Question

I'm in the process of learning ERP using SAP, and doing some example practice questions. At the moment, I'm learning about the procurement process and the questions involve some accounting aspects, which I struggle with, and would really appreciate some help with these 2 separate, but similar questions.

1) What is the financial impact (what accounts are updated with either Debit or Credit) with Invoice Verification (when the invoice is approved for payment)? (Since the vendor account is a subledger account, there is an automatic posting made to another account.) There should be 3 accounts listed.

2) What is the financial impact (what accounts are updated with either Debit or Credit) with Payment Processing? Also 3 accounts.

Answer 1

1)
The invoice verification step is where the invoice is posted to the Accounts Payable subledger and an automated posting to the reconciliation account. In this step the invoice is cleared out of the GR/IR(goods receipt / invoice receipt) account with a debit and a credit is posted to the AP vendor account which results in an automatic posting of a credit in the payables reconciliation account. A financial accounting document is created and invoice document is created.

2)
The payment processing step posts the payment from the bank and applies to the appropriate invoice on the vendor account. The impacts on the general ledger accounts here are a credit to the bank account for the amount of the check or electronic payment and a corresponding debit to the vendor account in the Accounts Payable subledger which results in an automatic posting of a debit to the Accounts Payable reconciliation account. A financial accounting document is created for the posted payment.