INTRODUCTIO

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INVENTORY IN

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CONTENTS Definition of Inventory Definition of Item & Item Status Types of Inventory Creation of Inventory Expense Item Creation of Inventory Asset Item Creation of Expense Item Conclusion

INVENTORY Definition: Stocking, tracking and maintaining the different

items like Raw material, Finished Goods, etc. in an organization.

ITEM & ITEM STATUS Item: An item is a part or service that are purchased, sold,

planned, manufactured, stocked, distributed, or prototyped. Item Status: An item status is defined by selecting the value

check boxes for the status attributes.

TYPES OF INVENTORY Inventory items: It will hit the inventory as well as inventory

valuation account and it will be used in production of finished goods. You cannot define an item as expense and inventoried at the same time, but you can define the item as inventory item and when you want to use it as expense, move it to an expense sub-inventory. Inventory items can be sub divided into two categories:

i. INVENTORY ASSET ITEM Those Item that needs to maintain stock and tracking are

inventory Items. Create unique Item coding for each Stock keeping units (SKU's).

For example: Inventory items: Machine parts, Raw Materials, Any Trading Items etc.

ii. INVENTORY EXPENSE ITEM Non-Stock able Items that are direct IN & OUT are expense

items. For such items no need to create Item code for all. Only few codes can be created and in PR & PO description can be change.

For example: Expenses Items: Assets, services, Projects, consumables (Office Stationery) etc.

EXPENSE ITEMS Captive consumption of the organization .It will not be

transferred (Stock able & Transact able ) to the inventory and hence will not hit the inventory valuation account.

LET'S LOOK AT HOW ITEMS ARE CREATED AND EXPLORE THE UNDERLYING CONCEPTS CONCERNING THE CREATION OF ITEMS.

INVENTORY EXPENSE ITEMi. Select the Inventory Responsibility.ii. Select the V1 Inventory Organization  Let's list the steps required to create an Item: Navigate to Items | Master Items. Please note that Items are

defined in the Master Organization.

Enter the Item code, for example, SMINVEXPITEM Enter a description for the Item: inventory expense item

Check Inventory Item box, stock able, transact able

Uncheck Inventory asset value and costing enabled box

Press (CTRL+S) to save the item

INVENTORY ASSET ITEM In order to setup an Inventory Asset Item the initial steps

are same as the Inventory Expense Item, except the following differences which are mentioned below:

Check Inventory asset value and costing enabled box

Change the expense account to asset account and select asset category

Press (CTRL+S) to save the item

EXPENSE ITEM The difference in the Expense Item, Inventory asset item and

Inventory expense item are mentioned in the following slide:

Uncheck Inventory Item box, stock able, transact able

Uncheck Inventory asset value and costing enabled box

Enter the expense account and remove the asset category

Press (CTRL+S) to save the item.

  Expense Items Inventory Expense Items Inventory Asset Items

Inventory Asset FlagN N Y

Purchasing Item FlagY Y Y

Inventory Item FlagN Y Y

Costing Enabled FlagN N Y

CONCLUSIONDifferences between the different types of items are summarised

below: