Microsoft Dynamics vendors provide comparisons and opinions to professionals in the ERP/Accounting software selection process

 
 

Aisling Dynamics Consulting, LLC

Dynamics GP: What are All These Inventory Accounts For? Dynamics GP Inventory Account Uses!


Email | Print

Dynamics GP: What are All These Inventory Accounts For?

Do you have to use all of these accounts?

No, it really depends on how you process transactions in Dynamics GP, what valuation method you are using and where you want the accounts to come from.  For Sales Transactions you can set GP to use some accounts from the Customer and not the item.  You also have the option of setting up Site-Level Segment Overrides to customize the accounts by the site used in the transaction as well.

 

Accounts are setup at the Item Level on the Item Card and can be defaulted in through use of Item Classes.

 

Let’s look at the myriad accounts and what they do:

Inventory Account

This is the account in the GL where THIS items’ inventory value is stored, usually a Balance Sheet account.  This account will default on Sales Order during the sale and on Purchase Order Processing transactions when the item is purchased.  Assembly will also affect this account if you are using Assemblies.

Inventory Offset

The Offset Account is used on Inventory Adjustment transactions as the offset to the Inventory Balance Sheet Account entry which increases or decreases the inventory count and valuation.  This offset is typically a Cost of Goods Sold or a Loss account.  It can be replaced with the use of Reason Codes during the Inventory Adjustment process if you setup Reason Codes.

Cost of Goods Sold

The cost of purchasing or making this item.  This is usually a Profit and Loss Account to offset the cost of the sale of the item.  It is used during the Sales Process and in other transaction types such as Project Accounting and Field Services.  The amount here can be updated in a number of ways but is typically updated during the purchasing or building process.  This amount can typically NOT be updated manually during the sales process.

Sales

This account is typically a Profit and Loss Account that is updated with the full price of what you sell the item for.  Combine the amounts here with the cost of goods sold to find your net profit per item.  The amount here is controlled in a number of ways including the Price List setup and/or Extended Pricing if you have that turned on.  This can manually be updated, if you choose to allow it, during the sales entry.  This account can default to the Customer Account Setup if you choose to Mark the Customer as the source of posting accounts in Sales Order Processing setup.

Markdowns

In Sales Order Processing you can update a line item with a ‘Markdown’ amount.  This will be the account used  for the cost of that markdown.

Sales Returns

When an item is returned to inventory, this is the GL Account hit during the returns process and where the items return valuation is stored in Financial Statements.  This account can default to the Customer Account Setup if you choose to Mark the Customer as the source of posting accounts in Sales Order Processing setup.

In Use

When an item is Returned with an In Use status this is the account that holds the valuation of that item. This is Usually an Inventory account Balance Sheet Account more akin to your companies Fixed Assets since it is now considered in use by your company.  You can also transfer your own items into an ‘In Use’ status but will not be allowed to sell them until they are back into an ‘On Hand’ status in inventory.

In Service

Use this to store the value of items transferred or returned with an In Service status. This is usually an Inventory account. Items can be transferred from On Hand to In Service. And, just like ‘In Use’ you cannot sell items with a status of In Service, you must transfer them back to an ‘On Hand’ status.

Damaged

Used when items are transferred or returned with a status of ‘Damaged’.  This can be a different inventory account holding onto the value of damaged items during the repair process or this can be an expense for your company depending on your processes.

Variance

Unlike the Inventory Offset account, this account is specifically used during the Inventory Count process to log the variance transactions done.  This is typically a Cost of Goods expense or just a plain expense account that can be both increased and decreased depending on the variance type.

Drop Ship Items

Used to record the cost of an item in both Purchase Order Processing and is Sales Order Processing for the event of drop-shipping directly from a vendor to a customer.  This is typically a Cost of Goods Sold account.

Purchase Price Variance

If you allow a Purchase Price Variance to occur during the purchasing process of an item, this is the account that will hold the variance amount.  This is typically the difference that occurs AFTER you’ve ‘Received’ an item in at a certain cost (which increases your Inventory Account) and when you receive the Invoice with the final cost.

Unrealized Purchase Price Variance

This account is ONLY used with a Periodic Valuation Method in inventory.  If you are not using that periodic method, then you do not need to enter an account here.  This is the difference between the standard and actual cost an item is received for during the Purchasing Process.  The variance will be moved to the above Purchase Price Variance account when the item Is invoiced.

Inventory Returns

Used when items are transferred or returned with a status of ‘Returned’.  This can be a different inventory account holding onto the value of returned items during the repair process or this can be the regular inventory Balance Sheet Account for your company depending on your processes.

Assembly Variance

Used only if you are using Assembly in GP Inventory, this stores the differences between the actual cost and the standard, or average costs when building sub-assemblies in Bill of Material.

Standard Cost Revaluation

Depending on the type of valuation you are using, this account holds on to the variances if you change the Standard Cost of an item.  This is typically a Profit and Loss Account and can, of course, go up or down.

 

If you would like more information on automating GL Accounts in Dynamics GP, please feel free to reach out to us at info@aislingdynamics.com

Or go Here to learn more about us!

Feel free to visit Aisling Dynamics to learn more about how Aisling can help optimize your investment in Dynamics GP!

 

 

Ask This Expert a Question / Leave a Comment