Purch. Account and Direct Cost Applied Account in the General Posting Setup - using the same GL Account?

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Hey Guys, what are the pros or cons of using the same GL Account No. in the General Posting Setup for both the Purch. Account and for the Direct Cost Applied Account?

It seems like some people prefer to always use one GL Account and others will always use separate accounts. The only benefit I can think of having separate accounts is that it will allow you to manually calculate COGS using the purchases account balance.

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Dallefeld 235 User Group Leader on at

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I personally like to see two account to verify that the net affect is zero. If you use one account, it should be zero,

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AD-22040756-1 668 on at

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thanks Kim

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cortneypeaslee 15 on at

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Kim,

We've noticed the net effect is NOT zero if the credit memo is less than the inventory value due to item charges or adjust cost. How is this corrected? We've been manually posting adjustments for the differences monthly, but that seems to be incorrect.

Any insight is truly appreciated!

Thank you,

Cortney

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Dallefeld 235 User Group Leader on at

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What accounts are you posting to for Purchase Credit Memos?

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AbhinavMehra 364 on at

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Hi,

I hope this answer will help you to understand pros and cons

Using the same GL Account No. in the General Posting Setup for both the Purch. Account and for the Direct Cost Applied Account has its own pros and cons.

Pros:

It simplifies the setup and maintenance of the chart of accounts since you only need to create and maintain one account.

It can reduce the risk of errors in posting transactions since there is only one account to select.

Cons:

It can make it difficult to accurately track the direct costs applied to a particular item or service. Using the same account for both Purchases and Direct Costs Applied may result in inaccurate financial statements since the cost of goods sold will not reflect the actual direct costs applied to the items sold.

It may also make it difficult to analyze the data since the costs associated with a specific item may be blended with other costs in the same account.

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cortneypeaslee 15 on at

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Good morning Kim,

Our Purch. Account and Purch. Credit Memo Account are the same G/L (#40610). Our Direct Cost Applied Account is separate (#40620). We have them total together on the Account Schedules and our Financial Statements.

Thank you!

Cortney Peaslee

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Dallefeld 235 User Group Leader on at

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I can see that different costing methods could cause the purchases account and direct cost applied account not to equal. And this is clear with the credit memo issue that you are having. The purchases account for credit memos gets the credit memo cost while the direct cost applied account gets the corrected unit cost based on costing method or applies-from item entry. To make these match, you can use the 'applies-from item entry' on the credit memo lines.

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