Purchase order accounting entries
I've spent a good chunk of my day trying to unravel a messy purchase order situation and wanted to make sure I'm not going mad.
The way I see it the whole purchase order thing should work a little like this:-
- PO is raised for goods and services - No impact on accounting records
- Goods and received and in good order etc etc - DR to P&L expense, CR to accruals in the balance sheet
- Invoice comes in from supplier - DR the accrual above, CR Supplier/Purchase ledger
I guess my question is two fold......
1. am i right in saying no entry should hit the accounting records until the goods are received (the accrual stage above)
2. shouldnt a fully integrated system such as SAP, Oracle etc etc create that accrual for you (and subsequently get rid of it when the supplier invoice is matched)
The records im looking at just now show maual accruals for goods received where no invoice has been received and I'm begining to panic a little.
Can someone at least tell me that my theory is sound?
I need a drink................
Thanks in advance!
- FILING COMPANY ACCOUNTS 23 2
- Which company is best for online new company formation? 120 5
- FRS percentage 58 2
- Anybody taken part in the Growth Voucher Scheme? 80 2
- How much did you pay for your website 715 14
- Subsidiary exemption from audit via parent guarantee 48 1
- Can I use the approved mileage rates in a Limited Company? 189 5
- can a CGT transfer be legally cancelled in the future if 293 9
- Gross Profit Percentage 504 11
- Companies House 422 8
- On line petition re HMRC grabbing money from taxpayer bank accounts 971 23
- can a balancing allowance be claimed if 137 4
- Benefit fraud 3,147 42
- Who would you nominate for a Practice Excellence Award? 219 2
- What is the reasoning behind HMRC letter re high income child benefit charge? 1,031 16
- Tax return to date of death/R27 139 2
- Preparing a consolidated TB 291 7
- does a hybrid car with CO2 92g/km bought April 2014 481 5
- How to deal with a prior year CT adjustment 250 8
- Medical benefit on low paid wife of director? 153 5
- CTA study material 616
- Anyone have clients that use Pay4Later to offer customers credit? 381
- Employment related securities question 235
- Foreign Business setting up in UK 204
- ATED Penalties 203
- AIM Stocks and IHT 183
- Tax Relief for overseas employees 145
- Expat pension contributions? 137
- Trust for Employee 133
- Staff accommodation without a rental value or RV 124