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Accounting during different stages of PO are as follows :
Step1: (When PO is raised.)
No accounting entry.
Step2: (When goods is received against the PO)
Receiving a/c Dr.
AP Accrual a/c Cr.
Step 3: (When goods received in inventory.)
Material a/c Dr.
Receiving a/c Cr.
Step 4:(When invoice is entered)
AP Accrual a/c Dr.
Liability a/c Cr.
Step 5: (When invoice is paid.)
Liability a/c Dr.
Cash clearing a/c Cr.
Step 6:(When reconciled through CM)
Cash clearing a/c Dr.
Bank/ Cash a/c Cr.
Hope above explanation will help. :)
Thank you very much this realy helped clarify this process.
You are most welcome.
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