ORIX Academy for applied accounting

Learn accounting clearly, then apply it as it is practiced at work

Begin with a visual explanation and worked example, practise with clear guidance, then move into evidence, journals, and review inside one connected course journey.

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Session 3

Procurement cycle foundation: buying builds the balance sheet

Outcome: Trace purchase documents from requisition to payment, apply the three-way match, compute landed inventory cost, and explain why most of a purchase never reaches profit or loss.
Duration: 30 minutes

A real lesson preview

Order to cash: how does evidence reach the accounts?

This preview comes from the Amwaj revenue-cycle foundation lesson and explains the idea before independent practice.

Visual explanation

Procurement document-to-account map

A semantic model connecting procurement-cycle stages to evidence and potential accounting effects.

1
Requisition
Evidence
Approved internal request stating the need
Accounting effect
Establishes the need and the approval trail; no accounting effect from the request alone.
2
Purchase order
Evidence
Approved order stating item, quantity, and price
Accounting effect
Fixes the future commitment and the reference price for matching; it creates no journal by itself.
3
Goods receipt
Evidence
Goods received note and inspection report
Accounting effect
Evidences arrival and acceptance, so inventory cost rises by the landed amount for the accepted quantity.
4
Invoice and match
Evidence
Supplier invoice matching the order and the receipt
Accounting effect
Determines the credit side and its amount once the three-way match succeeds; a failed match stops payment, not the investigation.
5
Payment
Evidence
Approved payment authorization and bank movement
Accounting effect
Reduces cash and settles the supplier balance without recording the cost again.

Worked example

Worked example: imported materials, then a write-down and retranslation

Amwaj imported raw materials on a foreign supplier invoice denominated in dollars, paid inbound freight and customs duty in cash at release, and left the foreign supplier balance unpaid at month end. In the same month a slow-moving line could only be sold below its cost, and the exchange rate moved before close.

Step 1
Build the landed cost first: the supplier price of SAR 150,000 (USD 40,000 at 3.75), plus SAR 12,000 inbound freight, plus SAR 18,000 customs duty, giving an inventory cost of SAR 180,000.
Step 2
Split the credit side by the nature of each obligation: the foreign supplier balance is an outstanding dollar liability of SAR 150,000, while freight and duty were paid in cash for SAR 30,000. No expense appears in this entry.
Step 3
Test the slow-moving line: its recorded cost is SAR 40,000 and its net realisable value is SAR 28,000. IAS 2 forbids carrying inventory above net realisable value, so you write it down by SAR 12,000 — and this item does reach profit or loss.

A purchase moves value between an asset and a liability; only what lost value or was genuinely consumed in the period reaches profit or loss.

Balanced example journals

Synthetic teaching amounts from the Amwaj training pack: a SAR 150,000 supplier invoice, SAR 12,000 freight, SAR 18,000 duty, and rates of 3.75 at purchase and 3.78 at close. The example does not address tax treatment.

**Record the imported materials at landed cost**When the materials are received and accepted, freight and duty are paid in cash, and the foreign supplier balance remains outstanding.
Account	Debit	Credit
Inventory — raw materials	180,000.00 SAR	—
Accounts payable — foreign supplier	—	150,000.00 SAR
Bank	—	30,000.00 SAR
Total	180,000.00 SAR	180,000.00 SAR

**Write inventory down to net realisable value**When the expected selling price less costs to complete and sell falls below the recorded cost.
Account	Debit	Credit
Inventory write-down expense	12,000.00 SAR	—
Inventory — trading goods	—	12,000.00 SAR
Total	12,000.00 SAR	12,000.00 SAR

**Retranslate the foreign supplier balance**At close, because the supplier balance is a foreign-currency monetary item remeasured at the closing rate.
Account	Debit	Credit
Foreign exchange loss	1,200.00 SAR	—
Accounts payable — foreign supplier	—	1,200.00 SAR
Total	1,200.00 SAR	1,200.00 SAR

What shapes the learning experience

Explanation learners can follow and work they can review

Clear Arabic teaching

Accounting concepts and terms in Arabic with precise English equivalents inside the course.

Progressive practice

A worked example and guided practice before the independent task.

A reviewable portfolio

Journals, schedules, reconciliations, and memos preserve evidence of completed work.

Flagship course

Amwaj for junior accountants

A nine-session curriculum following one connected accounting month: onboarding, revenue and purchasing cycles, close, statements, controls, and a capstone.

Visual explanation and a worked example before application
Business documents, journals, reconciliations, and ERP labs
Feedback and reviewable professional outputs

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The ORIX method

Five steps that build understanding before practice

1
Explain
The concept, terminology, and job context.
2
Show
A worked example that makes the reasoning visible.
3
Guide
A short task with support that reduces progressively.
4
Apply
An independent assignment using evidence and data.
5
Review
The consequence, common errors, and resulting work.

More ways to apply

Tools and services support the Academy journey

Accounting tools

Educational calculators and workpapers for understanding the effect of figures and assumptions.

Explore the tools

Professional services

Clearly scoped accounting and finance services for businesses.

View the services

Record the imported materials at landed costWhen the materials are received and accepted, freight and duty are paid in cash, and the foreign supplier balance remains outstanding.

Account

Debit

Credit

Inventory — raw materials

180,000.00 SAR

—

Accounts payable — foreign supplier

—

150,000.00 SAR

Bank

—

30,000.00 SAR

Total

180,000.00 SAR

Write inventory down to net realisable valueWhen the expected selling price less costs to complete and sell falls below the recorded cost.

Account

Debit

Credit

Inventory write-down expense

12,000.00 SAR

—

Inventory — trading goods

—

12,000.00 SAR

Total

12,000.00 SAR

Retranslate the foreign supplier balanceAt close, because the supplier balance is a foreign-currency monetary item remeasured at the closing rate.

Account

Debit

Credit

Foreign exchange loss

1,200.00 SAR

—

Accounts payable — foreign supplier

—

1,200.00 SAR

Total

1,200.00 SAR

Order to cash: how does evidence reach the accounts?

Procurement document-to-account map

Requisition

Purchase order

Goods receipt

Invoice and match

Payment

Worked example: imported materials, then a write-down and retranslation

Explanation learners can follow and work they can review

Clear Arabic teaching

Progressive practice

A reviewable portfolio

Amwaj for junior accountants

Five steps that build understanding before practice

Explain

Show

Guide

Apply

Review

Tools and services support the Academy journey

Accounting tools

Professional services

Order to cash: how does evidence reach the accounts?

Procurement document-to-account map

Requisition

Purchase order

Goods receipt

Invoice and match

Payment

Worked example: imported materials, then a write-down and retranslation

Explanation learners can follow and work they can review

Clear Arabic teaching

Progressive practice

A reviewable portfolio

Amwaj for junior accountants

Five steps that build understanding before practice

Explain

Show

Guide

Apply

Review

Tools and services support the Academy journey

Accounting tools

Professional services