O2C Cycle with Accounting Entries

ORDER TO CASH
PARTICULARS DR CR SPL NOTES ACCOUNT IS
PULLED FROM
Sales order entry
No Accounting

Sales Order Pick

From Sub Inventory A/c 100 At Standard Cost Sub-inventory

Material A/c
Setup
To Sub Inventory A/c 100 At Standard Sub-inventory
Cost(Staging) Material A/c
Setup

Sales Order Issue

COGS 100 It can be fetched from Master

five places Item/Org/Order
Type/Line
Type/Shipping
Params
To Sub Inventory A/c 100 At Standard Cost Sub-inventory
Material A/c
Setup

Transaction level

Receivable A/c 120 Auto Accounting

Tax A/c 10 Auto Accounting
Freight A/c 10 Auto Accounting
Revenue A/c 100 Auto Accounting

Receipts

Receipts with no
remittance method

Cash 100 Before application of  Receipt class

the receipt
Unapplied A/c 100 Receipt class

Unapplied A/c 100 After application of the Receipt class

receipt to the
transaction
Receivables A/c 100 Receipt class

Cash A/c 100 Receipt class

Unidentified A/c 100 In case of receipt Receipt class
without customer or
transaction

Unidentifed A/c 100 when customer Receipt class

indentified
Unapplied A/c 100 Receipt class

Receipts with
remittance method.

Confirmed receipts A/c 100 At the time receipt Receipt class

entry
Unapplied A/c 100 Receipt class

Remitted receipts A/c 100 On remittance to bank Receipt class

Confirmed receipts A/c 100 Receipt class

Cash 100 On clearance of cheque Receipt class

Remitted receipts A/c 100 Receipt class

Receipts with
discount/unearned
discounts

Cash 90 At the time earned Bank

discounts
Discount earned A/c 10 Receivable
activity
Receivable A/c 100 Transaction Type

Cash 90 At the time of  Bank

unearned discount
Discount unearned A/c 10 Receivable
activity
Receivables A/c 100 Transaction type

Following Accounting entries will be generated for O2C

 Sales order creation – No entries

 Pick release:

Inventory Stage A/c…………………Debit

Inventory Finished goods a/c……..Credit

 Ship confirm:

Cogs A/c ……………………………Debit

Inventory Organization a/c………Credit

 Receviable:

Receviable A/c………………………Debit

Revenue A/c………………………Credit

Tax ………………..…………………Credit

Freight…………..….……………….Credit

 Cash:

Cash A/c Dr…………………………Debit

Receivable A/c……………………….Credit

Accounting Entries for AR

Once the Order is shipped then Material account will be

credit and COGS Account will be debit.
At the time of Invoice creation
Revenue account will be credit and receivable account
will
be debit.
At the time of receipt creation.
Receivable account will be credit and Bank payment
account
will be debit