Answer / srinivask

P2P cycle run from Purchasing to Payables Module.
Material receiving at security level:

Material receiving a/c debit
Invoice AP accural a/c credit

Material receiving at stores:

Material a/c debit
Material receiving a/c credit

Invoice entry:

Invoice AP accrual a/c debit
AP liability a/c credit

Invoice payment:

AP liability a/c debit
cash/bank a/c credit

Answer / deepak

For the ease of understanding I am taking an example of Inventory item for P2P Accounting

1) When a receipt is created for an inventory item.

Inventory receiving account Dr
To Accrual account

2) When the Receipt Transaction Processor job is run

Inventory Valuation account Dr
To Inventory Receiving account

3) When an invoice is matched to a PO

Accrual account Dr
To Liability account

4) When the payment is issued.

Liability account Dr
To Cash/Bank Clearing account (if Clearing is used)

5) When the payment is cleared

Cash/Bank Clearing account Dr
To Cash/Bank account

6) When inventory is transferred to the department using the item.

Expense account Dr
To Inventory Valuation account

After knocking of all the respective Debit & Credit accounts, what remains finally is the Expense account Dr to Cash/Bank account.

Regards
Deepak Jadhav

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