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Function documentationAllocation Account, Expense Clearing Account, Stock in Transit Account Locate this document in the navigation structure

 

For reporting purposes, at the end of a company’s financial period, any inventory posted to the accounts within the period must have a corresponding vendor liability which is recorded in the same period.

It is common business practice for there to be a delay between inventory receipt and receipt of its associated vendor invoice. When the end of the financial period falls within the delay period, the posted inventory value in respect of these receipts does not have a corresponding vendor invoice. Instead, liability accounts, such as the allocation account and expense clearing account, hold the posted inventory value on a temporary basis until the vendor invoice is received. At the end of the financial period, the transactions which make up the value of these special liability accounts must be easily auditable.

In SAP Business One, certain postings to the following accounts are automatically reconciled to facilitate the auditing process:

  • Allocation Account

    The account records the offsetting amount for the change in inventory value due to actual inventory received or issued via the goods receipt PO or A/P returns documents.

  • Expense Clearing Account

    The account records the offsetting amount for the change in inventory value due to expenses directly incurred in the receipt or issue of inventory through the goods receipt PO or A/P returns documents, for example, freight.

  • Stock in Transit Account

    The account records the offsetting amount for the change in inventory value due to both actual inventory and expenses directly incurred through the reserve invoice documents.

The full or partial automatic system reconciliation of the postings to these three accounts occurs in the following scenarios:

  • Creating an A/P invoice based on a goods receipt PO

  • Creating an A/P credit memo based on an A/P goods return

  • Closing a goods receipt PO which is not copied, or not fully copied to an A/P invoice or a goods return

  • Closing an A/P goods return which is not copied, or not fully copied to an A/P credit memo or a goods receipt PO

  • Creating an A/P goods return based on a goods receipt PO

  • Creating a goods receipt PO based on an A/P goods return

  • Creating a goods receipt PO based on an A/P reserve invoice

  • Creating an A/P credit memo based on an A/P reserve invoice

    Note Note

    The scenarios below only exist in the following localizations where A/P and A/R correction invoice is supported: Czech Republic, Hungary, Poland, and Slovakia.

    End of the note.

    Note Note

    In the scenarios below, an A/P correction reserve invoice refers to an A/P correction invoice created based upon an A/P reserve invoice.

    End of the note.

  • Creating a goods receipt PO based on an A/P correction reserve invoice

  • Creating an A/P correction invoice reversal based on an A/P correction reserve invoice

  • Creating an A/P correction reserve invoice based on another A/P correction reserve invoice or an A/P reserve invoice; the created invoice causing an inventory value decrease compared with the connected goods receipt PO

However, in the above scenarios, if any of the three accounts has been involved in a manual reconciliation before the automatic system reconciliation takes place, SAP Business One does not perform the system reconciliation.

Note Note

You can cancel the automatic system reconciliation only if the document that triggers the reconciliation is cancelled.

End of the note.

Example Example

  1. You create a goods receipt PO for item A01 as follows:

    Item No.

    Quantity

    Unit Price

    Freight 1

    Freight 1 Inventory

    Tax

    A01

    100

    1

    10

    Yes

    19.25

    The corresponding journal entry posting is as below:

    Account

    Debit

    Credit

    Allocation Account

    100

    Expense Clearing Account

    10

    Inventory Account

    110

  2. You create an A/P invoice partially based on the goods receipt PO as follows:

    Item No.

    Quantity

    Unit Price

    Freight 1

    Freight 1 Inventory

    Tax

    A01

    40

    1

    4

    Yes

    7.70

    The corresponding journal entry posting is as below:

    Account

    Debit

    Credit

    BP Account

    51.70

    VAT Receivable (Input Tax)

    7.70

    Allocation Account

    40

    Expense Clearing Account

    4

SAP Business One automatically reconciles the allocation account and expense clearing account as follows:

Account

Debit

Credit

Reconciliation Amount

Balance Due

Allocation Account

40

100

40

60

Expense Clearing Account

4

10

4

6
End of the example.

More Information

Interim Accounts