Account Assignment for Returns

When a payment item is returned:

The return amount plus the return charge is debited to the ordering party account as one total.
The return amount is credited to the recipient account
The charge amount only is posted as income to a technical P&L account.

However, like all accounts in Account Management (FS-AM), the technical P&L account is similar to the balance sheet account. The postings on the technical P&L account are not transferred to a real P&L account for charge income until the data is transferred to the general ledger.

Once P&L accounts on the general ledger are cleared on the key date of the balance sheet, this account can no longer be reconciled for AM , because the reconciliation uses the balances of the general ledger accounts. This means that there must be a special account assignment for returns in AM if the General Ledger Transfer component is active.

In AM, the technical P&L account is cleared each day by effective cash pooling . The clearing account in AM absorbs the clearing balance from the effective cash pooling, and is also used for reconciliation with the general ledger.
The general ledger transfer of the technical P&L debit postings and the technical P&L credit postings is to two different accounts on the general ledger : The credits are posted to the P&L income account, and the debits to a balance sheet account (transfer account).
The general ledger transfer of the cash pooling posting on the AM clearing account is to an equivalent balance sheet account on the general ledger (clearing account). This account is used as reconciliation account for the clearing account in AM .
The balances of the transfer account and clearing account on the general ledger must always be zero. However, these must not be offset against one another, as reconciliation with AM would then no longer be possible. Since the two accounts can never be cleared, and are managed separately for reconciliation purposes only, they must not be included on the balance sheet.

This results in the following business transactions in AM , and the corresponding posting records on the general ledger (the payment transaction account for clearing in the general ledger is abbreviated to PT Clearing account):

(1)AM: Credit from debit collection of 100 to corporate customer account in credit

General ledger: Per PT clearing account 100 to current accounts of corporate customers 100

(2)AM: Debit of 100 to private customer account in debit

General ledger: Per current account private customer 100 to PT clearing account 100

(3)AM: Reversal of debit for 100 on private customer account (return) in credit

General ledger: Per PT clearing account 100 to current accounts of private customers 100

(4)AM: Charges for return amount to 3 on technical P+L account in credit

General ledger: Per PT clearing account 3 to charge income 3

(5)AM: Debit corporate customer account with return debit amounting to 103 in debit

General ledger: Per current account corporate customer 103 to PT clearing account 103

(6)AM: Cash pooling clears technical P+L account amounting to 3 in debit

General ledger: Per transfer account 3 to PT clearing account 3

(7)AM: Cash pooling clears balance of 3 on clearing account

General ledger: Per PT clearing account 3 to clearing account 3

This graphic is explained in the accompanying text.

To ensure that postings from returns can be transferred correctly to the general ledger, you need to do the following:

Create the technical P&L account in AM for the return charges with a general ledger group that is not part of the inventory run.
Create the clearing account in AM for the cash pooling posting that clears the balance of the technical P&L account.
Create the charge revenue account as P&L account on the general ledger for the credit postings of the AM technical P&L account.
Create the transfer as balance sheet account on the general ledger for the debit postings of the AM technical P&L account.
Create the clearing account as balance sheet account on the general ledger for the postings of the AM clearing account.
Create a master contract hierarchy for effective cash pooling of the technical P&L account in AM , and the AM clearing account, then schedule the cash pooling run in end-of-day processing.
Set up the corresponding account assignments in the Customizing for Account Management.