Expected cost posting and accruals

Hello, Could some nice accountant type person please put me straight on this if I have it wrong! I am talking about Navsion GB3.60 here, I am more familair with Navision financials which did not have the expected cost posting facility and as such I am trying to suss out the way in which it should be used properly. Let us assume automatic cost posting is on (I really don’t wan’t to think about any additional implications of running the post cost to G/l and which date to use just now!) Here goes! Have I got this right?[:I] If EXPECTED COST posting is NOT ON and goods are received, but not invoiced by the end of a month, an accrual posting based on the GRNI figure must be debited to the stock nominal on the last day of that month, then reversed on the following day. When the invoice comes in, the associated stock posting has already been catered for in the previous period by the accrual, so the user MUST ALTER THE POSTING DATE to be the current month (it will by default still be showing the posting date as it was when the goods were received). This means that the item ledger entries postings to the stock nominal are dated in the current month and the net effect on the current month is zero because of the credit that was posted to the first day of the month by the previous month’s accrual balancing entry. If EXPECTED COST posting is ON and goods are received but not invoiced by the end of the month an accrual posting based on the GRNI figure is not required, because an expected cost posting has already been made automatically, i.e. a debit to an interim stock nominal balanced by a credit to a liability account. When the invoice arrives the user must NOT ALTER THE POSTING DATE showing on the order header, but should leave it as it was when the goods were received. This means that the item ledger entries postings to the stock nominal are dated in the previous month and the net effect on the previous month is a debit balance in the stock nominals, because the expected cost postings are automatically reversed when the invoice is posted. If the posting date was changed to be the current month when the invoice is posted, the reversal of the expected cost would be dated in the current month and would not therefore reverse the entry in the previous month that was generated by the receipt. Thanks [xx(] This is what happens when you cross developers with accountants, it gets messy, remember The Fly! Jon.

Hi Mc Arthur, You are right as I have understood you, being a Chartered Accountant myself :-). The following entries will take place when the “Automatic Cost Posting” is “True” and the “Expected cost posting” is also “True” 1. When the Purchase order is received Debit Inventory (Interim) Account (Inventory Posting Group) Credit Inventory Accrual (Interim) Account (General Posting Setup) Here one has to note that the value for this entry is taken from the “Unit Cost” on the “item card” and not from the related “PO”, irrespective of the costing method used for the item ??? The date posted is the posting date as defined in the PO Header at the time of Posting the receipt. Subsequently when the Invoice is received the user has to change the Posting Date on the PO Header and the following entries will be posted Debit Inventory Accrual (Interim) Account (General Posting Setup) Credit Inventory (Interim) Account (Inventory Posting Group) The amount will be the same as above but the Posting Date will be the new posting date as defined at the time of posting the Invoice. Apart from this entry the normal purchase entry with the correct unit costs will be posted. If you need to navigate the expected cost related entries you will have to do so only in the GRN and not from the Invoice. Another Point to be noted is the expected cost posting has no effect on the Item Ledger entry (posting date will always be the date of receipt) or the value entries (posting date will always be the date of invoicing) Hope that helps

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Originally posted by rohkam
…, being a Chartered Accountant myself :-).


What does that means? There were Chartered Accountants at Enron as well.[;)] However, as soon as you receive the goods, you have (the) costs (whenever you will receive the invoice). Expected cost posting is only to help you during your monthly / yearly end reporting. Jon, you should not post the credit to the first day of the following month. This posting should be made to the closing date of the month. Unfortunatly, we do not have a closing date for a month in Navision, only for the year end. What a wonderful world! Back to Jon and Rohith. Regards Walter

Don’t make this any more complicated than it already is! With expected costs on - receive goods in month 1. You close the month. Invoice arrives. It must be posted in month 2. If the invoice amount is different to the expected cost posting, Navision will adjust accordingly in month 2.

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What does that means? There were Chartered Accountants at Enron as well.


Yeah !! very true !! but they were not using Navision …were they??

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Unfortunatly, we do not have a closing date for a month in Navision, only for the year end. What a wonderful world!


Nope !! How you define an accounting period determines your closing date. You could define each new month as a new fiscal year and then you will have a closing date for each month.

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Jon, you should not post the credit to the first day of the following month. This posting should be made to the closing date of the month


If you do that, then the reports will not give the correct picture as on the month end. For eg. If you filter your entries for an earlier month they would not include the expected costs.

Thanks very much for your contributions! Walter - Sorry, when describing accruals, what I should have said is the ‘reversing entry’ on the first day of the following month, not the ‘credit that was posted to the first day of the month by the previous month’s accrual balancing entry’ which of course is the other side to the debit entry to the stock nominal on the last day of the previous month. [xx(] i.e. procedure: run GRNI report. postings are: 31/03/2003 debit stock + credit GRNI control account then reversal 01/04/2003 credit stock + debit GRNI control account. Are you then saying that in an ideal Navision world you would be able to post the 010403 postings to C310303 instead. I guess if I look at net change on the stock nominal for april, the figure is screwed up by the presence of the reversing credit, so if you are looking at balance by dimension with periods across the top you should really look at balance at date for a true figure. Sorry maybe all this is glaringly obvious to (even an Enron) accountant![:I] Adam - so you are saying it doesn’t matter that the expected cost reversal produced by the invoice goes into month 2. My head really starts to hurt when I try to think about these things! Jon.