Example 1: Invoice

A vendor invoice is entered with the following items: FB60

Vendor Invoice During Entry

Posting key (Dr/Cr) Account Cost Center Amount
40(Dr) Expense CC1 40.00
40(Dr) Expense CC2 60.00
31(Cr) Vendor 100.00

Example 2: Payment

The payment for the above vendor invoice then contains the following items when entered:

F-53

Vendor Payment During Entry

Posting key (Dr/Cr) Account Profit Center Amount
25(Dr) Vendor 100.00
50(Cr) Bank 95.00
50(Cr) Cash discount received PC1 2.00
50(Cr) Cash discount received PC2 5.00

3 . Advance payment to Employee f-48

Employee Vendor (special GL indicator) Dr

To Bank A/C Cr

4. Employee will Submit the approved bills to finance, and FI user will post the invoice.

The following accounting entry would be passed.

Expenses A/c Dr FB60

Employee Vendor A/c Cr

5. Advance to Vendor

Advance to Vendor A/c Dr (special GL indicator)

Bank Outgoing A/c Cr

The down payment with reference to Purchase order. T Code F-48

 6 User need to check/confirm the services received information in the system.
Accounting entry would be
Service Expenses Dr.
SR/IR Cr.

System will automatically generate the accounting entry as below

SR/IR Dr
Service Vendor A/c Cr
TDS payable a/c Cr (If applicable)

Invoice with PO - Foreign Purchase of Materials

Steps to be followed in Foreign PO scenario:

a) PO against Foreign Vendor in Foreign Currency: Order currency of the purchase order will
be in foreign currency, where for custom duties, local freight related to these vendor can be
maintained in local currency at condition level, provision for maintaining the exchange rate is
available.

b) Invoice for custom duty : Since custom duties needs to be paid to the government before
receiving the goods, we will create custom duty invoice first

Custom clearing a/c Dr

To Customs vendor a/c Cr

c) Goods receipt of the material by stores: Once stock received at stores the following
financial entry will be posted:

Stock a/c Dr
GR/IR clearing a/c Cr
Freight clearing a/c Cr
Custom clearing a/c Cr

d) Invoice for supply vendor: With reference to stock received Invoice will be raised to
supplying vendor in foreign currency itself, provision for maintaining exchange rate is
available in Invoice screen

GR/IR clearing a/c Dr

To Vendor a/c Cr
 e) Invoice for Freight vendor: For difference delivery cost like agent fee and inward freight
invoices will be posted.

Freight Clearing a/c Dr

To Vendor a/c Cr

Invoice with PO - Foreign Purchase of Services

Purchase order will be raised in foreign currency.

Expense a/c Dr
To SR/IR clearing a/c Cr

Invoice will be posted by the finance team: Once the Service entry was posted by the
respective department, Finance will post the Invoice in foreign currency and provision for
maintaining the exchange rate is available.

SR/IR a/c Clearing a/c Dr

To Vendor a/c Cr

Taxes related to purchases and tax deduction during purchase are covered in Taxation
Payment processing to vendor will be covered in Bank Accounting

Invoice with PO - CAPEX related material/ Services

Steps to be followed in CAPEX PO scenario:

a) Purchase order will be raised with account assignment category A for any asset
procurement.
The asset master number (CWIP) will be provided by finance team . Procurement team has to
obtain the a new asset number (CWIP) every time they purchase asset.
Note: Finance team has to issue block wise (CWIP) asset master number.
when asset received by the following department (as discussed no stock item will be
maintained in stores) GRN will be posted.

Asset CWIP a/c Dr

To GR/IR a/c Cr

Note: All the expenses related to particular asset, the procurement department has to use the
related asset number in further PO's till it gets capitalized.
When Finance post the invoice following entry will be generated.

GR/IR a/c Dr
Vendor a/c Cr
Accounts Receivable

Customer Invoice Directly posted in FI

Customer a/c Dr
To Revenue a/c Cr

Customer Down payment Directly posted in FI

Bank/Cash a/c Dr
To Customer advance a/c (Spl.GL) Cr

Domestic Sales Invoice Processing:

On delivery of Goods, the following entry gets generated in FI.

Cost of Goods Sold a/c Dr

To Inventory (Finished Goods) a/c Cr

TDS on Payment to Vendors:

Accounting entry at the time of Invoice entry: T code: FB60/MIRO

Dr Expense a/c
Cr Vendor
Cr TDS Payable

Accounting entry for advance payment to vendors: T Code:F-48

Dr. Vendor Advance a/c

Cr. Bank a/c
Cr. TDS Payable

TDS remittance: Remittance will be made through the system by standard T-code J1INCHLN.
Challans will be updated for each section separately.

Dr TDS Payable
Cr Bank a/c
Bank Challan updation: bank challan number will be updated in the system through standard T
code J1INBANK. This will link the remittance challans with the external bank scroll number. No
accounting entry will be generated.

Quarterly E-Returns: E-Returns for TDS shall be generated from the system by T code
J1INQEFILE. The return shall be converted into required excel file and can be validated for filing.

Tax Collected at source (TCS)

Accounting entry on billing: T code: VF01/FB70

Dr. Customer
Cr. Revenue a/c
Cr. Other taxes
Cr. TCS Payable

Deposit of TCS to Govt. : T Code: F-07

Dr. TCS payable

Cr. Bank a/c

1. Procurement of an Asset :

Financial entry during procurement:

During Goods Receipt :
Fixed Asset/ CWIP a/c Dr
To GR/IR Account Cr
During Invoice Receipt:
GR/IR Account Dr
To Vendor account Cr

b) Capital Stock item to Fixed Asset:

Financial entry during GRN of stock item:

Capital Stock item Dr

To GR/IR account Cr

Invoice will be posted by the finance team

Financial entry during the invoice :

GR/IR account Dr
To Vendor a/c Cr
To Input tax a/c Cr (if applicable)

When Asset is put in use, Stores will send the request to finance for asset number. Finance will
create or mention the existing asset number to stores based on the nature of the asset to
capitalize. Stores will issue the capital item with reference to the asset number.

Fixed Asset a/c Dr

To Stock a/c Cr

.
c) Asset Purchase without PO:
Financial entry during the invoice of asset purchase :

Fixed Asset account Dr

 To Vendor account Cr

2. Capitalization of AUC/CWIP:
a) Booking of cost to internal order in case of direct issue of materials/service through PO
route:

Expenses a/c Dr (with reference to order)

To GR/IR Cr (in case of material)
To SR/IR Cr (in case of service)
To Freight clearing a/c Cr (in case of delivery cost)

GR/IR Dr (in case of material)

SR/IR Dr (in case of service)
Freight clearing a/c Dr (in case of delivery cost)
To Vendor a/c Cr

Booking of direct expenses through FI route:

Expenses a/c Dr (with reference to order)

To Vendor a/c Cr

When material issued from stores to CWIP

Consumption a/c Dr (with reference to order)

To Stock a/c Cr

Monthly moving cost to AUC/CWIP

CWIP a/c (balance sheet a/c) Dr

TO Expense a/c (Internal Order) Cr

Final Capitalization to Fixed asset after completion

Fixed Asset a/c Dr

To CWIP a/c (balance sheet a/c) Cr

b) Final Capitalization to Fixed asset after getting completion certificate of CWIP/AUC Asset

Fixed Asset a/c Dr

To CWIP a/c (All relevant expenditures) Cr
3. Depreciation of Asset: Financial entry during depreciation runs monthly:

Depreciation a/c Dr (cost centers will be derived from the asset

master)
To Accumulated Depreciation a/c Cr
4. Disposal of an Asset through Customer sales: Asset will be disposed in a two step
procedure

a) Asset retirement in FI route: Asset will be removed from asset register by indicating the sale
amount. Sold to customer

Example : Asset value 10000 , accumulated depreciation 5000 and the gross selling price
6000

Automatic posting during asset retirement:

Accumulated depreciation a/c Dr 5000

Asset sale clearing a/c Dr 6000
Fixed Asset a/c Cr 10000
Profit on sale of Asset Cr 1000

b) SD route billing: After completion of above process to generate the sales invoice and delivery
will be processed while billing the following financial entry will generated as follows

Customer a/c Dr 6600

VAT output a/c Cr 600 (assumption of 10% vat)
Asset Sale clearing a/c Cr 6000
c) Disposal of an asset through scrapping: this scenario occurs when the asset needs to be
removed/retired from asset register due to completely damaged or moved to scrap.

Example : Asset value 10000 - accumulated depreciation value 9800= 200 net book value

Accumulated a/c Dr 9800

Loss due to scrapping account Dr 200
Fixed Asset a/c Cr 10000