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Receive and Invoice - Direct Cost GL Entry

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Posted on by DinB

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When I enter "Receive and Invoice" for Purchase Order in Demo Company, the Posting preview shows 4 lines for GL Entry. Why does it have two lines with "Direct Cost"? Although they cancel each other, I expect only Inventory and Accounts Payable to be listed.

Thanks in advance.

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Dallefeld 11,425 User Group Leader on at

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RE: Receive and Invoice - Direct Cost GL Entry

Just another look at what everyone is saying. Standard BC entries for inventory purchase.

Debit Purchases

Credit AP

Debit Inventory

Credit Direct Cost Applied

Best Practices:

Don't make Purchases, Inventory and Direct Cost Applied the same account. Direct Cost Applied is used elsewhere.

Purchases and Direct Cost applied should be Income Statement accounts

General Posting Setup accounts should be Income Statement accounts with 3 exceptions, prepayment accounts, cogs interim and inv accrual interim
Gavin 2,339 on at

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RE: Receive and Invoice - Direct Cost GL Entry

Hi,

In addition to the comments I just wanted to add you mentioned you only expected an Inventory and Account payables to be listed which is exactly what I expected when I first started using Business Central. I was also confused as to why the system was generating additional GL distributions. On investigation my thoughts were its partly because of how Business Central splits the posting into a "Purchase" and an "Inventory" posting. You can see this more clearly if you personalise the Page and add the "Source Code" field. You'll see the posting has two distinct elements, a "PURCHASE" and an "INVTPCOST" posting. (see below from my system)

I found this is likely to accommodate the option "Automatic Cost Posting" in the "Inventory Setup". (basically this gives you the option to switch off the Inventory GL posting part of the posting). Therefore if you switch off Inventory postings you need a "Purchases" entry to balance against the Accounts Payable when you post this transaction. As others have mentioned this is set in the "General Posting Setup".

I blogged about this in more detail here https://thedynamicsexplorer.com/2019/05/22/dynamics-nav-business-central-thoughts-on-the-direct-costs-applied-and-purchases-accounts/

Hope this helps.

Thanks

Gavin
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KasparsSemjonovs 3,924 Super User 2024 Season 2 on at

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RE: Receive and Invoice - Direct Cost GL Entry

Places ZHU mentions are the ones that provides setup.

When buying items, the item value Debit is put in the Inventory Account (from Inventory Posting Setup)

And the Credit (as each transaction requires Debit and Credit to Balance) amount is put to the Direct Cost account (from General Posting Setup)
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YUN ZHU 73,378 Super User 2024 Season 2 on at

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RE: Receive and Invoice - Direct Cost GL Entry

Hi, Please check the posting settings below, it looks like you have set 10700 on both sides.

Hope this helps.

Thanks.

ZHU