COGS Account treatment in SD module

[former_member220526]

Hi Guys:

I have a question regarding the logic behind SAP has configured the accounting entries at the time of PGI and billing in SAP SD module. Normally clients are doing following entries

PGI

COGS Dr

Finished Goods Cr

Billing

Customer Dr

Sales            Cr

In a public limited there are stringent accounting requirement not to book COGS at the PGI time, there are many cases at month end for which partial deliveries have been made during the month and their left over stock is delivered in next month. For the value of goods partially delivered normally clients are booking the invoice as well in order to comply with matching principal of accounting. It means for the left over delivery they will do the delivery in next month and book another invoice in next month so we have two invoices posted against Sale order. Customer statement send to the customer from SAP will have two invoices . This is an audit objection as well. I know above can be overcome in SD through future available in SD module which will post entry

PGI

Goods In transit Dr

Finished Goods      Cr

Billing

COGS Dr

Goods in Transit Cr

Customer Dr

Sales          Cr

but i still want to know the sound logic of SAP posting COGS at the time of PGI and why not taking Goods in transit methodology to deal with above exceptions.

Regards

[Lakshmipathi]

Customer statement send to the customer from SAP will have two invoices . This is an audit objection as well

I dont think anything wrong in generating multiple billing documents for a sale order.  What was the reason given by your clients' audit team?  If that is justifiable, then we can, accordingly, do some configuration change or master data change to comply the requirement.  If the client dont want partial delivery to happen, you can very well control in customer master.

G. Lakshmipathi

[moazzam_ali]

Hi Faizan

First of all let me tell you that system doesn't create two accounting entries at the time of billing. What you are talking about is stock in transit entry by following this document.

Customer Delivery - Stock in Transit (EHP5 - LOG_MM_SIT functionality)

With this you do PGI in VL01N/VL02N and system creates first entry. When material received at customer's site we do POD with VLPOD and system creates 2nd entry and when we do billing in VF01 system creates third entry which is AR entry. This should be clear to you before understanding the logic.

Now for your question why system creates accounting entry at the time of PGI in standard system. There is no some SAP provided logic or document. I am just giving you my own views that we do PGI when material leaves our premises physically. And when material is no more in in our premises it means out stock is reduced and company is no more liable for this since it is in transporter's liability now. Now delivery time varies from company to company. In some cases it takes a few minutes or hours but in export process it can take days or months. We use POD process and these two accounting entries process in export process but in short time deliveries we use simple delivery process with one accounting entry.

I would suggest you to use monthly closing for local deliveries and POD process for exports.

Let me know for further clarification.

Thank$

[harnish_shah]

Hi,

A single Sales order can have multiple invoices. That is standard SAP practice. For every delivery there should be an invoice. This is clearly a change management.

Regards,

Harnish Shah