Does the amount in a PO exist on the GL prior to the actual invoices coming in when working on an accrual basis? What I'm trying to decipher is what the benefit would be, if any, to close out a PO that didn't exhaust the full amount entitled to it. Is there any effect on the BS or the P&L?
USA Purchase orders and the GL
- Thread starter ArtKer
- Start date
What is the function of a PO? By itself is it a source document that causes any changes to the GL? If it does not alter the GL, does it impact the financial statements?
As for shutting down a partially used PO, why is it partially used? Planned or unplanned? Will shutting it down hamper operations?
So many questions.
As for shutting down a partially used PO, why is it partially used? Planned or unplanned? Will shutting it down hamper operations?
So many questions.
Not so many questions...only one. A purchase order forms a legal document between you and your supplier. It also provides documentation on what has been ordered, quantities, price, etc. My question was pertaining to whether or not the PO landed on the GL at any point prior to it actually being invoiced by the supplier. If not, then it wouldn't appear to affect the GL whatsoever if the actual invoicing came in below the purchase order amount, and it was shut down early.
It sounds to me like their is confusion about different documents in the procurement process. But I believe you now understand a PO does not impact the GL.