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Former Member
Jul 16, 2007 at 10:58 PM

Gross Method and Net method: What is the difference?


Hello folks,

Any assistance on the following question would be most appreciated. <b>What is the difference between the Gross Method and Net Method?</b>

I was reading a SAP book entitled 'SAP Account Determination'. In this book, there is a paragraph discussing Incoming Invoices (A/R & A/P Pg. 24).

The paragraph is as follows:<b>"</b><b>If discount terms are offered on an incomng invoice, you can choose to post that invoice using the <u>net method</u> or the <u>gross method</u>, determined by the flag set in the document type configuration. If the incoming invoice for inventory materials is posted using the net method, then the discount amount on the invoice has no impact on the Moving Average Price of inventory materials</b>.<b>"</b>

How does one figure out which method to use for a business? Does the US use net? I am trying to find a really good explaination and maybe an example of what the gross and net method are. Also, where is this configured in the SAP system?

Thanks in advance.