The event identifiers associated with each inventory transaction

Activities Table are listed in The Accounting Activities Table job aid provided with this manual. Because each event ID represents an accounting distribution, each transaction is linked to at least two event identifiers in order to generate a double-sided accounting entry for the transaction.

For example, when a receipt is processed against a purchase order in the Purchasing (PS) module, the following inventory accounting entries, listed in the Receipt transaction in the Accounting Activities Table, are generated:

From the Accounting Activities Table, note that the event identifiers associated with the receipt of an item are A010, A020 and A090. If your warehouse wanted to use a specific company and/or center, then that accounting information would be associated with L type event ID, which would override the information associated with event IDs A010, A020 and A090.

Using the food item example, when a food item is received, the NCAS first locates the group account (XXFOOD) associated with that food item. Then the NCAS uses the event identifiers associated with the receipt of an item (A010, A020 and A090) overridden by the information associated with the L type event ID to debit or credit the appropriate accounts within XXFOOD as follows:

• For the receipt of the item, NCAS would debit the Inventory asset account (A010) and credit the Reserve for Inventory account (A020).
• If your warehouse had a negative on-hand balance for the item, the NCAS would generate an adjustment entry. The system would debit or credit the Inventory account (A010) and correspondingly credit or debit the Inventory Adjustment account (A090). Inventory adjustments will be explained in detail in the Accounting for Inventory Transactions section.
• Again, any L-type information established for your warehouse will override the default company and center from A010, A020 and A090.

Transactions can share event identifiers because different inventory transactions can affect common accounts. For example, refer to the Average Cost Adjustment and the Cycle Count Adjustment transactions in the Accounting Activities Table. Both transactions are associated with the same set of event identifiers (A010, A020, E020 and A100) because both transactions involve an adjustment to the inventory asset balance and, therefore, result in entries to the same default accounts.

Inventory transactions can involve two companies. Because the NCAS Inventory module is balanced every day by company, every transaction that involves two companies must have balanced entries or the system will be out of balance and require correcting entries. When GL company codes differ on an inventory transaction, the system automatically generates intercompany entries to complete a set of balanced entries for each company. Among the balancing entries for intercompany transactions are entries to intercompany receivable and payable accounts. (For example, refer to the Internal Replenishment (Intercompany) transaction in the Accounting Activities Table.) In addition to balancing the entries for intercompany transactions, these accounts also indicate to which company the payable is due and from which company the receivable is due. The system indicates the due-to and due-from companies by placing the appropriate four-digit company code in positions three through six of the account code.

The Accounting Activities Table also lists the accounting rules that are used to post the group account entries to the General Ledger. For example, for the receipt of an item, the group account entry to the Inventory asset account is rolled up to the GL using inventory accounting rule 01 (IN/01). Similarly, the group account entry to the Reserve for Inventory account is rolled up to the GL using inventory accounting rule 02 (IN/02). Inventory accounting rules will be explained in more detail in the Posting to the General Ledger section of this course.