Purchase Order Accruals

[fred gonzalez]

I have a prospect that needs to recognize purchase orders on their P&L as
soon as generated. The reason is that their products take a long time to
arrive and they want to "accrue" the expense without having receiving the
goods or creating a journal entry (too many po's). Receiving them at the time
they generate the PO would be an option except that their PO's don't
necessarily match their invoices.

Has anyone encounter this dilema? I am told that there are applications that
will do PO accruals.

[Charles Allen]

I'm wondering what the GL entry is when the goods are received. Do they
reverse the original entry and post a new one?

The only thing I can figure is they can create a report or use SmartList to
get the information they need to support a journal entry and manually enter
one.
--
Charles Allen, MVP

Post by fred gonzalez
I have a prospect that needs to recognize purchase orders on their P&L as
soon as generated. The reason is that their products take a long time to
arrive and they want to "accrue" the expense without having receiving the
goods or creating a journal entry (too many po's). Receiving them at the time
they generate the PO would be an option except that their PO's don't
necessarily match their invoices.
Has anyone encounter this dilema? I am told that there are applications that
will do PO accruals.
--
fred

[Victoria [MVP]]

Fred,

Is this something they need instantly or on a monthly basis? If they need a
monthly entry perhaps they can use the Encumbrance Management module to come
up with the monthly entry needed. If they need it instantly, I think you're
looking at a customization and probably not a very simple one.

While I am not a CPA, another concern I would have is that I am not sure
treating POs this way is GAAP compliant. Technically, they would be
overstating their expenses.
--
Victoria Yudin
Dynamics GP MVP
Flexible Solutions, Inc.

Post by fred gonzalez
I have a prospect that needs to recognize purchase orders on their P&L as
soon as generated. The reason is that their products take a long time to
arrive and they want to "accrue" the expense without having receiving the
goods or creating a journal entry (too many po's). Receiving them at the time
they generate the PO would be an option except that their PO's don't
necessarily match their invoices.
Has anyone encounter this dilema? I am told that there are applications that
will do PO accruals.
--
fred

[Frank Hamelly, MCP-GP]

Fred:

I agree with Victoria, unless they receive an invoice from the vendor
and are willing to post that invoice prior to receiving the goods,
they would be running afoul of GAAP. It's the equivalent of booking
revenue in anticipation of delivering product or services - definitely
not GAAP compliant.

Good luck,

Frank Hamelly
MCP-GP, MCT
East Coast Dynamics
www.eastcoast-dynamics.com