Answer / satyam computers

Accounting Methods are

1) Accrual Base Accounting
2) Cash Basis Accounting

Answer / oracle.vision

Accounting Methods are two types in oracle 11i
1. Accrual
2, cash

In Accrual method we are recording the Transaction in two
times
one for invoice and one for Payment.

In cash method we are recording the transaction only
for payment.

Corrections will be appreciated.

Answer / muzaffar ali

Accounting Methods
When you set up Payables you choose a primary accounting
method. In the Payables Options window you can also choose
a secondary accounting method. The accounting method
determines the types of accounting entries Payables
creates. For each accounting method, cash or accrual, you
choose a set of books in which you will account for
transactions.
Attention: Carefully consider these settings at
implementation time because you cannot change them after
accounting events occur (for example, after any invoice has
been validated in your system.)
Set up Payables to create accounting entries in compliance
with one of the following accounting methods:
o Cash Basis Accounting. You account only for
payments, and do not record liability information for
invoices. The payment accounting entries typically debit
your expense or asset account and credit your cash or cash
clearing account. When you create accounting entries,
Payables might also create entries for discount taken and
foreign currency exchange gain or loss.
Payables uses the payment date as the accounting date for
your expense and cash journal entries.
o Accrual Basis Accounting. You create accounting
entries for invoices and payments. The invoice accounting
entries generally debit your expense or asset account and
credit your liability account. For prepayments, Payables
creates accounting entries that debit your prepayment
account and credit your liability account. For prepayment
applications, Payables creates accounting entries that
debit your liability account and credit your prepayment
account.
Payment accounting entries typically debit the liability
account and credit the cash or cash clearing account.
Payables might also create accounting entries for discount
taken and foreign currency exchange gain or loss.
When you reconcile payments using Oracle Cash Management,
Payables might also create accounting entries for cash
clearing, bank charges, bank errors, and foreign currency
exchange gain or loss between payment and reconciliation
time.
o Combined Basis Accounting. You maintain one set of
books for cash accounting and one set of books for accrual
accounting. You choose which will be your primary and your
secondary set of books. Invoice accounting entries are
recorded for your accrual set of books, and payment
accounting entries are recorded in both your cash set of
books and accrual set of books.
Combined basis accounting allows you to produce financial
reports for either your cash or accrual set of books. For
example, you may want to manage your company on an accrual
basis, but require cash basis accounting information for
certain regulatory reporting on a periodic basis.
Accrual Basis Accounting Examples
In the following examples, US Dollars is the functional
currency for your set of books and you use accrual basis
accounting. You account for payments at issue time only.
Example 1
You enter and validate an invoice for $100 with payment
terms that allow you to take a 10% discount on the invoice
if paid within 10 days. When Payables creates accounting
entries for the invoice, it debits the expense account and
credits the liability account.
You pay the invoice five days later, taking the 10%
discount. When Payables creates accounting entries, it
records the liability and cash transactions along with the
appropriate discount transaction.
Example 2
You enter and validate a $25 prepayment for a supplier
site. You then enter and validate a $100 invoice for the
same supplier site. When you account for the prepayment and
invoice, Payables records the expense and liability
transactions for the invoices.
You then pay the prepayment and apply the prepayment to the
invoice, reducing the amount due on the invoice. You pay
the remaining amount of the invoice and create accounting
entries for the prepayment application and the invoice. The
prepayment application accounting entry debits the
liability account for the amount of the prepayment and
credits your prepayment account. The invoice payment
accounting entry debits your liability account for the
reduced invoice amount and credits your cash account.

Cash Basis Accounting Examples
In the following examples, US dollars is the functional
currency for your set of books and you use cash basis
accounting. You account for payments at issue time only.
Example 1
You enter and validate an invoice for $100 with payment
terms that allow you to take a 10% discount on the invoice
if paid within 10 days. Payables creates no accounting
entries for the invoice.
You pay the invoice five days later, taking the 10%
discount. When Payables creates accounting entries, it
records the expense and cash transactions along with the
appropriate discount transaction.
Example 2
You enter and validate a $25 prepayment for a supplier
site. You then enter and validate a $100 invoice for the
same supplier site. Payables records no accounting entries
for the prepayment and invoice.
You then pay the prepayment and apply the prepayment to the
invoice, reducing the amount due on the invoice. You pay
the remaining amount of the invoice and create payment
accounting entries. The accounting entry prepayment
application debits the expense account and credits the
prepayment account for the amount of the prepayment. The
payment accounting entry debits your expense account and
credits your cash account for the reduced invoice amount.

Answer / r k jain

In AR perspective -
Accounting method would be ACCRUAL if you want your billing
system to record revenue from invoices, debit memos, and
chargebacks. When you use this method, Receivables debits
your cash account and credits your receivables account upon
payment of a debit item.
Accounting method would be CASH BASIS if you want to
recognize revenue at the time you receive payment for an
invoice, debit memo, or chargeback. Receivables debits cash
and credits revenue when using the Cash Basis method.

Answer / madhu

accounting method 2 accounts created
expence a\c dr
to liability a\c....1

liability a\c dr
to cash clearing a\c

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