Example

This example shows how commitments are tracked for the acquisition of equipment for the LGE Drug XYZ Research Study. It tracks the commitment process through the Requisitions, Purchase Order, Accounts Payable, and Project Accounting applications.

Note: Commitments that are generated in Requisitions can be viewed separately from other commitments on Encumbrance Analysis (AC97 and AC297).
  1. A purchasing agent at LGE Corporation enters a requisition for one computer at a cost of $2,000 in the Requisitions application with this transaction line:
    Co Acct Unit Acct Amount Activity Account Category
    4321 201 51100 $2,000 ADMISSIONS EQUIP
  2. When the requisition is released, the activity commitment file is updated with a $2,000 requisition commitment for the ADMISSIONS activity.
  3. The requisition is approved and a purchase order is created. When the purchase order is released, the requisition commitment is relieved and a new purchase order commitment is created.
  4. The purchase order is issued, and the computer is received. After the invoice matching process, the invoice batch is released in Accounts Payable and the commitments are updated again. The purchase order commitment is relieved and the accounts payable commitment is created.
  5. The invoice distribution is closed on Invoice Distribution Closing (AP175) and the commitments are updated again to relieve the accounts payable commitment. Because invoice distribution creates an activity transaction that has yet to be posted, an activity commitment is created.
  6. When the activity transaction is posted, the commitment is relieved and the balance files are updated with the actual transaction amount.
    Illustration: Dynamics of the commitment files during processing