Lesson 4 of 6
Account assignment: stock versus consumption
9 min
Not everything Contoso buys goes into the warehouse. Rotors go into stock and are valued as inventory. Safety gloves for the line are expensed to a cost center. A new test rig is capitalized as an asset. The PO item's account assignment category tells SAP which of these it is, and that decides the postings at goods receipt and invoice.
| Account assignment category | Meaning | Additional data required | Contoso example |
|---|---|---|---|
| (blank) | Stock item: received into inventory | Plant, storage location | Rotors CMC-RTR-200 into 171A |
| K | Cost center | G/L account, cost center | Safety gloves for the Detroit assembly cost center |
| A | Asset | Asset number | New alternator test rig |
| F | Internal order | Order number | Trade show booth materials |
| P | Project (WBS element) | WBS element | Parts for a plant 1720 line expansion project |
Common account assignment categories. Your system may have more.
The postings each one produces
| Event | Stock item (blank) | Cost center item (K) | Asset item (A) |
|---|---|---|---|
| Goods receipt | Dr inventory / Cr GR/IR | Dr expense account on the cost center / Cr GR/IR | Dr asset (acquisition) / Cr GR/IR |
| Invoice | Dr GR/IR / Cr supplier | Dr GR/IR / Cr supplier | Dr GR/IR / Cr supplier |
| Price difference at invoice | Price difference or inventory, by price control | Additional expense on the cost center | Additional acquisition value on the asset |
| Stock quantity | Increases | No stock | No stock |
For consumption items the goods receipt is often still valuated (posting to expense at GR), but the PO can be set up so that the goods receipt is non-valuated and the cost posts only at invoice. Contoso uses valuated receipts for all account-assigned items so costs hit the cost center when goods arrive.
- PO itemSafety gloves, account assignment K, cost center Detroit assembly, G/L office and shop supplies
- Goods receiptExpense debited on the cost center; GR/IR credited
- InvoiceGR/IR cleared; supplier credited
- Cost reportingCost center report shows the gloves in the month received
Item categories in brief
Separate from account assignment, the item category describes the kind of procurement: standard, consignment, subcontracting, third-party, stock transfer or services. It controls which fields are required and whether a goods receipt and invoice are expected. Account assignment answers "where does the cost go?"; item category answers "what kind of purchase is this?" Some combinations are not allowed; for example, consignment items are stock-related by nature.
What would you do?
A buyer creates a PO for 50 rotors with account assignment K to a maintenance cost center, because maintenance needs spares. What is the consequence?
Account assignment can also be split. A PO item for $3,000 of training material might be distributed 50/50 to two cost centers, by quantity or by percentage. The goods receipt and invoice then post to both cost objects in proportion. Multiple account assignment is useful but easy to get wrong, so if Contoso uses it, include one split item in the test set and check that the journal entries divide the amount exactly as the PO says.
- The account assignment category decides where the cost goes: stock, cost center, asset, order or project.
- Stock items debit inventory at receipt; consumption items debit expense on the cost object.
- Item category describes the kind of purchase; account assignment describes the cost destination.
- Test each category through to the journal entries.
Check your understanding · not graded
Lesson check
1. A PO item with cost center account assignment posts its goods receipt to where?
2. Which account assignment category is used for an asset purchase?
3. What does a blank account assignment category mean?
4. What does the item category describe?