This article examines the impact of turning off “Expected Cost Posting to G/L” in Inventory Setup in Microsoft Dynamics NAV.
Originally published in Q3 2017 NAVUG Magazine
This tip was inspired by a question from one of our clients asking about the repercussions of turning off “Expected Cost Posting to G/L” in the Inventory Setup.
By default, this option is turned off/disabled. This particular client had turned it on in the past and wanted to know the impact of now turning it off.
When we are working with Purchase Orders in Microsoft Dynamics NAV, we may receive goods into inventory first and subsequently receive an invoice from the vendor. Sometimes, this may transcend months (receive goods in late March, invoice sent in April), and to give us proper visibility, Microsoft Dynamics NAV gives us the option to record the expected costs.
As a colleague of mine put it, “CFOs do not like surprises, so getting a delayed purchase invoice that was not expected usually creates problems.” Enabling Expected Cost Posting to G/L “makes for more accurate and timely accounting, and you do not have to build the accrual for those purchase invoices that you have not received yet, and the expected/interim accounts are a good indicator of what purchase invoices are still outstanding.”
Essentially, nothing will break if this option is disabled. To better understand, here’s what happens in each case (enabled and disabled):
With Expected Cost Posting to G/L Enabled
When we use the “Post > Receive” action on a Purchase Order, Microsoft Dynamics NAV posts entries to the expected/interim accounts in the General Ledger based on the dollar amounts that we have entered on the Purchase Order lines.
Later, when the invoice arrives, we use the “Post > Invoice” action on the same Purchase Order, and Microsoft Dynamics NAV reverses the expected entries in the G/L, and books the final entries to the appropriate G/L accounts. If the amounts in the Purchase Line have been changed/updated because the vendor has charged more or less than originally anticipated, the final entries posted to the G/L use these amounts.
With Expected Cost Posting to G/L Disabled
No entries are posted to the expected/interim accounts in the General Ledger when goods are received. Microsoft Dynamics NAV only posts entries to the General Ledger when we get the invoice from the vendor and use the “Post > Invoice” action on the Purchase Order.
Note: If we use Expected Cost Posting, we must have the appropriate requisite G/L accounts selected in the Posting Setups in Microsoft Dynamics NAV.
