Practicing commitment accounting
As previously mentioned in the Commitment Type section of this chapter, we can use commitment type accounting as a tool to provide financial information before "budget to actual" reports, and prevent budget overrun. In the following sections, we will implement commitment accounting and analyze the accounting facts/GL journal entries generated.
Prerequisites
We can activate commitment accounting through the Accounting Schema window. There is a list of options that can be used to enable commitment accounting. The options are:
PO Commitment only
PO Commitment & Reservation
SO Commitment only
SO Commitment & Reservation
PO;SO Commitment
PO;SO Commitment & Reservation
For our reference, monitoring the expenses incurred in the purchase activity can be done by enabling PO Commitment & Reservation in our accounting engine, which we can do by performing the following steps:
In the Accounting Schema window, navigate to the Accounting Schema tab, and set the Commitment...
