Sample Accounting Postings

Daily processing in Deacom generates multiple transactions within the system that drive general ledger posting. Understanding the accounts affected and the dates on which these transactions occur will help users gain a better understanding of the accounting impact when performing transactions throughout the system.

Transactions made within Deacom are directed to GL accounts based on the configuration of the business utilizing the ERP system. These transactions can be reported on through configured financial statement reports including balance sheets, income statements, cash flow statements and statements of retained earnings. With multiple financial statements available, Deacom has the capability to report in both IFRS and GAAP standards if required. The implementation team will work with your company to ensure you meet the required accounting compliance.

For publicly traded US companies that need to pass SOX audit requirements, Deacom supports the audit trail, database level security and application level security required to pass the accounting audit. The implementation team can work with you to ensure that your company meets the SOX audit requirements through the configuration of Deacom. Deacom is configurable in a way that supports IFRS, GAAP and SOX audit requirements. From inventory valuation, foreign exchange gain/loss consolidation, revenue recognition and beyond, Deacom’s functionality enables companies to comply with these accounting rules and regulations.

Inventory costing methods

Deacom provides three different inventory costing methods for postings. The costing method is set in Accounting > Options > Costing tab. The options are:

Standard Cost: Each lot of material is added to inventory at standard cost and variances are generated for purchasing differences from standard. Each lot retains its lot value until it is relieved from inventory.
FIFO (Actual) Cost: Each lot of material is added to inventory at actual cost, and retains its lot value until it is relieved from inventory.
Average Cost: Each lot of material is added to inventory at actual cost and all lots present are revalued at the new average cost. The posting behavior from a general ledger perspective when running in average cost is the same as when running in actual. The differences between the two methods are reflected in how inventory costs are calculated as described in the above list.

Method	Definition	Best For	Pros	Cons
Standard	Each lot of material is added to inventory at standard cost and variances are generated for purchasing differences from standard. Each lot retains its lot value until it is relieved from inventory.	Repetitive Production Make to Stock Stable Product Lines Stable Materials and Labor Costs	Ability to see variances quickly Management by exception Easy to determine value of inventory Overhead application is easy at a standard rate Gross profit margins are easily predicted More “forgiving” to process-errors in purchase order pricing / receiving / issuing / shipping	Need to “roll” costs if volatile market Contracts or pricing to customers at cost plus; shouldn’t use Cost Variances are held below the gross profit line, and difficult to tie to specific products / sales / customers Standard costs must be established and maintained for new and existing items
FIFO (Actual) ★	Each lot of material is added to inventory at actual cost, and retains its lot value until it is relieved from inventory	Variable Production Output Make to Order Changeable Product Lineup Variable Materials Costs	Volatile raw material pricing Actual COGS provide the most accurate calculation of gross profitability of individual Sales / Products / Customers Supports “cost plus” contract sales	More sensitive to processing errors
Average	Each lot of material is added to inventory at actual cost and all lots present are revalued at the new average cost.	Please review this method with a Deacom accounting specialist before moving to it in a live environment.	Do not have to keep pricing by lot	Difficult to recover costs of expensive units Extremely difficult to spot problems

★ Best to be supplemented with standard labor costs when performing incremental production finishes.

Sample Postings for Actual Cost (Includes Average and FIFO)

This section below contains sample postings for several key transactions when running in either standard cost or actual cost mode. The examples provided will follow a standard flow as outlined below:

Receive purchase order
Issue purchased materials to a production job
Finish products off Job
Reserve finished products to a sales order
Ship the sales order
Invoice sales order

Action	Account	Debit	Credit
Post payroll	WIP Labor	1,000
	Accrued Payroll		1,000

Receive PO	Inventory	650
	Standard Freight		50
	A/P		600

Un-Receive PO	Inventory		650
	Standard Freight	50
	A/P	600

Purchase services to job	WIP Purchases	500
	A/P		500

Issue inventory	WIP	650
	Raw Material Inventory		600
	Packaging Material Inventory		50

De-Issue inventory	WIP		650
	Raw Material Inventory	600
	Packaging Material Inventory	50

Relieve job	WIP Labor		1,000
	WIP Purchases		500
	WIP Materials		650
	Labor Expenses	1,000
	Purchase Expenses	500
	Materials Expense	650

Finish job	Inventory	2,000
	Job Finish Material		1,150
	Job Finish Labor		500
	Job Finish Burden		350

Un-Finish job	Inventory		2,000
	Job Finish Material	1,150
	Job Finish Labor	500
	Job Finish Burden	350

Ship sales order	Inventory		3,000
	COG Sold	3,000

Invoice order	A/R	5,000
	Revenue		4,900
	Freight		100

Un-Invoice order	A/R		5,000
	Revenue	4,900
	Freight	100

Sales order paid	A/R		5,000
	Cash	4,700
	Sales discounts	300

Purchase order paid	A/P	600
	Cash		550
	Purchase discounts		50


Void an AP Check	A/P		600
	Cash	550
	Purchase discounts	50

Payroll paid	Accrued payroll	1,000
	Cash		1,200
	FICA etc.	200

Credit Memo Sales	Sales or Sales Returns/Allowances	100
	Accounts Receivable		100

Cross facility order shipped	Inventory - Philadelphia		100
	Facility Elimination - Phila	110
	Facility Elimination - Denver		110
	Sales - Corporate	110
	Sales - Philadelphia		100
	Cross-Facility Markup - Philadelphia		10
	COGS - Corporate		110
	COGS - Philadelphia	100
	COGS - Denver	110

Cross facility order invoiced	A/R - Denver	250
	Sales - Denver		250

Inter-Company Transfer Shipment	In-Transit Inventory	100
	Inventory - Philly		100

Inter-Company Transfer Receipt	Inventory - Denver	100
	In-Transit Inventory		100

Print a check for PO on corporate	Cash - Corporate		100
cash account	Facility Elimination - Corporate	100
	Facility Elimination - Facility		100
	A/P - Facility	100

Receive cash payment	Cash - Corporate	200
in corporate	A/R - Facility		200
	Facility Elimination - Corporate		200
	Facility Elimination - Facility	200

Purchase of fixed assets	Fixed Assets	12,000
	Cash		12,000

Journal entry to record	Depreciation Expense	400
depreciation	Accumulated Depreciation		400

See the Operations help page for details on how actual labor is posted during job closing.

Sample Postings for Standard Cost

This section below contains sample postings for several key transactions when running in either standard cost or actual cost mode. The examples provided will follow a standard flow as outlined below:

Receive purchase order
Issue purchased materials to a production job
Finish products off Job
Reserve finished products to a sales order
Ship the sales order
Invoice sales order

Action	Account	Debit	Credit
Post payroll	WIP Labor	1,000
	Accrued Payroll		1,200
	Labor expense	200

Receive PO	Inventory	550
	Material Burden		50
	Purchase cost variance	100
	A/P		600

Purchase services to job	WIP Purchases	500
	A/P		500

Issue inventory	WIP Materials	500
	Raw material inventory		500

Relieve job	WIP Labor		1,000
	WIP Purchases		500
	WIP Materials		500
	Labor Expenses	1,000
	Purchase Expenses	500
	Materials Expense	500

Finish job	Inventory	2,400
	Job labor standard		800
	Job burden standard		400
	Job materials standard		1,200

Ship sales order	Inventory		2,400
	COGS Account	2,400

Invoice order	A/R	5,000
	Revenue		5,000

Sales order paid	A/R		5,000
	Cash	4,900
	Sales discounts	100

Enter vendor invoice	A/P		15
	Freight In	15

Purchase order paid	A/P	615
	Cash		565
	Purchase discounts		50

Payroll paid	Accrued payroll	1,000
	Cash		800
	FICA etc.		200

Cross facility order shipped	Inventory - Philadelphia		100
	Facility Elimination - Phila	110
	Facility Elimination - Denver		110
	Sales - Corporate	110
	Sales - Philadelphia		100
	Cross-Facility Markup - Philadelphia		10
	COGS - Corporate		110
	COGS - Philadelphia	100
	COGS - Denver	110

Cross facility order invoiced	A/R - Denver	250
	Sales - Denver		250

Inter-Company Transfer Shipment	In-Transit Inventory - Philly	100
	Inventory - Philly		100

Inter-Company Transfer Receipt	In-Transit Inventory - Philly		100
	Transfer Markup		10
	Inventory - Denver	110

Purchase of fixed assets	Fixed Assets	12,000
	Cash		12,000

Journal entry to record	Depreciation Expense	400
depreciation	Accumulated Depreciation		400

See the Operations help page for details on how actual labor is posted during job closing.

Account setup

The accounts that will be utilized when performing transactions throughout the system are indicated primarily in Accounting > Options and Accounts 2 tabs and on individual Item Master records. Companies will define the majority of these accounts during implementation although some accounts may be intentionally left blank depending on individual company requirements. Additional information regarding the specific accounts in Accounting > Options and on individual Item Master records may be obtained in Accounting > Options and Inventory > Item Master respectively. Process information regarding configuring accounts can be found in Configuring the Chart of Accounts.

Transaction dates

Every transaction in Deacom happens on a specific date and every transaction form in the system shows a date. The date on these forms defaults to the current date but can be changed to back date transactions when necessary. Users should strive to perform transactions in real time in order to maintain consistency and to avoid the potential for mistakes.

Several options are available to limit the ability to backdate transactions. The “No Posting Before” and "No Posting After” dates in Accounting > Options > General tab define the date range in which general ledger postings may be entered. In addition, the security setting “Accounting -- backdate transactions” controls a user’s permission to post a transaction to the general ledger with dates of yesterday or before.

Every transaction in Deacom uses the date indicated on the form when posting, except for the following transactions:

Un-shipping sales orders
Un-invoicing sales orders
Un-receiving purchase orders
Un-invoicing purchase orders

These four transactions will all happen on the original date regardless of the date indicated on the form. The reason for this is to minimize undesired inventory and general ledger effects.