Need clarification on Rebate condition account keys

[Former Member]

Hi Guys,

I need some clarification on Rebate condition account keys .Question is why rebate condition type has two account keys eg.ERB & ERU and why not we make it seperately as other conditions .APPreciate your comments on this .

Thanks and regards

Amar

[jpfriends079 · Accepted solution]

ERB: is the account key for Rebate Rate

ERU: *is the account key for the Accrual Rate*

As you know both these Account Keys are assigned to the Rebate Condition Type in the pricing procedure. All the Rebate &

Accruals are posted in the separate G/L Account for the Rebates. So, ERB for rebate this account key posted to revenue a/c

ERU is price this is posted amount to accrual a/c

To further explain it.

ERB acct key which is used to record the sales deductions amount.

System will keep the track of billing documents relevant for rebate processing. System automatically posts the accruals so that accounting has an overview of the accumulate value for the rebate..the value will posted in the G/L account based on ERU.

Hope it can assist you.

Thanks & Regards

JP

[Former Member · Accepted solution]

To expand on JP's comments, consider what would happen without the rebate accounting in place.

The full sales amount of all invoices over the year would have remained in the sales income account. Then, at the end of the year (or of the rebate agreement), there would be one single hit to the compnay's revenue for the rebate expense. Costs would be understated in every other month, and overstated in the month when the hit took place.

Rebate accounting allows the expense to be accurately judged and also spread out in synch with the revenue. Then, when the rebate is cleared, there is no huge hit to profitability. Instead, an asset (cash) and a liability (rebate accrual) are reduced with no impact on profitability.

James