Clearing Account functionality.

[Former Member]

Dear All,

Can anyone tell me the functionality of Clearing account. What is clearing account, why do we need this, what not happen without this...

Regards,

Suresh Patipati.

[Former Member · Accepted solution]

Hi,

Clearing accounts acts like a bridge between two accounts and helps us to trace the actual posted and the balance left

due to various reasons. They are required in only particular type of transactions and not for all. To cite an example,

we have GR/IR Clearing account. This is an intermediary account between Inventory and Vendor. We can monitor

the balance in the account for actual goods received with reference to the purchase order and the value of goods

cleared for billing to Vendor. These are also termed as reconciliatiion accounts. Some other accounts are Account

receivable, Accounts Payable, and Tax Payable accounts.

Regards,

Sadashivan

[Former Member]

Clearing accounts are GL accounts managed as OPEN ITEMS. This is usually created for bank accounts and other expenses that you want to keep track. For some, they set up GL accounts as clearing account so it will be easier for them to analyze which are paid or not since when you display the line items, you will be able to display CLEARED and OPEN ITEMS.