Article

Dynamics GP Three-Way Match Process or, How I Learned to Love My Purchase Accrual Account

by Frank Hamelly
Senior Consultant, I.B.I.S., Inc.,
A significant number of clients that I've worked with in the past (and present) have a tough time wrapping their brains around the Purchase Accrual account and how it is interrelated with receiving and invoicing of purchased goods.  This lack of clarity results in unreconciled accounts, duplicate postings to inventory and expense accounts, and an accountant's worst nightmare if allowed to go unchecked for very long.

This column is an attempt to help clarify the Purchase Accrual concept and point out the necessity of keeping it reconciled with the Received not Invoiced report and/or SmartList.

In an ideal world (and we all want to live there, right?) these are the correct steps, in chronological order, for receiving goods, entering the vendor invoice, and paying the vendor.  Following these steps in correct order ensures a successful three-way match process and happy GL accountants -

1.  Issue Purchase Order

2.  Receive goods

3.  Enter invoice

4.  Pay invoice

1.  Purchase Order Entry

This is not a transaction per se.  The PO is just a document that stores the information against which Receiving Transactions will be done - unless the receipt and/or invoice are entered at the time of PO entry, which GP allows with the proper security but surely violates segregation of duty principles.

2.  At goods receipt, the accounting transaction that occurs is (using inventory as an example)

Debit (Dr.) Inventory (01-99-1300-000-00)

Credit (Cr.) Purchase Accrual (01-99-1999-000-00)

3.  At invoice entry (using the Enter/Match transaction), the accounting transaction that occurs is

Dr. Purchase Accrual (01-99-1999-000-00)

Cr. Accounts Payable (01-99-2000-000-00)

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Accounting Dynamics GP Inventory Management
About Frank Hamelly

Frank Hamelly, Sr. Dynamics Consultant with I.B.I.S., Inc., in Charlotte, NC,  is a business and technology professional with over 25 years experience implementing and supporting various ERP systems and business process re-engineering initiatives across all organizational areas and across various industries, for small, mid-sized, and Fortune 500 companies.  He has held numerous positions in Accounting, Finance, Customer Service and Information Systems.  His application experience includes SAP R/3, Baan, Fourth Shift, Peachtree, MAS 90/200, Quickbooks and Microsoft Dynamics ERP.  His industry experience includes manufacturing, , distribution, telecom, aerospace, life sciences, utilities and media.  Frank studied Business Administration with an Accounting concentration at the University of Pittsburgh.  He is a Microsoft Certified Professional (MCP), Microsoft Certified IT Professional (MCITP), a Microsoft Certified Trainer (MCT), and has been named a Microsoft Most Valuable Professional (MVP) each year since 2008.  He writes articles for Dynamics-related web sites and is a regular speaker at Microsoft Dynamics Convergence, GPUG Summit, MSDynamicsWorld's Decisions Virtual Conference, a trainer and presenter for the Great Plains Users Group (GPUG) and has been a reviewer for various books written by fellow MVPs.  Frank is author of the blog GP2themax with 5,000 visits per month.

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