Price reductions (e.g. discounts) or surcharges (e.g. freight) are applied in customer invoices. The expectation is that these price-components are separately posted to designated functional g/l accounts according to settings made in the Account Determination. The resulting Journal Entry however does not show entries separating revenues from other price-components.
Changing the default pricing-method to Gross does have implications for accounting, based on how line-items and price-components are computed. The default Pricing Procedure is Net. You can alter the procedure to Gross via:
- Business Configuration work center and open Fine Tuning activity Configure Price Strategy.
- Click Default Gross Pricing.
- Depending on selected Distribution Channels the Default Pricing Procedure can be modified.
When Setting the default as Gross Pricing the implication is that entered freight charges are not posted separately to the designated freight g/l account.
The very same definition applies for price reductions as customer specific discounts. In case Net is applied a segregation of additional pricing components and revenue is conducted. In case Gross is applied - these components are displayed with the sales revenue. This is a system-definition.
Freight of 8,00 Net or 9,25 Gross (VAT rate 19%) / Unit
Pricing Procedure is Net:
Net Price: 100,00 EUR
Pricing Component - Freight: 8,00 EUR / Unit = 14,11 EUR
Value Added Tax (incl. Freight): 21,68 EUR*
Total: 135,79 EUR*
In the resulting journal entry additional price-components are segregated after VAT.
Revenues: 100,00 EUR*
Freight/Other Revenues: 14,11 EUR*
Pricing Procedure is Gross:
Gross Price: 119,00 EUR
Pricing Component - Gross Freight: 9,25 EUR / Unit = 16,31 EUR
Value Added Tax (incl. Freight): 21,60 EUR*
Total: 135,31 EUR*
In the resulting journal entry additional price-components are not segregated after VAT.
Revenues: 113,71 EUR*
* Differences in decimals are due to rounding logic in applied scenarios.
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