Taxes Included in the Cost of Items: Generated Transactions

To process the purchase of items, you create a purchase order, and then process the purchase receipt and AP bill related to the purchase order. The following sections describes the GL transactions that are generated for the lines of an AP bill that are subject to a tax that has the Use Tax Expense Account check box cleared on the GL Accounts tab of the Taxes (TX205000) form.

You can view the reference number of the GL batch generated for a particular AP bill in the Batch Nbr. box on the Financial tab of the Bills and Adjustments (AP301000) form. You can click the link in this box to view the details of the batch on the Journal Transactions (GL301000) form.

Transactions Generated for Stock Items

If a purchase order includes any stock items with the Average, Specific, or FIFO valuation method selected on the General tab of the Stock Items (IN202500) form, on release of the AP bill prepared for the purchase order, an inventory adjustment transaction is automatically generated. The following cost-updating transactions are generated on release of this inventory adjustment.


Account	Source of Account	Debit	Credit
Inventory account	Dependent on the setting of the posting class of the item specified in the Use Inventory / Accrual Account From box on the Posting Classes (IN206000) form	Tax amount Note: For a partially deductible VAT, only the expense part of the calculated tax is posted to the item's Inventory account.	00.00
PO Accrual account	Dependent on the setting of the posting class of the item specified in the Use PO Accrual Account From box on the Posting Classes (IN206000) form	00.00	Tax amount

If a purchase order includes any stock items that are not in stock or any stock items with the Standard valuation method selected on the General tab of the Stock Items (IN202500) form, the following cost updating transactions are generated on release of the AP bill prepared for the purchase order.


Account	Source of Account	Debit	Credit
Tax reason code account	Reason code	Tax amount	00.00
PO Accrual account	Dependent on the setting of the posting class of the item specified in the Use PO Accrual Account From box on the Posting Classes (IN206000) form	00.00	Tax amount

Transactions Generated for Non-Stock Items Requiring Receipt

If a purchase order includes any non-stock items with the Require Receipt check box selected on the Non-Stock Items (IN202000) form, the following cost-updating transactions are generated on release of the AP bill prepared for the purchase order.


Account	Source of Account	Debit	Credit
COGS/Expense Account	Dependent on the setting of the posting class of the item specified in the Use COGS / Expense Account From box on the Posting Classes (IN206000) form)	Tax amount	00.00
PO Accrual account	Dependent on the setting of the posting class of the item specified in the Use PO Accrual Account From box on the Posting Classes (IN206000) form)	00.00	Tax amount

Note:

For the list of transactions that are generated for a purchase order that is subject to a tax that have the Use Tax Expense Account check box selected on the GL Accounts tab of the Taxes (TX205000) form, see Purchases with Sales Taxes: Generated Transactions, Purchases with Use Taxes: Generated Transactions, and Value-Added Taxes: Inclusive Output and Input VATs at the Document Level.