Standard Accrual
In case of Standard Accrual, Invoice and Payment Accounting will be there.
Reason: Transaction happens in two phases.
1)Order goods and receive goods(Create PO, Create Receipt, Create Invoice and account it)
2)Pay the amount for received goods within due time set by the supplier( Pay the invoice and account it)
Since you are not paying the amount immediately, you need to keep track of the amount needs to pay to the supplier after phase one. You maintain this amount in LiabilityA/C(Cr). After second phase, you debit your LiabilityA/C and credit your CachA/C which shows your cash flow from your organization to the supplier.
Here are the details of accounting for an item purchase of cost 100 dollars.
Note: Payment accounting may happen in two stages based on option selected in Payables->Setup->Options->PayablesOptions->AccountingOption tab->PaymentAccounting.
Accounting Method: Standard Accrual
Invoice Accounting:
ItemExpenseA/C----------------------100----Dr
LiabilityA/C---------------------------100----Cr
Payment Accounting:
Direct Pay-No Clearance
Payment Time
LiabilityA/C------------------------100----Dr
CashA/C--------------------------100----Cr
Or
Pay and Clear
Payment Time
LiabilityA/C------------------------100----Dr
CashClearingA/C-------------------100----Cr
Clearing Time
CashClearingA/C------------------100----Dr
CashA/C--------------------------100----Cr
Standard Cash
In case of Standard Cash, only payment accounting will be there.
Reason: While purchasing an item you pay amount immediately to the supplier. So you don't have any debt to the supplier to record. so there is nothing to record in LiabiltyA/C.
Here are the details of accounting for an item purchase of cost 100 dollars.
Note: Payment accounting may happen in two stages based on option selected in Payables->Setup->Options->PayablesOptions->AccountingOption tab->PaymentAccounting.
Accounting Method: Standard Cash
No Invoice Accounting..
No LiabiltiyA/C
Payment Accounting:
Direct Pay - No Clearance
Payment Time
ItemExpneseA/C------------------100----Dr
CashA/C-------------------------100----Cr
Or
Pay and Clear
Payment Time
ItemExpneseA/C------------------100----Dr
CashClearingA/C-----------------100----Cr
Clearing Time
CashClearingA/C-----------------100----Dr
CashA/C-------------------------100----Cr
