What is the difference between cancellation and reversal?

Canellation means total purchase item or a part of it can be cancelled when we feel it is not required and material has not yet  been received by the company.

Reversal means Purchase Return when the material has reached your company and you want to return it back due to some reason then you can go for reversal.

While doing migo, we can use cancellation and as well as reversal, what is the diference between the two?

The reversal method for both Cancellation and Reversal are the same although the meaning are different.

Movement Type102 in MIGO will reverse the Goods Receipt for PO and the same will happen for Cancellation also......
Movement Type 122, is for Return delivery to Vendor and this won't come under Reversal or Cancellation concept...

In SAP MM, 102 is the reversal mvt. type of 101. Every mvt. type has its reversal counterpart. The are many reasons to
make a reversal of any mvt. type (mostly human mistakes). 

Movement Type 161 is used when you make a returns purchase order to a vendor. This is a purchase order with the "returns"
flag marked.  By the way, 161 has it reversal mvt. type in 162. 

It's true that in both cases material is being removed from the stock but for diferent reasons and in diferent bussiness processes.                           *-- Charles

Related:

• MBST: Reversal of cleared items in FI
• Interview Questions on SAP MM

SAP Material Management Books
SAP MM Books - Certification, Interview Questions and Configuration

SAP Materials Management Tips
SAP MM Configuration Tips and Materials Management Discussion Forum

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