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.
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 ...