Dynamics 365 – Purchase Order Generated Accruals Explained

Do you ever have to figure out where an accrual came from and get so confused that it feels like the room is spinning?  Don’t feel alone.  Dynamics 365 Finance and Supply Chain gives you the power to configure entries to the General ledger so they are not so vague.

Posting at Receipt

One of the most confusing ledger entries are the postings made at receipt of a product or service.  In order to post a receipt, the Accounts Payable parameter on the General tab called Post product receipt in the ledger must be enabled. 

The field notes explain it clearly.  The product receipt account and the product receipt offset account on the Purchase order tab determine where the posting is made.

Posting Profiles

Navigate to Inventory Management> Setup > Posting > Posting. Select the Purchase Order tab.

Common practice is to use Procurement categories for expensed items and services.  To determine where the entry at receipt will post, select the Purchase expenditure, un-invoiced posting type.

For each category, enter the main account to post the receipt.  This is essentially an accrual since this entry will be reversed when the vendor invoice is posted.  The main account entered here will be debited for the cost of the receipt.

Enter the main account for the offset, or credit under the Purchase accrual posting type.  Use the option of ‘ALL’ if the same account should be used regardless of the Procurement category.

And to complete the setup, enter the main accounts by category under the Purchase expenditure for expense posting type.

The posting types will be listed on the vouchers indicating which posting profile was used for the entry.  The voucher can be viewed from the ledger or from the posted product receipt journal.

Accrual Reversal

When the vendor invoice is posted, the entry made at receipt is reversed.  Depending on the Posting profile setup, the accounts may be the same or may be different at invoice and receipt.  That is a business decision.

More specifically, the posting of the invoice will utilize the Purchase expenditure for expense posting type, for the debit, and the Offset account, for the credit, as determined by the Posting profile set forth in the AP Parameters under the Ledger and sales tax tab.

From the invoice journal or from the ledger, the reversal of the receipt entry and the invoice posting can be reviewed.

From this example, note the reversal of the receipt entry on the first and fourth lines of the voucher.

Journal Descriptions

Understanding the posting types is one tool in being able to decipher voucher postings and their source.  Another tool that may come in handy when trying to decipher voucher entries, is the ability to configure the journal descriptions.  This tool is often overlooked and undervalued.

Navigate to General Ledger> Journal setup > Default descriptions.  Here is where a description with meaning can be configured and automatically populate the voucher entries to provide clarification and source details.

To create a default description, start by selecting the entry type from the looong list of options.

The challenge is finding the right option.  It is sometimes easy to find them using the document type such as, in this case, a Purchase order.  Note Purchase order – product receipt which signifies the product receipt voucher.

Select a language for the description.  The text field is what will appear on the voucher in a ledger in the Description field in place of the standard description (which is the transaction type).  This field is built using the fixed variables, Optional variables, and Parameters in the sections below and text.

In this example, the Product receipt voucher will include the description of the Date, PO#, and Receipt ID.


In summary, Understanding the posting types and which ones are used for which transactions and knowing how to create descriptions for voucher entries will make the analysis of ledger entries easier and less stressful.

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