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- Specifies if value entries originating from receipt or shipment posting, but not from invoice posting are recorded in the general ledger.
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- Expected Costs represent the estimation of, for example, a purchased item’s cost that you record before you receive the invoice for the item.
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- To post expected costs, interim accounts must exist in the general ledger for the relevant posting groups.
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- Expected costs are only managed for item transactions, not for immaterial transaction types, such as capacity and item charges.
Entries and Comparison for the Purchase Process are mentioned below:
| Steps | Description | Disabled (Without Interim) | Enabled (With Interim) |
| 1 | Purchase Order Creation | No G/L Impact. PO is non-financial. | No G/L Impact. PO is non-financial. |
| 2 | Purchase Receipt (Without Invoice) | No G/L Entry Posted. Inventory updated only in Item Ledger. | Expected Cost Posted to G/L using Interim Accounts. Dr. Inventory Interim A/C Cr. Purchase Interim A/C |
| 3 | Purchase Invoice Posting | Actual Cost Posted Directly on Invoice Posting Dr. Inventory A/C Cr. Vendor Payable | Expected Cost will reverse first; then actual cost will Post. Reversal: Dr. Purchase Interim A/C Cr. Inventory Interim A/C Actual: Dr. Inventory Interim A/C Cr. Purchase Interim A/C |
Entries and Comparison for the Sales Process are mentioned below:
| Steps | Description | Disabled (Without Interim) | Enabled (With Interim) |
| 1 | Sales Order Creation | No G/L Impact. PO is non-financial. | No G/L Impact. PO is non-financial. |
| 2 | Sales Shipment (Without Invoice) | No G/L Entry Posted. COGS are not recognized yet. | Expected Cost Posted to G/L using Interim Accounts. Dr. COGS Interim A/C Cr. Inventory Interim A/C |
| 3 | Sales Invoice Posting | Actual Cost Posted Directly on Invoice Posting Dr. Cost of Goods Sold Cr. Inventory | Expected Cost will reverse first; then actual cost will Post. Reversal: Dr. Inventory Interim A/C Cr. COGS Interim A/C Actual: Dr. Cost of Goods Sold Cr. Inventory A/C |
List of Points needs to remember regarding Expected Cost Posting
| Point | Description | Disabled (Without Interim) | Enabled (With Interim) |
| 1 | Inventory Valuation Impact | Inventory value in G/L updated only after invoice. | Inventory value reflected in G/L at receipt and finalized at invoice. |
| 2 | COGS Recognition Timing | Delayed until sales invoice. | Recognized at shipment (expected) and finalized at invoice. |
| 3 | Interim Accounts Requirement | Interim accounts not required. | Interim accounts mandatory for posting groups. |
| 5 | Inventory Current State | Inventory between warehouse activity and invoice: Understated in PurchaseOverstated in Sale | Inventory value is Correct |
| 5 | Month-End Financial Reporting | Inventory and COGS may be misstated if invoices pending. | Inventory and COGS accurately reflected even with pending invoices. |
| 6 | Audit & Control Perspective | Lower control, manual adjustments may be needed. | Strong control, audit-friendly and IFRS compliant. |