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Back to the track — Accounts Payable Accountant
Operations requested 40 valves before shutdown. Budget is 50,000.00 and selected quote 48,000.00. After receipt the supplier claims 52,800.00 because quantity increased by four, while the PO in the system was amended after invoice arrival. Determine the effective version and what represents need, receipt and liability.
The purchase cycle first fails when AP looks at a purchase order only after an invoice arrives, as though it were merely a system number needed to complete fields. In reality, the PO is where an internal need becomes an authorised commitment to a named supplier: what is bought, quantity and unit, price and terms, whose budget, when needed and who approved it. A later invoice cannot repair a vague order. The figures may agree because the supplier copied the same ambiguity, yet the business may pay for something the requester did not need, at an untested price or against an ownerless cost centre. AP control therefore begins by understanding the requisition and order, not merely posting them.
The requisition answers the need before it answers the supplier. The requester states the required outcome, quantity, unit, delivery location, need-by date and cost centre, attaching the specification or service scope. 'Maintenance materials' for SAR 48,000.00 is not enough: procurement cannot compare equivalent offers, warehouse cannot inspect receipt, accounting cannot map the account, and a reviewer cannot reconstruct the decision. Budget is neither price nor automatic approval. SAR 50,000.00 available proves spending capacity within authority, not that SAR 48,000.00 is fair. When these questions are mixed, the budget field becomes an excuse not to negotiate rather than a limit on commitment.
The requester owns specification and timing, procurement owns competition, price and terms, budget owns authority, master data owns supplier identity and bank details, warehouse or service owner owns receipt, AP owns invoice and liability, and treasury owns cash release. This division is not bureaucracy; it prevents one person inventing the need, selecting the supplier, confirming receipt and paying cash. If a manager asks AP to create a PO after the invoice 'so the system accepts it', the answer is not a backdated form. The missing prior authority must remain visible in an exception for the authorised owner to accept or reject and prevent recurrence. A retrospective paper PO conceals the control failure rather than curing it.
After requisition approval comes supplier selection, where the file separates why the purchase is needed from why this supplier was chosen. The lowest quote may be SAR 46,500.00 but miss a plant shutdown, so a SAR 48,000.00 offer is selected with the comparison and reason retained. A sole source may be justified for an original spare, in which case the sole-source basis is documented instead of manufacturing three cosmetic quotes. Completion of fields is not the value; a person absent from the meeting must understand why the supplier won and what risk was accepted. Related parties or repeated non-competitive awards follow the policy's disclosure and approval route before the PO is issued.
The treatment starts from these documents. Follow the numbers to identify recognition date, amount, counterparty, reference and approval evidence before preparing the entry.
Facts and supporting evidence
Forty units at 1,200.00 were received before invoice; recognise an uninvoiced receipt of 48,000.00.
Correct treatment and entry
| Account | Debit | Credit |
|---|---|---|
| Inventory | 48,000.00 | |
| Goods received not invoiced | 48,000.00 | |
| Total (SAR) | 48,000.00 | 48,000.00 |
Treatment and financial effect
Receipt supports asset and accrual while VAT awaits its document and route.
Reperformance starts from this case's own facts: Forty units at 1,200.00 were received before invoice; recognise an uninvoiced receipt of 48,000.00. Obtain the original source that proves this event. The training drawings Approved purchase requisition, Purchase-order change record explain field shape and reading order; they do not replace the case document or transfer their figures into it. Match entity, period, currency, reference and version to the purchase order, receipt evidence, tax invoice and payment approval, then confirm that the source supports the debit side (Inventory) and the credit side (Goods received not invoiced). Missing ownership, date, reference or approval remains an open exception; a balancing journal or undocumented assumption does not cure it.
Remeasure from the facts before reading the proposed journal, then add it independently: total debits 48,000.00 and total credits 48,000.00. Debit detail: Inventory for 48,000.00. Credit detail: Goods received not invoiced for 48,000.00. Link every line to the recognition or measurement rule explained in the lecture, then trace its reference and posting date. After posting, test the payables control account, supplier subledger and supplier statement. Equal sides prove arithmetic only, not the correct account, period or classification.
Before close, compare the correct treatment with the common alternative and record its specific effect: Payables and input VAT are overstated by 55,200.00 and 7,200.00 before a valid claim exists. Do not close until the journal agrees with payables ageing, input VAT and cash and an independent reviewer can move from balance to account, reference and this event's own source. Keep the calculation, source version, journal identifier, reconciliation result and unresolved exceptions in the same workpaper. An attached file without a stated conclusion is not review evidence.
In ERP, requisition, PO, change order and receipt remain linked versioned identities. PO closes by received and invoiced quantity/value, with stale orders, retrospective changes and emergencies in separate reports. AP does not receive authority to edit approved version merely to pass invoice.
Complete requisition, order and change records for four cases, identify effective version and whether outcome is commitment, accrual or payable.
Work output: A workbook
These are yours once downloaded, and need no account. Fill them with your own figures and keep them in your portfolio.
Turn PO version, receipt and invoice into three quantities, then identify which version governed the event.
A 100-unit request whose authority, version and receipt unfold step by step.
What you haveRequest says 100 with no unit.
The arithmetic in this case runs in the tool itself, which is open to you any time with your own figures.
Log which stage created error—need, authority, version or receipt—who owns correction and closing evidence.
This is not sent anywhere and not stored here. Write it down for yourself — in the workpaper you downloaded, or on paper.
A PO is authority, version and terms. It alone does not record payable and cannot be retrospectively amended to justify invoice.
An invoice exceeds PO, then PO is amended to invoice value. How do you prove change is legitimate?
Answer every question. Getting them all right records this lesson; you may retry as often as you need.
Reading alone records nothing.
The complete applied walkthrough is available below while the recording is prepared.
I place requisition, V2 and receipt. When higher invoice arrives, I do not edit V2; I place dated change card and ask if it preceded four extra units. If approved before them it becomes V3, otherwise invoice remains exception.
A PO must be usable later, not merely well presented: material code or service scope, quantity and unit, price and currency, expected tax as configuration rather than final conclusion, payment terms, location, date, tolerance, and requisition and contract references. Unit of measure is a major defence. An order for 40 'each' and an invoice for 40 'boxes' may look numerically equal while each box contains ten. Payment terms also begin from a specified event: invoice, receipt or acceptance date under the agreement. '30 days' without a start point creates disagreement among AP, supplier and treasury at payment time, turning something easily settled during contracting into a cash-release dispute.
Reality changes: four extra units may be needed, delivery date may move, or additional service may arise. A legitimate change does not overwrite the PO. The record retains SAR 48,000.00 original value, adds +4,800.00 linked to reason, evidence and approval, then issues V3 at SAR 52,800.00. Matching can then identify the version effective when receipt occurred, and the reviewer can see whether the change preceded supplier work or followed it. Raising a PO after a higher invoice arrives creates circular evidence: invoice justifies amended PO, and amended PO justifies invoice. The proper test is independent: was the addition requested, received and approved before becoming a claim?
A commitment matters for cash management before invoicing. An approved unreceived PO is an operating commitment, not a recorded payable because supply has not occurred. Receipt before invoice may create an accounting accrual under policy while tax evidence remains unavailable. Reports therefore separate open orders, uninvoiced receipts, blocked invoices and payables approved for payment. Combining them into one figure either overstates cash needs or surprises treasury with near-term obligations missing from the ledger. A sound order cycle gives every stage a name and state, so a promise to buy is not treated as an invoice and an unmatched invoice is not treated as certain cash outflow.
Urgency does not remove control; it changes the route. If a production line stops and needs an immediate part, record who declared the emergency, value limit, supplier selector, receipt confirmer and the date for retrospective review. A named, temporary exception is better than a fabricated PO, but it cannot become a permanent channel because a team prefers it to planning. Monitor retrospective requisition count and value, repeated suppliers and requesters. A pattern indicates inventory planning, authority or supplier-behaviour problems rather than an isolated invoice. AP's role is not to punish operations, but to stop the exception becoming the normal way purchasing happens.
Not everything needs a PO. Payroll, taxes and some centrally contracted or recurring charges may follow a separately defined route, while a purchase with no real need does not become legitimate because the system assigned a PO number. The test is whether the transaction type has an approved evidence route, not a lazy interpretation of 'no PO, no pay'. Good policy defines exceptions before they occur, who approves them, alternative evidence and how they are reported. At close, old orders are reviewed: completed ones close, cancelled ones are documented and open ones are reconfirmed with their owner. Stale open orders overstate operational commitments and give later invoices an old reference that proves nothing.
What AP carries into invoice processing is not a PDF named purchase order but a reperformable chain: requisition proves need, comparison explains supplier choice, approval proves authority and budget, version controls quantity, price and terms, and receipt will test performance. Before accepting an invoice, ask whether the reference belongs to this supplier and event, whether the version was effective, whether unit, price and currency are clear, whether changes are separately dated, and whether the remaining open value is right. If not, do not turn the gap into a silent payable. Open a bounded exception and return the fact to its owner. A PO makes an invoice testable; it does not provide cosmetic cover.
Facts and supporting evidence
A 120,000.00 service contract has three milestones; only two were accepted at close.
Correct treatment and entry
| Account | Debit | Credit |
|---|---|---|
| Service expense | 80,000.00 | |
| Accrued services | 80,000.00 | |
| Total (SAR) | 80,000.00 | 80,000.00 |
Treatment and financial effect
Recognise accepted work, not full PO; third milestone remains operating commitment.
Reperformance starts from this case's own facts: A 120,000.00 service contract has three milestones; only two were accepted at close. Obtain the original source that proves this event. The training drawings Approved purchase requisition, Purchase-order change record explain field shape and reading order; they do not replace the case document or transfer their figures into it. Match entity, period, currency, reference and version to the purchase order, receipt evidence, tax invoice and payment approval, then confirm that the source supports the debit side (Service expense) and the credit side (Accrued services). Missing ownership, date, reference or approval remains an open exception; a balancing journal or undocumented assumption does not cure it.
Remeasure from the facts before reading the proposed journal, then add it independently: total debits 80,000.00 and total credits 80,000.00. Debit detail: Service expense for 80,000.00. Credit detail: Accrued services for 80,000.00. Link every line to the recognition or measurement rule explained in the lecture, then trace its reference and posting date. After posting, test the payables control account, supplier subledger and supplier statement. Equal sides prove arithmetic only, not the correct account, period or classification.
Before close, compare the correct treatment with the common alternative and record its specific effect: Expense and liability are overstated by 40,000.00 and unperformed milestone disappears. Do not close until the journal agrees with payables ageing, input VAT and cash and an independent reviewer can move from balance to account, reference and this event's own source. Keep the calculation, source version, journal identifier, reconciliation result and unresolved exceptions in the same workpaper. An attached file without a stated conclusion is not review evidence.
Facts and supporting evidence
Four extra units were approved before supply, then 44 units were received and posted to inventory against goods received not invoiced of 52,800.00; the correct invoice arrived with VAT of 7,920.00.
Correct treatment and entry
| Account | Debit | Credit |
|---|---|---|
| Goods received not invoiced | 52,800.00 | |
| Input VAT | 7,920.00 | |
| Accounts payable | 60,720.00 | |
| Total (SAR) | 60,720.00 | 60,720.00 |
Treatment and financial effect
V3 controls receipt and invoice; the invoice clears GRNI rather than charging inventory twice.
Reperformance starts from this case's own facts: Four extra units were approved before supply, then 44 units were received and posted to inventory against goods received not invoiced of 52,800.00; the correct invoice arrived with VAT of 7,920.00. Obtain the original source that proves this event. The training drawings Approved purchase requisition, Purchase-order change record explain field shape and reading order; they do not replace the case document or transfer their figures into it. Match entity, period, currency, reference and version to the purchase order, receipt evidence, tax invoice and payment approval, then confirm that the source supports the debit side (Goods received not invoiced, Input VAT) and the credit side (Accounts payable). Missing ownership, date, reference or approval remains an open exception; a balancing journal or undocumented assumption does not cure it.
Remeasure from the facts before reading the proposed journal, then add it independently: total debits 60,720.00 and total credits 60,720.00. Debit detail: Goods received not invoiced for 52,800.00; Input VAT for 7,920.00. Credit detail: Accounts payable for 60,720.00. Link every line to the recognition or measurement rule explained in the lecture, then trace its reference and posting date. After posting, test the payables control account, supplier subledger and supplier statement. Equal sides prove arithmetic only, not the correct account, period or classification.
Before close, compare the correct treatment with the common alternative and record its specific effect: GRNI retains a 4,800.00 credit, input VAT is understated 720.00 and payable 5,520.00. Do not close until the journal agrees with payables ageing, input VAT and cash and an independent reviewer can move from balance to account, reference and this event's own source. Keep the calculation, source version, journal identifier, reconciliation result and unresolved exceptions in the same workpaper. An attached file without a stated conclusion is not review evidence.
Facts and supporting evidence
A 23,000.00 advance was paid on a cancelled refundable contract; no supply occurred, no valid tax invoice remains, and any earlier advance document was cancelled by a linked note.
Correct treatment and entry
| Account | Debit | Credit |
|---|---|---|
| Supplier advances | 23,000.00 | |
| Cash | 23,000.00 | |
| Total (SAR) | 23,000.00 | 23,000.00 |
Treatment and financial effect
The amount is a documented recovery right; cash paid without supply or a valid invoice creates neither expense nor input VAT.
Reperformance starts from this case's own facts: A 23,000.00 advance was paid on a cancelled refundable contract; no supply occurred, no valid tax invoice remains, and any earlier advance document was cancelled by a linked note. Obtain the original source that proves this event. The training drawings Approved purchase requisition, Purchase-order change record explain field shape and reading order; they do not replace the case document or transfer their figures into it. Match entity, period, currency, reference and version to the purchase order, receipt evidence, tax invoice and payment approval, then confirm that the source supports the debit side (Supplier advances) and the credit side (Cash). Missing ownership, date, reference or approval remains an open exception; a balancing journal or undocumented assumption does not cure it.
Remeasure from the facts before reading the proposed journal, then add it independently: total debits 23,000.00 and total credits 23,000.00. Debit detail: Supplier advances for 23,000.00. Credit detail: Cash for 23,000.00. Link every line to the recognition or measurement rule explained in the lecture, then trace its reference and posting date. After posting, test the payables control account, supplier subledger and supplier statement. Equal sides prove arithmetic only, not the correct account, period or classification.
Before close, compare the correct treatment with the common alternative and record its specific effect: Expense and VAT are overstated 20,000.00 and 3,000.00 while recovery asset is missing. Do not close until the journal agrees with payables ageing, input VAT and cash and an independent reviewer can move from balance to account, reference and this event's own source. Keep the calculation, source version, journal identifier, reconciliation result and unresolved exceptions in the same workpaper. An attached file without a stated conclusion is not review evidence.