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What type of account is freight account in oracle receivables

Discussion in 'Oracle Financials' started by kcp_pavan, Mar 17, 2009.

  1. kcp_pavan

    kcp_pavan Active Member

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    When an invoice is created in AR.....will generate folowing accounting entries.

    Receivable DR

    Revenue CR
    Tax CR
    freight CR

    IF we categorize all the accounts above...
    Receivable ==> Asset account
    Revenue ==> Income account
    Tax ==> liability account

    What type of account is Freight?

    Generally Freight is an expense account.If it would be expense...then it should have been debited.....because debiting an expense account will increase the expense...Why is it credited.If freight account is not an expense then what category the freight account mentioned belongs to.?

    asset.. or liability.. or expense.. or income..........

    Tons of thanks
    pavan
     
  2. apps_expert

    apps_expert Forum Expert

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    hi pavan, u r not seeing the full picture here, when you create an invoice in receivables.

    Receivable DR

    Revenue CR
    Tax CR
    freight CR

    And When you create a receipt

    DR Cash

    CR Receivables

    So, in effect it's
    DR Cash

    Revenue CR
    Tax CR
    freight CR

    As you see Cash is an Asset type account where DR is increase. SO when CASH is DR it means CASH is increasing. But freight is an expense type account. For expense type accounts CR is an increase and DR is a decrease, while it is reverse for asset type accounts. So rightfully when creating an invoice TAX, freight and revenue are all credited.

    Hope this clarifies your doubt.
     
  3. Sadik

    Sadik Community Moderator Forum Guru

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