will place in – KON and BSX
For STO, where stock will transfer from plant to plant and here, we have two scenarios.
Within company code
Between two different company codes
Within company code:
Within the company codes, there will be no billing takes place whereas plants are within same company code, where we can exchange the stock as per the requirements.
But whereas two different company codes, the billing will take place and billing will be done by SD consultant.
In every company there will be physical inventory and stock will be verified and make it corrected if there is plus or minus.
Accounting entries takes place are: BSX and INV with modifier GBB