on 08-29-2007 6:00 AM
Hi
Can anyone explain me what are adjustment accounts and target accounts
what exactly happens when we regroup payables or receivables and
how is reconciliation account affected in this process.
Points promised
Thanks
Prashanth
Hello Prasanth
What we r doing here is sorting the receivables and payables by the remaining periods.We r sorting the open items of receivables / payabels as this is necessary to disclose as per the legal requirements (eg - customer more than 6 months and less than 6 months)
Even this configuration regroups accounts receivables nad payables balances which are maturing beyond 6 months
We do it separately for customers and vendors
we are regrouping the reconciliation accounts by creating a group in the initial screen
Target accounts are those accounts to which the amount is to be postedand by whichthe balance of the specified accountis to be adjusted
The adjustment account is displyaedin the BS/PL statement together with the accounts to be adjusted
For example - for receivable 0 month ( receivables within 6 months) check vendor posting
<b>1st line</b>
Customer reconciliation account ( ASSETS)
Adjutment account for regrouping for AR ( ASSETS)
target account as - credit balance in AR ( liability)
<b>2nd line</b>
vendor reconciliation account ( liability)
Adjuctment account - accounts payable adjuctment account regrouping ( liability)
target account - Debit balance in AP( Assets)
For receivable - more than 6 months ( check both customer and vendor posting)
<b>1st line</b>
Customer reconciliation account ( ASSETS)
Adjutment account for regrouping for AR ( ASSETS)
target account - AR maturity more than 6 moths ( assets)
<b>2nd line</b>
vendor reconciliation account ( liability)
Adjuctment account - accounts payable adjuctment account regrouping ( liability)
target accounts - AP maturity more than 6 months ( liability)
thse are the GL accounts you need to create
Similarly for vendor also u need to do it
Hope it would help u in understanding the process
Assign points if u find the answer useful
Regards
Anup
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Hi Anup
Thanks for the reply
Could you elaborate on target account
what i understand is target account is an offsetting entry for the adjustment account
However in your example you are using it for credit balances of AR and debit balances of AP
Could you explain with an example with some amounts in A/R with maturities within 6 months and more than 6 months and how these amounts will be posted to adjustment and target accounts
Thanks
Prashanth
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