Accounting Events

An accounting event is a Payables transaction that has accounting impact. After an accounting event completes, you can create accounting entries for it by creating accounting entries for the category or document class that includes the event. The two document classes in Payables are invoices and payments. The following is the complete list of the accounting events in Payables, listed by document class.
Invoices
– invoice
– invoice adjustment
– invoice cancellation
– prepayment application
– prepayment unapplication

Payments
– payment
– payment adjustment
– payment cancellation
– (future dated) payment maturity
– payment clearing
– payment unclearing
The following descriptions give an overview of the event and the accounting that Payables does for each event. These descriptions assume that you use accrual basis accounting, unless there is a specific reference to cash basis accounting.

Invoice Event
The invoice event occurs when the Invoice Validation process successfully validates a new invoice. Accounting entries for this event are created for the accounts on each invoice distribution, and the liability account of the invoice.

  • If you do not use Automatic Offsets, the system creates a single liability entry for the invoice liability account.
  • If you use Automatic Offsets, then Payables creates liability entries to offset each distribution on the invoice. It builds the liability account based on your automatic offset method, either balancing segment or account.

In addition, during accounting for the invoice event, Payables creates or adjusts encumbrances, if necessary. If the invoice is purchase order matched, then Payables also records encumbrances for any invoice price variance or exchange rate variance.
If you use cash basis accounting, when you submit the accounting process for an invoice event, Payables will update the status to accounted, but Payables will create no accounting entries.

For the invoice event, the accounting date is the GL Date on the invoice distribution. Note that if an invoice has distributions with different GL Dates, the earliest GL Date will be used when accounting for the invoice event, and Payables will record the distributions with the later GL Date as an invoice adjustment event.

Invoice Adjustment Event
The following are examples of transactions that are invoice adjustment events:

  • Reversal of an existing distribution for an accounted invoice
  • Adding a new distribution to an accounted invoice
  • Accounting for the invoice event for this invoice includes only the distributions with the earliest GL date. Payables groups the other distributions by GL Date and accounting for these groups of distributions are recorded for separate accounting events.

Note that if the invoice is paid and the payment has already been accounted, if you adjust the invoice, the system will not  automatically adjust the payment accounting entries. The accounting date for this event is the GL Date on the invoice distribution.

Invoice Cancellation Event
This event occurs when you cancel an accounted invoice. This event accounts for the new, negative amount distributions (reversals) that are created when you cancel an invoice. This event reverses all existing accounting entries for the invoice.
The accounting date for this event is the GL Date on the invoice distribution.

Prepayment Application Event

This event accounts for the application of a prepayment to an invoice. Since this is an invoice event, cash basis accounting will not account for it until you pay the invoice.
This event credits the prepaid account for the amount of the application, and debits the liability account because the prepayment was a payment on the invoice. The accounting date for this event is the GL Date on the Prepayment type invoice distribution.

Prepayment Unapplication Event
This event accounts for the unapplication of a prepayment. It reverses any accounting entries that were recorded for the prepayment  application. The accounting date for this event is the GL Date on the Prepayment type invoice distribution.

Payment Event
Accounting entries for this event record payment of an accounted invoice.
Payables will not account for a payment until the paid invoices are accounted.

  •  If you use accrual basis accounting, Payables creates entries to relieve the liability of the invoice accounting entries. Payables will also record any gains and losses if you account for gains and losses at payment issue.
  •  For cash basis accounting, accounting for the payment event creates entries for the accounts on the paid invoice distributions. Payables creates accounting entries for this event only if the Account for Payment When Payment is Issued option is enabled in the Payables Options window.

When the payment accounting options in the Payables Options window are set to account for payments when they are issued:
• If you account for payments at payment issue only, then accounting entries for this event credit the cash account.
• If you account for payments at both issue and clearing, accounting entries for this event credit the cash clearing account.
For future dated payments, accounting entries for this event credit the Future Dated Payment Account from either the payment document or the supplier site, depending on your Payables option.

Based on your system setup and the transaction details, this event might also create discount or rounding entries. For payments, including future dated payments, the accounting date for this event is the payment date. If the payment date is in a closed period, then the GL Date is the first day of the next open period.
If you account for payments only when they clear, then Payables does not record any entries for the payment event, but instead records the payment during the payment clearing event.

Payment Maturity Event
This event creates accounting entries for future dated payments when their status is updated from Issued to Negotiable. After a future dated payment matures, you can update its status in two ways:
• Submit the Update Matured Future Payment Status program
• Manually update the status in the Status field of the Payments window.

Accounting entries for this event debit the future dated payment account.
• If you account for payments only at payment issue, then accounting entries for this event credit the cash account.
• If you also account for payments at payment clearing, then accounting entries for this event credit the cash clearing account.
Payables creates accounting entries for this event only if the Account for Payment When Payment is Issued option is enabled in the Payables  Options window.
The accounting date for this event is the maturity date on the future dated payment.

Payment Adjustment Event
A payment adjustment event occurs when you change the invoices recorded on a Manual payment.
For the newly selected invoices, the accounting entries for this event relieve the liability accounts in the amount of the payment. For the originally paid invoices, the entries reverse the invoice liability that the payment had relieved.
Payables also reverses any gains or losses for the originally paid invoices, and records any gains or losses for the newly selected invoices.

Payables creates accounting entries for this event only if the Account for Payment When Payment is Issued option is enabled in the Payables Options window. For payments the accounting date for this event is the payment date. If the payment date is in a closed period, then the GL Date is the first day of the next open period.

Payment Cancellation Event
This event occurs when you cancel (void) a payment. This event reverses accounting entries for the payment.
The accounting date for this event is the void GL Date on the payment. If the void GL date and the payment date are different, then when you account for the payment, you will get both a payment event and a payment cancellation event.
Payables creates accounting entries for this event only if the Account for Payment When Payment is Issued option is enabled in the Payables Options window.

Payment Clearing Event
This event occurs when you either clear or reconcile a payment in Oracle Cash Management. Payables creates accounting entries for this event only if the Account for Payment When Payment Clears option is enabled in the Payables Options window.
Accounting entries for this event credit the cash account.
• If you account for payments both at issue and clearing, then accounting entries for this event debit the cash clearing account.
• If you account for payments only at clearing,
– and you use accrual basis accounting, then accounting entries for this event debit the liability account.
– and you use cash basis accounting, then accounting entries for this event debit the expense account.

Also, you may have accounting entries for gains, losses, bank charges, and negative amount bank errors.
Note that positive amount bank errors are recorded through Oracle Receivables.

The accounting date for this event is the Clear Date you enter in Oracle Cash Management.

Payment Unclearing Event
This event occurs when you either unclear or unreconcile a payment in Oracle Cash Management.
Accounting entries for this event reverse the accounting entries that were recorded during the payment clearing event.
Payables creates accounting entries for this event only if the Account for Payment When Payment Clears option is enabled in the Payables Options window and after the corresponding clearing event is accounted.
The accounting date for this event is the GL Date on the uncleared payment.

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