You are on page 1of 3

Let us go about purchase cycle: 1.

Purchase Requistation : First Purchase requisation has to made to purchase department wheever the product need by the user or production depaartment.They are created by tcode me51k. 2. Once the purchase requested, then the purchase department will search for the materail, where available and when available. That is called Material determination. 3. After the search of material is over, then look for who are the parties , who is going to supplies the material in competitive rate. Then select the correct vendor is known as material determination. 4. After that Tender process done through Tcode-ME41. 5. After finilisation of Tender, the vendor selected and purchase order issued. The Creation of Purchase Order is ME21N. There will not be any finance entry while creating the Purchase Order. 6. Once the purchase order issued, then by the terms of PO, the vendor will supply the materials. The Receipt of Good (GR) , done through MIGO or if it is an service entry done through ML81N. The Entry will be Inventory account - drGR/IR Clearing a/c - crPurchase a/c - drPurchase offset a/c -crGR/IR clearing is a intermediate account, will be used to connect cost and vendor. In GR/IR clearin a/c - 1. Assesable Value 2. Sales Tax 3. Surcharge ie., Other than Cenvat Clearing will be there. 7. After the receipt of material, the Good Receipt along with Invoice Bill submitted to the Excise person handling Central Excise matters, to take Credit of duty for the product. The entry will be 1. Cenvat Clearin a/c - cr RG23a Part II a/c - dr RG23a Part II cess a/c - dr. 8. From the Excise person , the bill move towards the person who passing the bills for payment. He will do the Invoice Receip First through MIRO. Here two document will be created, one for MM and one for FI. The entry will be Vendor a/c - CrGr/IR Clearing a/c - dr Cenvat Clearing a/c- dr.

9. After finalisation of Invoice receipt, the bill is for Payment process mode through F-53. The entry will be Vendor a/c - dr Bank a/c - cr.

i. Movement types: Classification key indicating the type of material movement (for example, goods receipt, goods issue, physical stock transfer). The movement type enables the system to find predefined posting rules determining how the accounts of the financial accounting system (stock and consumption accounts) are to be posted and how the stock fields in the material master record are to be updated.

ii. Valuation class

Assignment of a material to a group of G/L accounts Along with other factors, the valuation class determines the G/L accounts that are updated as a result of a valuation-relevant transaction or event, such as a goods movement.

The valuation class makes it possible to:

- Post the stock values of materials of the same material type to different G/L accounts - Post the stock values of materials of different material types to the same G/L account iii. Transaction/Event Key

Key allowing the user to differentiate between the various transactions and events (such as physical inventory transactions and goods movements) that occur within the field of inventory management.

The transaction/event type controls the filing/storage of documents and the assignment of document numbers.

iv. Material Type

Groups together materials with the same basic attributes, for example, raw materials, semifinished products, or finished products. When creating a material master record, you must assign the material to a material type. The material type you choose determines:

Whether the material is intended for a specific purpose, for example, as a configurable material or process material Whether the material number can be assigned internally or externally The number range from which the material number is drawn Which screens appear and in what sequence Which user department data you may enter What procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both

Together with the plant, the material type determines the material's inventory management requirement, that is:

Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting