1 - When does an RMA debit inventory and credit
DCOGS account?
A. RMA has created after
COGS Recognition. So RMA debits inventory and credits COGS account. If RMA
happens before COGS Recognition then RMA debits inventory and credits DCOGS
account.
2 - Why there is no accounting for COGS
recognition?
A. There is no
accounting for COGS recognition because it has zero quantity.
Reason:- Customer has
created RMA against this Sales Order Line.
3 - No COGS Recognized (COGS will never be
recognized as there is no reference to the original invoice). Why?
A. COGS
recognition is designed to match with AR revenue recognition. If you don't have
an invoice yet but only a credit memo, what would be the percentage of revenue
recognized from AR?
Eg:
The COGS recognition is
not going to happen at the individual RMA level, it is at the order line level
that has been shipped.
Say you have debited the
Deferred COGS for the original shipment at $100, then you have credited the
Deferred COGS for the RMA receipt at $40. The net Deferred COGS is $60, so far
so good. After the credit memo and invoice have gone through, what matters at
this point of time is how much net percentage of revenue is recognized from AR
for this order line. Suppose a 50% revenue recognized, then a distinct COGS
recognition transaction is going to be created that will credit deferred COGS
at $30 and debit COGS at $30. The accounting of original shipment and RMA
transactions would not change, but the additional COGS recognition transaction
will make the order line's recognized COGS to be matched with recognized
revenue.
4 - Why Inter company COGS account is not
working after completing mandatory setup?
A. There is a difference
between the internal order flow and drop shipment or global procurement flow.
The intercompany COGS account defined in the Inter-company Relations form is
only used in drop shipment and global procurement flows. For internal order
flows, the account is driven by the Inventory Cost of Goods Sold Account
workflow. In default, the workflow process uses the item COGS account, but the
user can configure the process to use any other account.
5 - How to diagnose missing COGS Recognition
events?
A. Checking whether the
COGS events are costed is easy, you just verify mmt.costed_flag. Checking whether
COGS events are created is more functional and less simple. You can use the R12
Revenue COGS matching report to find out whether the result is expected. If the
expected COGS recognition percentage does not match Revenue percentage, there
could be a potential problem.
6 - Can we close the Inventory period without
running the
COGS recognition
concurrent programs? If not, what prevents it? If so,
what are the entries
that are created when the recognition is run the
following month and the
inventory period for the current month is
closed?
A. If the customer is
using perpetual Costing Method "Standard", "Average",
"Layer" then the inventory period can be closed prior COGS
recognition process. If the customer is using PAC then the "Collect
Revenue" and "AR period" needs to be closed prior PAC period
close.
7 - How to
derive COGS Account Cost Center using Salesperson
Value from Sales Order form in Order Management thru SLA?
A. Looking at
gmf_xla_extract_headers, for the OM issue from stores transaction,
the transaction_id on that row points to a row in mtl_material_transactions and
the column source_line_id in that table points to the line_id in
oe_order_lines_all.
8 - Why when generating accounting--the COGS,
accounting does not follow the Revenue Accounting for the Receivable Invoices?
A. COGS account in
Oracle EBS is driven and derived from Order Management COGS account generator
workflow. If you need help for that workflow, contact Order Management team.
9 - Is there a way for Cost Management SLA
(Subledger Account) to utilize the same sources as the AR SLA?
A. Right now, there is
no built-in cross reference of sources in SLA between Receivables and
Cost Management. There are two options for the customer:
a - Inside SLA, build a
few custom sources for Cost Management Application that the customer is using
for Receivables.
b - Even though the
deferred COGS account is a fixed organization parameter, the true COGS account
is derived from Order Management COGS Account Workflow. That is well-known in
11i and the functionality remains in R12. The logic can be mimicked inside the
workflow.
10 - Trying to generate Deferred COGS but
instead the Inventory Accrual account appears on the Inter-company AP invoice.
How can they get this to be a deferred accrual account?
A. There is only
deferred COGS, no such a thing called deferred accrual. To do the drop shipment
right, you need to set up the transaction flow and inter-company relations with
advanced accounting, not the shipping network setup.
When the setup is right,
you would get one physical transaction out of OU2, one logical transaction for
OU2, and two logical txns for OU1. The logical sales order issue transaction of
OU1 will hit deferred COGS account. The deferred COGS will be transformed into
true COGS after you run the COGS recognition programs. As for the inter-company
AP invoice, it should use the intercompany accrual account defined in the
inter-company relations form. There is no concept of deferred accrual.
11 - COGS account is going 100% into the account
instead of getting deferred into 5 groups. Our revenue accounting rule splits
the revenue into 5 deferred periods and we expect the COGS to do the same. I
ran the 3 programs under Cost Management (Resp.) -> COGS accounting and the
Material Distributions is still going 100% into a single account, instead of
creating 5 records for 20% each in each period. Why?
A: For a given sales
order shipment, it always goes to 100% deferred COGS at first. Then after you
run those programs for each period and assuming AR passes the right percentage
of revenue recognition, we will move from deferred COGS to COGS accordingly.
For example, at period 1, if AR says 20% revenue recognized, then you then
programs and you will have 80% deferred COGS and 20% COGS. And at period 2, if
AR says now 40% revenue recognized, you run the programs and you will have net
60% deferred COGS and 40% COGS.
12 - After the COGS generation program is run,
COGS entry can be viewed from Material Transactions Distribution screen in
Inventory. The COGS account is wrong as the workflow was not updated. How
to change the cogs account after it is generated?
A. The COGS entry is
recorded in material distribution, sub-ledger accounting (SLA) and general
ledger. There is no way to go back to re-cost or re-account for old
transactions. Practically speaking, the best way is to manually adjust them
inside GL and move forward with the correct accounting for new transactions.
13 - How to use COGS Account Relationship to
Advanced Pricing?
A. n order to get it working,
both profile options INV:Inter-company Invoice for Internal Orders and CST:
Transfer Pricing Option must be set to Yes at site level. Cost manager is at
global level, there is no support at responsibility level. Please study the
following white papers:
14 - RMA Receipt transaction does not credit
actual Cogs Account. Why?
A. This is intended
behavior in R12.
For RMA receipt
Transaction with reference to original Sales Order document will create below
accounting distribution:
Dr.Inv
Cr.Deferred COGS
There will be separate
COGS Adjusting entries created for the COGS Adjustment based on the COGS
Recognition percentage.
Dr./Cr.COGS
Cr./Dr.DCOGS
For RMA receipt
Transaction without any reference to Sales Order document will create below
accounting distribution:
Dr.Inv
Cr.COGS
This will result in
balanced journal entries.
15 - Sales Orders are for a single customer,
linked to a single sales rep, and can contain an item A which, depending on the
usage at sales order lines level, has to be linked to two distinct business
lines.
Thus the same item used
in the same order and in 2 sales order lines has to generate revenue account
and cogs accounts linked to 2 distinct business lines. How this can be achieved
? Can we use the order line type for this ? Impacts on the AR and COGS
auto-accounting ?
A. COGS and revenue
accounts are not built the same way.
For revenue account, the
auto-accounting allows to default your business line segment from the bill to
site, the transaction type (AR one, not the OM one), the sales rep or
the product. If the product is not the single driver for your business line
segment value, does one of these other values could be used ? If not, it means
the value will have to be corrected manually in the invoice, or a custom to be
built depending on customer rules. For the COGS, it's generated by the account
generator workflow, this can be customized to default the value expected by the
customer.
17 - Can we "Turn Off" DCOGS in
Release 12.0.x ?
A. Deferred COGS and
Revenue-COGS matching are mandatory new features in R12 to help customers be
legal-compliant. There is no standard way to support disabling this
best-practice feature set.
18 - Why is COGS charged to the incorrect GL
account?
A. COGS account is
stamped as MMT's (MTL_MATERIAL_TRANSACTIONS table) distribution account, and it
is driven by the Order Management Cost of Goods Sold Account workflow.
Customers can configure the workflow process to achieve their business needs
based on item types.
19 - In 11.5.10.x mtl_material_transactions
table and locator_id field was used to get information on inventory charged to
projects. In R12 locator_id field is blank, how to find?
A. In EBS release 12.x.x
COGS is a logical transaction --not a material transaction as 11.5.10.x.
COGS transactions will not have project and locator information.
20 - Can COGS Recognition transactions created
in a closed inventory period?
A. Refer Oracle Cost
Management User Guide ->Revenue and COGS Matching ->Period Close
Considerations Here its clearly mentioned that COGS Recognition transactions
can be created in Closed Inventory Period. If the GL period is closed then COGS
Recognition events/transactions will be created in next open GL period.
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