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!
- Is Dropbox right for your client comms? Webinar 15 May 312
- Set up a company pension 261
- RTI Fees 230
- 2011 FHL loss & ITA 2007 s74a 227
- Where's our 10%? 205
- HMRC Lost PAYE Clients 204
- Driving sales growth 194
- UK Property Purchase by an overseas individual in own name 190
- EIS 187
- Regiatration of a Trust 186
- Cost of converting property - who pays? 182
- CIS late registration 172
- Accounting for gift vouchers - paid for and donated 168
- Best structure 164
- Break up basis accounting 162
- Property owned privately 153
- Mortgage application for intending director. 153
- Membership of trade association - tax deductible? 144
- Companies in administration - Bad debt and VAT 133
- SEIS and DeMinimus Aid 124