In a database using perpetual stock system, the Expense Clearing Accountis found on the Stock tab under Administration -> Setup -> Financials -> G/L Account Determination. In company databases using the non-perpetual stock system this tab is greyed out and not accessible.
The G/L accounts defined here are the default accounts used in the G/L determination by warehouse, item group or on item level. Naturally, they can be overwritten manually. When a Goods Receipt PO (GRPO) is posted in SAP Business One, the stock value goes up and the off-setting account is the Allocation Account. Once the AP Invoice is received, this allocation account is balanced. The Expense Clearing Account also serves as an allocation account which is used to off-set the increase in stock value due to freight charges that are defined to affect item cost. In this example Freight 01 (Administration -> Setup -> General -> Freight) is defined to affect both Stock and the Last Purchase Price (LPP) list.
Item 019 (Lemon) is defined for G/L accounts to be set on the warehouse level. At present it has an item cost of 0.12 with a quantity of 94 in stock.
A quantity of 100 lemons is received with a GRPO where a freight charge has been applied:
Adding this document produces this Journal Entry (JE):
The freight portion of the stock value increase is posted to the Expense Clearing Account. Drawing the GRPO into an AP Invoice without changing any values leads to the creation of this JE:
Both clearing accounts are balanced. The item cost is also updated taking the freight charge into consideration:
(Existing quantity * current item cost + added quantity * unit price + freight charge amount)/ Existing quantity + added quantity)
(94*0.12 + 100*0.2 +10)/(94 + 100) = (11.28 + 20 + 10)/194 = 0.212784 which is rounded to 0.21.
In this example, the base document carried a freight charge of 10.00. It frequently occurs in business that the estimated freight cost recorded at the GRPO stage is different from the actual freight cost in the AP invoice.
To illustrate, at the invoicing stage of this GRPO it transpired that the actual freight cost for the item was not 10.00 as estimated in the GRPO, but 15.00.
The field Amount in the copied row is fully editable and referenced to the base document. The user may adjust the amount in the copied row, or, for consistency, enter the additional amount in the target document row for that freight code accompanied by appropriate remarks:
The JE created by the addition of the AP invoice reflects the following:
The Expense Clearing Account is balanced and the stock value increases by the delta amount. Similarly, if the delta amount is negative, the Expense Clearing Account will also be balanced and the stock value adjusted accordingly. As an example, the actual freight was not 10.00, but 2.00, therefore the stock value must be reduced by 8.00:
Adjustment of the stock account naturally only takes place when the freight charge is defined to affect stock value.