This post is about ledger postings setup regarding purchasing in Dynamics AX 2012. The system has a lot of places where ledger accounts can be set. In this post I show you important places where account must be set. It will help to post purchasing smoothly.

1. Purchase inventory posting

Let’s start setting up from the inventory posting. Go to the “Posting” form on the “Purchase order” tab.

On the tab “Purchase order” you should set at list the accounts:

1.a. Product receipt

• This is an asset account.
• It is debited when product is received and credited when the purchase order invoiced.
• Posting type is “Product receipt”.

1.b. Purchase expenditure, un-invoiced

In case of unstocked items and procurement categories the un-invoiced purchase expenditure account will have a debit balance until the product receipt is fully invoiced. In this case you can consider to set an asset or expense account there.

In other cases the account usually doesn’t have a balance and isn’t transferred to ledger.

Posting type is “Purchase expenditure, un-invoiced” for this transactions.

1.c. Purchase inventory, receipt

• This is an asset account.
• The account is debited when the purchase order is invoiced.
• Posting type is “Purchase, inventory receipt”.

1.d. Purchase expenditure for product

Usually this account doesn’t have any balance. But in some cases it can have. For example when different currency rounding logic is used or a stocked item  is returned at a different price than average cost.

Purchase expenditure for product account must be specified. You can consider to set profit or loss account there.

1.e. Purchase, accrual

• The account is for recording liability.
• Is credited when the product receipt is posted and debited when the invoice is posted.
• Posting type is “Purchase, accrual”.

1.f. Purchase expenditure for expense

• This is an expense account.
• The account is debited when instead of item used a procurement category in a purchase order.
• Posting type is “Purchase expenditure for expense”.

2. Payable entry

Now you need to set a liability account to record debt to the supplier. Vendor posting profiles are used for this.

You need to set at least “Summary account”.

• This is a liability account.
• In most cases the account is credited when the purchase order is invoiced to record debt to the vendor. The account is debited when the payment is made.
• Posting type of the transaction is “Vendor balance”.

3. Miscellaneous charges

Charges can be used to track the cost related to the purchase. It can be fright, insurance, loading/unloading of goods and so on.

Different options are available. You can debit:

1. An asset account which is linked to the item via inventory postings settings. In this case you increase the value of the inventory received. Specify “Item” for the “Type” field this option.
2. A ledger account that is specified directly for the charge code. Usually this account is an expense one. Set “Ledger account” value in the “Type” field for the option.
3. A liability account which is set in the posting profile of the vendor. This decreases the debt to the supplied. Specify “Customer/Vendor” for this option.

You can credit:

1. A liability account linked to the vendor account. This increases debt to the supplier. Specify “Customer/Vendor” value in the “Type” field for this option.
2. Ledger account specified for the charges code. Use “Ledger account” for this option.

Posting types for transactions are used in accordance with the value in the “Posting” field or in accordance with the type of the entry (item or customer/vendor).

4. Sale taxes

A sales tax code must be linked with a ledger posting group. Tax accounts must be specified in the ledger posting group.

You need at least sales tax receivable account specified in the ledger posting group.

• This account is asset one.
• The account is debited when purchase is invoiced.
• Posting type “Sales tax”.

5. Purchase price variances (aka PPV)

It is needed to set a purchase price variance account if you use standard costing. This account is used to post difference between standard cost and price paid for the inventory.

• This account is balance one, so it can be as asset or liability. The balance of this account is usually periodically allocated on cost of goods sold, inventory, and work in process accounts.
• The account is debited in case the standard cost of the purchased inventory is lower than the price paid. The account is credited if the standard cost is higher than the price.
• The purchase price variances are calculated when product receipt or invoice is posted.
• Posting type: “Purchase price variance”.

Settings, described in the post, must be done properly.  It helps you to process purchasing smoothly.

If you know other ledger settings which are important for purchasing, please feel free to share your knowledge in comments.