COGS Accounting

COGS Accounting : 

In R11i, COGS was being recognized soon after ship confirm. After ship confirm, User runs Interface Trip Stop (ITS). ITS calls OM interface and Inventory Interface. Inventory Interface calls COGS Account Generator WF.

In R12, COGS are recognized along with revenue. After shipping, Inventory tables are updated with deferred COGS account. After Invoicing, COGS account generator updates the COGS account.

Excepiton - Ship only-lines (No invoice will be created) needs to be handled differently.

Navigation - Deferred COGS account setup:

Inventory -> Setup -> Organization -> Parameters -> other accounts

Accounting Entries : 

When order shipped - 
Inventory Valuation Account - Credit
Deferred COGS Account - Debit

Once Revenue Recognized then 

1. Run the Revenue Recognition Information Collection Program. It collects the percentage of Revenue Recognized based on AR events for a date range.
2. Run the Generate COGS Recognition events. This will create COGS recognition for each sales order where the revenue recognition percentage is not equal to COGS recognition percentage.

Navition - For running programs:

Cost -> COGS Recognition -> Collect Revenue Recognition
Cost -> COGS Recognition -> Generate COGS Recognition events 
Cost -> View Transaction -> Material Transactions -> Distributions

Accounting Entries : 

After revenue recognition - 
Deferred COGS Account - Credit (Actual Revenue)
COGS - Debit (Actual Revenue)