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Reply from VidhyaDhar on Jan 30 at 3:28 AM Hi
What do you do when you travel in a cabbie? As soon as your cab ride is
over, you pay to the cab driver. You got your ride and the cab man got his
fare, both in a single step. The deal is over and you do not need to bother
about following up with the cab-man or vice versa. Since the deal is over
this does not require open item management. Usually , expenses and revenues
affecting the profit and loss account fall into this category.
On the other hand, let us take the following instance:
You sold some material to your customer but the customer avails credit and
would pay a month later. Until the customer settles the amount the deal is
incomplete. Such unsettled transactions are called open items. Once the
customer pays, you stop following up any further. This completes the
transaction and the settlement is called as clearing the open item. Open
item management , here as you can see , applies to the customer who appears
in the balance sheet (sundry debtors).
The same logic can be extended to vendors to whom you owe money for
supplies received from them, as well.
The logic can be extended to general ledger accounts, as well (Let us
assume you availed a Bank Loan repayable in 12 installments. Until the
loan is fully repaid, the loan amount can be managed on open item basis ).
You might have by now observed that open item management applies to
customers, vendors, G L accounts ( Bank Loan etc.) which are essentially
balance sheet related items.
I would suggest that you pick the concept from the replies you receive and
try to analyze yourself than resort to spoon feeding (Don't you remember
the Chinese proverb...Do not ask someone to give you a fish for today's
food instead, ask him to teach you how to fish so that you can learn
the trade and make your livelihood yourself.)
Hope you understand the concept now.
Regards
VidhyaDhar
| | | ---------------Original Message---------------
From: usmanfico
Sent: Monday, January 30, 2012 3:06 AM
Subject: Which Kind of Entries are Cleared in f-03
Hi Vidhya Dhar ,
My apology for that but I am not satisfied. I won't ask this question again
Maybe I am not able to make this clear. Anyways you helped me a lot
Regards,
Useman |
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