In SAP Procurement, we can accrue liability when we receive materials. This accrual is offset to Vendor account when Vendor invoice is input into the system.
Typically, the accounting entry would be as follows:
At time of Goods receipt:
- Debit Inventory
- Credit Goods Receipt/ Invoice Receipt clearing
At time of input of Vendor Invoice in the system
- Debit Goods Receipt/ Invoice Receipt clearing
- Credit Vendor
In SAP Sales, why can we not accrue sales when delivery is made to the Customer?
When Outbound delivery is posted (with Post Goods Issue), SAP posts the following:
- Debit Cost of Sales
- Credit Inventory
Sales Accrual entry as below should also be posted.
- Debit Revenue Accrual
- Credit Revenue
When billing is performed, the accrual account can be offset.
- Debit Customer
- Credit Revenue Accrual
- Credit Output Tax
Customers have to execute reports to identify Sales Orders delivered but not billed. Depending on the delivery terms on the Outbound Delivery, they work out whether accrual should be posted on not. In most cases, all five criteria (as per IFRS) for identifying the critical event for recognizing revenue on the sale of goods are met.
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