Accounting Methods (Oracle Payables Help) http://download.oracle.com/docs/cd/A60725_05/html/comnls/us/ap/accting.

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Accounting Methods
When you set up Payables you choose a primary and an optional secondary accounting method in the Payables Options window. The accounting method you
choose determines the distributions Payables creates when you post your transactions. For each accounting method, cash or accrual, you choose a set of books
to which you will to post transactions. You cannot change your primary accounting method after you post your transactions.

Set up Payables to create accounting entries in compliance with one of the following accounting methods:

Cash Basis Accounting. You record only payments, and do not record liability information for invoices. The payment distributions typically debit
your expense or asset account and credit your cash or cash clearing account. When you post payments, Payables may also create distributions for
discount taken and foreign currency exchange gain or loss.

Accrual Basis Accounting. You post accounting distributions for invoices and payments. The invoice distributions generally debit your expense
account and credit your liability account. For prepayments, Payables creates distributions that debit your prepayment account and credit your
liability account.

Payment distributions typically debit the liability account and credit the cash or cash clearing account. When you post payments, Payables may
also create distributions for discount taken and foreign currency exchange gain or loss.

Combined Basis Accounting. You maintain one set of books for cash accounting and one set of books for accrual accounting. You choose which
will be your primary set of books and which will be your secondary set of books. Invoice distributions are recorded for your accrual set of books,
and payment distributions are recorded in both your cash set of books and accrual set of books.

Combined basis accounting allows you to produce financial reports for either your cash or accrual set of books. For example, you may want to
manage your company on an accrual basis, but require cash basis accounting information for certain regulatory reporting on a periodic basis.

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