D365: Posting rules and GL transactions explanation. Part 1 – Purchase order posting

Posting is one of the tough piece in AX and I am going to go through different posting rules and GL transactions explanation:

Your inventory posting rules may vary due to different settings. Some of them are presented below:

– Whether your item stock, non-stock
– Whether you want to post physical inventory or no
– Whether charges are included into purchase
– Whether specific costing method is used
– Whether taxes are presented
– Whether it’s intercompany purchase
– Whether your cost matches vendor price
– Whether discounts are applied

In AX, the following configurations exist that is used for inventory posting along with purchase order update.

Product Receipt (with D365 it’s called Cost of purchased materials received)
Purchase expenditure un-invoiced
Purchase, inventory receipt (with D365 it’s called Cost of purchased materials invoiced)
Purchase expenditure for product
Purchase accrual

All listed setting you can find in the Item group form.

With AX R3 / D365 there are several changes in the purchase orders posting and we will review what was changed.

In this topic let’s review some Purchase account types that are used almost everywhere in daily life.

We will be using the simple case with the following settings:

• Stocked item
• FIFO inventory model with posting physical inventory for item
• no taxes
• no charges
• no discounts
• no price variances

When a purchase order is product receipt updated, accrued liability and cost resulting entries occur:

Dt Product Receipt (Cost of purchased materials received)

Cr Purchase accrual

In AX R2 there were 2 additional accounting entries

Dt Purchase expenditure, un-invoiced

Cr Purchase expenditure, un-invoiced

With AX R3 and next versions, these entries no longer transferred to the general ledger. As you can see these entries are not displayed on the Voucher transaction form, but you can find them in the Subledger journal form.

Since Subledger journal form is displaying all generated subledger accounting entries, even those that are not transferred to the general ledger. Plus, as you can see, Purchase expenditure, un-invoiced accounting entries net to 0.

When a vendor invoice is recorded, the following resulting entries occur

Dt Purchase accrual

Cr Product Receipt (Cost of purchased materials received)

Dt Purchase, inventory receipt (Cost of purchased materials invoiced)

Cr Vendor balance

Purchase expenditure for product 0.00

First two accounting entries (transactions) are accounting entries on the product receipt for accrued liability and inventory cost that are reversed.

The next accounting entry is created to record the inventory on stock.

The next accounting entry is created to record vendor balance.

Purchase expenditure for product accounting entry is transferred to the general ledger in a single zero-amount entry. Initially (in previous versions), this accounting entry had displayed both lines for the credit and the debit entries that net to 0, now it’s only single line).

Single zero-amount Purchase expenditure for product entry can be reviewed in Subledger journal form as both credit and debit entries. Purchase expenditure, un-invoiced accounting entries which are no longer transferred to GL, can be reviewed here as well.

In case of RMA order (with the same settings) the behavior will be the same, but with opposite transactions.

Transactions after Product receipt for Returned order are:

Cr Product Receipt (Cost of purchased materials received)

Dt Purchase accrual

Voucher form:

Subledger form:

Transactions after Invoice for Returned order are:

Ct Purchase accrual

Dt Product Receipt (Cost of purchased materials received)

Cr Purchase, inventory receipt (Cost of purchased materials received)

Dt Vendor balance

Purchase expenditure for product 0.00

Voucher form:

Subledger form:

Posting rules for Standard cost inventory model  with no price variances will be the same.