You are here: Reference Guide > Table Structures > Automatic Postings > Impact on the Purchasing Cycle

Impact on the Purchasing Cycle

Standard costing impacts the General Ledger in the following manner. Committing purchase orders are posted to the General Ledger at the actual ordered cost.

The amounts posted to the General Ledger are the GST/VAT Exclusive values

Debit	Credit
Expected Inventory Asset (Ex GST)	Expected Inventory Liability (Ex GST)

Receival slips reverse out the expected accounts, where required, at the Actual Cost. The Delivered Asset is calculated at the current standard cost, the liability at the receiving slip actual price and the variance is calculated as the difference between the two.

Debit	Credit
Expected Inventory Liability (Actual Cost)	Expected Inventory Asset (Actual Cost)
Delivered Inventory Asset (Current Standard Cost)	Delivered Inventory Liability (Receiving Slip Actual Price)
Delivered Variance (Difference between Delivered Asset and Liability) – debit or credit as required

Activating purchase invoices reverses out the received details, including the variance. Posting to the inventory account is at the standard cost that was applied on the receiving slip, creditors at actual invoiced price and the variance calculated as the difference between the two.

Debit	Credit
Delivered Inventory Liability (Receiving Slip Actual Price)	Delivered Inventory Asset (Current Standard Cost)
	Delivered Variance (Reversed)
Inventory (Receiving Slip Standard Cost)	Creditors (Actual Invoiced Price)
Purchase Invoice Variance (Difference between Inventory and Creditors) – debit or credit as required

Where the Cost of Goods Ledger is turned off the journal is posted as follows.

Debit	Credit
Delivered Inventory Liability (Receiving Slip Actual Price)	Delivered Inventory Asset (Current Standard Cost)
	Delivered Variance (Reversed)
Inventory (Receiving Slip Standard Cost)	Creditors (Actual Invoiced Price)
Purchase Invoice Variance (Difference between Inventory and Creditors) – debit or credit as required
Purchases (Receiving Slip Standard Cost)	Stock Movement (Receiving Slip Standard Cost)

Open topic with navigation