Inventory Account Synchronization
Standard system Inventory accounts are specified by product line. The cost of the full on-hand quantity of an item is posted to the general ledger (GL) account identified as the Inventory account for that item’s product line. This is how the system represents the value of your company’s inventory within the general ledger. It is adjusted by any inventory transactions or cost adjustments that occur.
The system lets you further refine this accounting process by defining a different set of Inventory accounts for each site. The is important since when an item is stored in multiple sites, site-specific GL accounts let you generate separate balance sheets for each site. If an Inventory account is not defined for a site, product line accounts are used.
This accounting refinement is extended still further. Within any site, you can give each individual location a different set of accounts. This process is frequently used to store all consignment stock—inventory held by your company but owned by somebody else—in a separate location that has a different set of Inventory accounts. GL reports then split the costs of this stock out to a different account.
In summary, the system checks to see which Inventory accounts are affected whenever an inventory movement occurs. It does this by looking in the following order:
1 Accounts defined for a product line/site/location combination
2 Accounts defined for a product line/site combination
3 If neither of these is available, accounts defined for the product line
Within the warehousing system, you can specify GL accounts at an additional level: for the warehouse. This lets you set up different accounts for all inventories stored in a specific warehouse. The system makes this possible using a process called account synchronization.
Based on standard system features that support GL accounts at the location level, if you define Inventory accounts for a product line/site/warehouse combination, the system automatically duplicates this definition for every location within that warehouse.
Example: Warehouse W in site S contains 1000 locations. When you create an entry for product line PL in Inventory Account Maintenance (1.2.13) (product line set to PL, site set to S, location set to W), the system creates a duplicate record for every location within warehouse W. The single record you create results in 1001 Inventory account records.
The Inventory Acct Sync field in Warehouse Maintenance, which defaults from Warehouse Control, lets you specify how you want your Inventory accounts synchronized for a warehouse. The options are Full, Partial, and Blank.
• Full creates Inventory account records for the locations as described in the previous example, over-writing any existing definitions. That is, location accounts are always synchronized with the corresponding warehouse accounts.
• Partial is similar. It creates Inventory account records for the locations, but any existing location definitions are not over-written. This allows some location accounts to be different from the warehouse accounts.
• Blank prevents any automatic Inventory account synchronization. Instead, you can use Inventory Account Synchronization (4.1.13) to perform that function manually. With this approach, you define all of the warehouse accounts required in Inventory Account Maintenance without creating any corresponding location accounts. The location accounts are created only when you run Account Synchronization.