Expected Cost Posting

Mango

What would happend if Expected Cost Posting was switched off and a user decides to post/invoice a purchase order. Which accounts would be affected or not affected. What batch job would you need to run in order to update the expected cost?

I'm not too clear on the whole process and what expected cost posting actually does so if someone could explain it would be much appreciated.

Kowa

First of all, you need to activate "Automatic Cost Posting" ( or run Report "Post Inventory Cost to G/L", this has to be done regularly anyway even if "Automatic Cost Posting" is activated) is you want NAV to post inventory cost amounts to your inventory accounts.

If the actual cost on the inventory accounts is sufficient for your requirements , there is no need to activate "Expected Cost Posting". It is merely an option to see what is likely to happen to your inventory balance before the purchase orders are invoiced.

There are 2 accounts, Invt. Accrual Acc. (Interim) (debited), in the "General Posting Setup" and the Inventory Account ( (Interim) ( credited) in "Inventory Posting Setup", for which G/L entries are created when "Expected Cost Posting" is active and the purchase order is received. When the purchase is invoiced, a second G/L entry for the inverted amount for these accounts is created, at the same time there are G/L entries created with the actual cost for the non-interim versions of these accounts.

The other important batch job is "Adjust Cost - Item Entries". This forwards the cost from the purchases to the sales , from where they then
turn up on the COGS Account ( and the COGS Account (Interim) if "Expected Cost Posting" is active.)

Jaspreet

In continuation with Kowa's reply, I would like to add the below:
Expected Cost Posting is explained with an example:
A User creates a Purchase Order for 10 units @ $ 10.
When the Purchase Order is posted with 'Recipt' as an option then two entries are created:
Inventory Account Interim Debit $ 100
Inventory Accrual Acc Interim Credit $ 100

When the Purchase Order is posted with 'Invoice' as the option, the above entry gets reversed and the actual stock , purchase and vendor accounts get impacted.

So please note the Interim Accounts will have a zero balance when you completely invoice the Purchase Order

Now if you are already using Expected Cost Posting and want to turn off this option, then ensure the existing Purchase Orders that have been received but not invoiced, should be Invoiced completely. This will ensure that no balance exists in the G/L accounts and no balane of expected cost appears in the Value Entries