Discrepancy Between Purchase and Direct Cost Applied
In school we where told that when you invoice (voucher) received inventory you get a debit transaction against the inventory account and a credit transaction against the accounts payable. Well, in Microsoft Dynamics NAV you also get two transactions in the P&L, a debit against the purchase account and a credit against the direct cost applied account. What are those used for? Wouldn’t they always be the same and net each-other out?
Not necessarily. There is a special case to consider where the two transactions in the P&L are not the same and therefore a discrepancy between the two accounts will occur.
The special case is purchase credit memos for products that are returned where the vendor only credits you for parts of the inventory cost. If an item is in inventory at $100 and you return it to the vendor which only credits you $60, then you will have a $40 discrepancy on those accounts (since the credit on your inventory account will always be according to your inventory value). The g/l transactions will then look like below.
Note that the $40 adjustments will be created when the cost adjustment batch job is run (one of the reasons why you need to run it 🙂 ). Also note that the purchase credit memo account does not have to be the same as the purchase account, you can define them to be two different accounts in the general posting setup table. Although this does not change the fact that you have a discrepancy when you trying to reconcile.
This is useful to know when you evaluate any discrepancy between the purchase and direct cost applied accounts.