Outside Processing: Generated Transactions

When you process production orders that include outside operations, you record payments for the subcontractor services (which may include material costs) by creating and processing purchase orders and the related documents and transactions. To track these expenses, the system generates the GL transactions described in the following section.

Transactions Generated for Non-Stock Items Used as Materials

Suppose that for a non-stock item that is used as a material for outside processing, the Accrue Cost check box is selected on the Price/Cost tab of the Non-Stock Items (IN202000) form, and the Require Receipt check box is selected on the General tab of the same form. As a result, the system posts to the Expense Accrual account the costs of materials when the items are received to a warehouse of your organization and a production order is released. Transactions generated on the inventory receipt release are listed in the following table.


Account	Source of Account	Debit	Credit
Expense Accrual account	Item	Amount	0.00
PO Accrual account	Item	0.00	Amount

On the Non-Stock Items form for a non-stock item used for outside services, if the Accrue Cost check box is selected on the Price/Cost tab and the Require Receipt check box is cleared on the General tab, then you create the AP bill with this non-stock item. When you release the AP bill, the transactions listed in the following table are generated.


Account	Source of Account	Debit	Credit
Expense account	Item	Amount	0.00
AP account	Item	0.00	Amount

When you issue or backflush the non-stock item for a production order, the transactions listed in the following table are generated.


Account	Source of Account	Debit	Credit
Work in Process account	Item	Amount	0.00
Expense Accrual account	Item	0.00	Amount

If the Accrue Cost check box is cleared on the Price/Cost tab of the Non-Stock Items form, the amounts are posted to the Expense account instead of the Expense Accrual account.

Attention: In previous versions of Acumatica ERP Manufacturing Edition, we recommended that when you are using non-stock items for materials in outside processing, you specify the same account for the Expense Accrual GL account and Expense GL account. This ensured the proper accounting. If you use the same account for both the expense and the accrual, the amounts will offset each other; the Work in Process account specified in the production order will hold the expense of outside services to include in the product cost.