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Cost Accounting

This document contains a guide to all the features implemented in this app:

  • Accruals and Deferrals;
  • Invoice to Receive and Invoice to Issue;
  • Budget Amount in “Chart of Cost Centers” and “Chart of Cost Object”;
  • “Cost entries” recurrence;
  • “Delete Costs” improvements
  • “Cost Entries” copy

Notes:     

The accrual accounting records financial events, based on economic activity, rather than financial activity. Under accrual accounting, revenue is recorded when it is earned and realized, regardless of when actual payment is received. Similarly, expenses are “matched” (a process known as matching or expense matching) regardless of when they are actually paid.

In case of deferred sales invoices, the goods (or services) are already delivered, but the invoice will be issued by the end of next January, and the revenue is accrued in the closed period.

In case of purchase invoices, the goods (or services) are already delivered but the invoice is not already received.

The accrual basis can be defined when posting sales or purchase documents (invoices or credit memo).

In IS Cost Accounting Setup there are the following fields.

  • Cost Jnl. Template Competence Name: specifies the Cost Journal Template Name code.
  • Cost Jnl. Batch Competence Name: specifies the Cost Journal Batch Name code.
  • Accruals Payables Account: specifies the default account used in "Competence Assignment" procedure.
  • Prepaid Expenses Account: specifies the default account used in "Competence Assignment" procedure.
  • Deferred Income Account: specifies the default account used in "Competence Assignment" procedure.
  • Maximum Number of Instalments: maximum number of instalments that can be generated with "Competence Assignment" procedure."
  • Last Competence Assignment Doc. No.: specifies the last "Document No." assigned by "Competence Assignment" procedure, if not defined in "Cost Journal Batch".
  • Block Closed Period Posting: if Enabled it blocks postings on a closed period. The "Competence Assignment" procedure will post with entry posting date
  • Calculate by Day: if Enabled the "Competence Assignment" will calculate the competence by days.

In order to activate this process during the invoices (or credit memos) posting, the field “Competence Assignment” must be set on “G/L Accounts”.

For each G/L Entry created by the posting process, the system will show a card to be filled with the competence options.

The following fields are filled in automatically, with the values inserted in “IS Cost Accounting Setup”:

  • Cost Journal Template
  • Cost Journal Batch
  • Accruals Payables Account

The procedure automatically fills the following fields:

  • Entry No.: is the G/L Entry No.;
  • Document No.: is the posted document No.;
  • Account No.: is the G/L Account No. used in document line, or linked to the Item, Fixed Assets used in document lines;
  • Amount: is the G/L Entry Amount;

The user must fill in the following fields:

  • Competence Starting date: is the competence starting date of the revenue or cost;
  • Frequency: refers to the given time period on an intraday, daily, weekly, monthly, quarterly or yearly perspective, calculated from Competence starting date;
  • Number of instalments: is the number of quotes in which the initial amount has been divided;
  • Post: if enabled, the journal will be directly posted, otherwise the journal will be just filled in and the user will post it manually.

This is an example for a G/L posting created in a batch (“Post” flag disabled): the user is ready to modify (if necessary) and post the entries.

It is possible to assign the correct competence to an already posted cost or revenue by using the function present in the menu "Explore more roles → IS Cost Accounting → IS Competence Assignment".

The following fields are automatically filled as they are obtained from “IS Financial Suite Setup”:

  • Cost Journal Template
  • Cost Journal Batch
  • Accrual Payables Account

The other fields must be filled by the user.

In Cost Accounting Setup, set the default parameters needed for the process.

  • Cost Journal Template Name: specifies the Cost Journal Template Name code.
  • Invoice to Receive Account: specifies the default account used in "Invoice to Receive" procedure.
  • Last invoice to Receive Process document No.: specifies the last "Document No." assigned by "Invoice to Receive" procedure, if not defined in "Cost Journal Batch".
  • Disable Invoice Posting in Sales Order: specifies if the direct Sales Invoice posting from the order is enabled. This is used to prevent that an invoice is wrongly posted from the order.
  • Disable Invoice Posting in Purchase Order: specifies if the direct Purchase Invoice posting from the order is enabled. This is used to prevent that an invoice is wrongly posted from the order.
  • Invoice to Issue Account: specifies the default account used in "Invoice to Issue" procedure.
  • Last Invoice to Issue Process Document No.: specifies the last "Document No." assigned by "Invoice to Issue" procedure, if not defined in "Cost Journal Batch".

In order to create invoice to receive/issue batches, it’s necessary to use the functions found under the menu Explore more roles → IS Cost Accounting → IS Invoice To Receive or IS Invoice To Issue

The following fields are automatically filled as they are obtained from “IS Financial Suite Setup”:

  • Cost Journal Template
  • Invoice to Receive/Issue Account

The other fields must be filled by the user:

  • Cost Journal Batch: select the batch which will be populated with the entries to be registered. Each time the calculation of invoices to issue and receive is executed, the batch is deleted.
  • Up to Accounting Period: select the reference period used by the process, which always corresponds to the last day of the period. For example, if 01/01/2023 is selected, the calculation will consider all orders, with a date less than or equal to 31/01/2023 (the selected period is always included).

Example:

Below is the batch populated by the process: the user can modify it, if necessary, and post.

Invoice to Receive/Issue calculations details.

  1. The process will consider all purchase receipt or sales shipment lines that follow these rules:
    • Posting date <= Reference date (Up to Accounting Period)
    • Order No <> ‘’ (this is to not considering transfer receipts)
    • Purchase receipts/Sales shipments completely invoiced, but that at reference date were not completely or partially invoiced
    • Purchase receipts/Sales shipments to be invoiced
  2. The posting amount is calculated by:
    • As the invoice amount, if exist and is posted after the reference date; calculated by the order that still exists if is not completely invoiced.

The “Budget Amount” is shown in “Chart of Cost Centers” and “Chart of Cost Objects”, so it’s possible to compare the amounts as in “Chart of Cost Types”.

Enabling the “Recurring Entry” flag, it’s possible to define a cost account batch as a recurring journal. The procedure will post reverse entries on the first date after the selected posting date.

With this app it’s possible to select which entries to delete enabling the “To Register No.” field, so the user is not forced to delete all register from the selected one to the end.

Example:

Entries to Delete

Select the register to delete.

WARNING: It’s possible to delete only allocations and cost entries.

It’ not possible to delete registers transferred from G/L Entries.

Another feature is the No. series for cost accounting postings, as the standard one for General Ledger postings. If compiled the system automatically fills the “Document No.”.

There’s a new field in the batch definition, linked to a specific “No. Series”.

WARNING: if there’s no “No. Series” associated to the batch, the “Document No.” must be filled manually as usual.

It’s possible to copy a cost accounting entry, in order to fill a batch that will be posted by the user.

Example: Entry to be copied.

From Cost Registers select the action “IS Copy Cost Entry”.

and fill the following parameters:

  • Cost Entry – Document No.: select the document to be copied
  • Posting Date: the posting date of the document to be copied is reported
  • Cost Template: the cost template of the document to be copied is reported
  • Batch Code: the cost batch of the document to be copied is reported
  • Document No.: set the Document No. for the copied entries (useful if a No. Series is not specified in cost batch
  • Reverse: if enabled, it’s used to reverse entries to be copied amount.

If “Block G/L Account without Cost Center” is enabled, the “Global Dimension 1” must be filled in Income G/L Accounts.

When the dimension is empty in the income account, the system will show a warning message, and the account will be blocked.

WARNING: the message will be shown when closing the G/L Account Card.

With “IS Modify Cost Dimensions” function is possible to modify “Cost Center” and “Cost Object” for the selected cost entries. The dimensions are changed immediately.

If “Skip Cost Accounting Dimension Check” is enabled It’s possible to fill both “Cost Center” and “Cost Object” in the same entry.