Purchase expenditure for product account doesn't net 0 AX 2012

Hi, when I create a PO, accounting distribution shows the purchase expenditure for product account is hit**.**

when PO is invoiced, the purchase expenditure for product account net to zero correctly as per accounting framework AX 2012. there is two entry that net to zero, which is fine. So when vendor invoice is created, vendor balance and inventory receipt are recorded.

However, AX had hit this account when the PO is created per distribution so there an amount is held in that account. Is it a P/L or inventory account? When vendor invoice paid, will “purchase expenditure for product” be affected?

appreciate your help

Hi Patrick,

First of all, accounting distribution is a view and it doesn’t mean that your account is hit by some amount. When you post the invoice, purch expenditure for product is hit.

Secondly, there can be case when purchase expenditure for product doesn’t netoff to 0. This can be in case of Return Order where inventory cost is different that PO Line amount.

Generally, Purchase expenditure for expense is a P/L account. This is mainly used as clearing account.

Pranav…

Hi Pranav, thanks a lot for your feedback and this confirms my understanding. Since there is a balance on this account and there were some purchase return, will this be treated as an inventory from a balance sheet perspective? Generally we have item (raw, finished good), inventory adjustments as part of your BSheet. I am wondering if this needs to be taken into account to know the inventory total