Please send me the basic accounting steps for:
- the Sales cycle (from Shipment onwards)
- The purchase cycle (from GR onwards)
For simplicity, I'll assume a sales order exists and the material is being sold from inventory.
At the time a delivery is post goods issued, an accounting entry is created that debits Cost of Goods Sold and credits Inventory.
When the billing document is created, the debit goes against Accounts Receivable (attached to the customer number in the A/R subledger) and the credit goes against Revenue. This entry can get more complicated if a company offers discounts, sets up a warranty reserve as a percentage of revenue, bills sales tax to its customers, accrues for commissions based on a percentage of sales revenue, accrues a bad debt provision as a percentage of revenue, etc. However, if each of these steps is treated as if it stood alone, these calculations are not difficult to program.
When the customer pays his invoice, the debit goes against Cash and the credit goes against A/R.
The main pitfall I have seen in SD transactions revolves around the "Actual GI Date" that gets entered when a delivery is created. If there is a time lag between the Post Goods Issue and the creation of the billing document, P&L reports will pick up the cost of goods sold but there will be no offsetting revenue dollars, causing margins to be misstated. This is especially a problem at month end, since today's date will be the default date. Let's say today is January 1 and the Actual GI Date should be December 31. If the shipping clerk forgets to change the Actual GI date to 12/31 the revenue could show in December but the COGS will show in January because the GI date was in January. Right now, I don't open the new month until I'm sure all deliveries from the prior month have been entered. We've had a couple that went into the wrong month in the past, and correcting them is very difficult!
> - The purchase cycle (from GR onwards)
I'm making the assumption here that a purchase order exists in SAP for an inventory item.
When a goods receipt transaction is entered, inventory is debited and the GR/IR account is credited. (The GR/IR account is a current liability account.)
When the invoice arrives, GR/IR is debited and Accounts Payable is credited (the dollars are attached to the vendor number in the A/P subledger).
When the invoice is paid, Accounts Payable is debited and Cash is credited.
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