Procure to Pay (P2P) – Accounting Entries

This post highlights some of key accounting entry in each steps with respect to.
As you know "procure to pay" Business Flow start Purchasing requisition till paying to vendors and most important, in all the case the purchase is made for basic element called Items.
As you know there are three types of items:

• Inventory Expense Item
• Inventory Asset Item
• Expense item

Definition of above Items used in Purchasing can be best understood as:




Asset flag means means it is an asset and the items value will show in your inventory valuation.
Inventory Item



Expense Item
These are one which is used for consumable items purchase for your organization. More importantly , for creating an expense item you have to perform following setup doing in the Master Item form.Go to same path in oracle inventory
Oracle Inventory -> Items -> Master Items
When master items form open Go to Inventory Menu you need to tick followings

1. Inventory item
2. Stock able
3. Transactble
4. Resolvable

And you can also setup in Costing and purchasing menu account code as per your requirement.


Asset Item

As discussed above , the following attributes need to be enabled for such an item.

• Inventory item
• Stock able
• transact able
• Costing flag
• Inventory asset value

For entering on purchase orders
It should have purchased and purchasable flags enabled and you have to make sure you are assigning this item to the Purchasing org which you have defined at
Oracle Purchasing > Setup > Organizations >
Financial Options > 'Supplier-Purchasing' alternate region 'Inventory Organization' field.
The accounting can be best described for such kind of items is;

Is there any effect on Step 5 in all three cases, that mean do matching have different accounting entry?

The answer is no; as per my understanding purpose of setting the PO to a 2way, 3 way or 4 way match is to ensure that the corresponding hold is generated on the invoice.
The holds are basically designed for control purposes, they do not have any accounting effects.