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Inventory Account Sets - GL Accounts

Problem Description:

Understanding the purpose and meaning of different GL accounts in Inventory Control Account Sets

 

Solution: 

In Inventory Control / Setup / Account Sets, there are a group of General Ledger account numbers that are used to categorize transactions by accounts to which they are posted in General Ledger. These are the different categories: 

Inventory Control: An asset account containing the total value of the inventory on hand (at actual cost).  When an item is received into stock, the Inventory Control account will be debited, increasing the inventory.  When an item is sold, this account is credited.

Payables Clearing: This account is used for receiving goods. When an item is received into inventory, this account is credited.  When the vendor invoice is entered, this account will be debited. Therefore, this account acts as an accrued accounts payables account.

Adjustment Write-Off: Normally an expense account, used as the default account for IC Adjustments and write offs.

Assembly Cost Credit: When items are assembled, the fixed and variable costs are credited to this account. It may be necessary to do a manual GL journal entry to reclassify these amounts to other accounts such as labour or wage costs.

Non-Stock Clearing: This account is credited when a non-stock item is shipped, and is debited when a non-stock item is returned.  This is not a true 'clearing' account.   

Transfer Clearing: Using the IC Transfers function to move inventory from one location to another may incur additional costs.  These costs are credited to this account. This is not a true 'clearing' account. 

Shipment Clearing: This account is used for shipping goods. When an item is shipped from inventory, this account is debited.  When the customer invoice is posted, this account will be credited.

Disassembly Expense: When an assembled item is disassembled, if an amount is entered as a 'disassembly cost', this account will be debited.

Physical Inventory Adjustment: When a physical inventory is counted and reconciled, all the cost adjustments are posted to this account. 

Credit/Debit Note Clearing: When an OE credit note or OE debit note is posted, an entry is sent to gl where inventory is adjusted, and this account is used for the other half of the entry.  When the document is posted in AR, it will debit or credit this account, clearing out the entry from OE.

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