Inventory Transactions

Inventory transactions are used to account for inventory items moved to or from a specific warehouse, between locations within a warehouse, or between warehouses.

Purchases and sales cause inventory item movements, and the respective inventory transactions are generated by documents, such as purchase receipts and sales orders, originated in other modules. Your company may also have direct inventory transactions—those not based on purchase or sales documents—such as issue transactions to remove damaged or expired goods from inventory. Because direct transactions are not standard operations, they should be accompanied by reason codes that supply offset accounts and subaccounts and explain why these transactions were performed.

This topic contains an overview of the inventory processes and processing options applicable to documents of all types.

Types of Inventory Transactions

You use the following documents to record the inventory transactions performed:

Receipt: To record the arrival of some quantity of stock items to the inventory. Generally, inventory receipts are generated in the process of releasing purchase and transfer receipts, and inventory receipts can be created manually. For more details, see Inventory Receipt Processing.
On the Receipts (IN301000) form, you can enter inventory receipts manually and view all the receipts that have been created in the system.
Issue: To record the withdrawal of some quantity of stock items from the inventory. Generally, inventory issues are generated in the process of shipment confirmation, but also can be created directly in Inventory.
By using the Issues (IN302000) form, you can enter inventory issues manually and view all the issues that have been created in the system. For more details, see Inventory Issue Processing.
Adjustment: To update the quantity of stock items in the warehouse (usually after physical inventory counts) and to update costs for items with various valuation methods.
By using the Adjustments (IN303000) form, you can enter inventory adjustments manually and view all the adjustments that have been created in the system. An adjustment with a negative quantity that decreases the stock cannot be released if it would make the available for shipping quantity of an item negative. (The Allow Negative Quantity check box can be selected or cleared on the Item Classes (IN201000) form for the item's class.) In this case, the system displays an error message. Also, on the release of an adjustment with a negative quantity of a stock item, the system checks whether this item has allocations in sales orders, service orders, or production orders, as well as whether the item is added as a stock component to kit assemblies. If the stock item has an allocation in any of these documents and the quantity of this item that is available for issue will become insufficient if the adjustment is released, the system prohibits releasing the adjustment. It displays an error message with a recommendation to check the documents that the adjustment would have affected.
You can review the list of allocations that can be affected by negative adjustments to stock item quantities by using the Allocations Affected by Inventory Adjustments (IN622000) report.
Note: If you want to release an adjustment with a negative quantity of a stock item, you can select the Ignore Item Allocations check box on the Financial tab of the Adjustments (IN303000) form.
Transfer: To record the movement of stock items between locations within a warehouse or between warehouses. For more details, see Warehouse Locations and Single-Step Transfers: General Information and Two-Step Transfers: General Information.
Kit Assembly: To update the quantities of kits that were assembled and items that were used as kit components. If a kit is a stock item, this transaction increases the on-hand quantity of kits and decreases the on-hand quantity of its stock item components (if any). The cost of the assembled kit may exceed the total cost of its components if includes the cost of labor or other extra costs, added as non-stock item components. For more information, see Inventory Item Kits.
Kit Disassembling: To update the quantities of kits and their stock components when kits are disassembled into components. If a kit is a stock item, this transaction decreases the on-hand quantity of kits and increases the on-hand quantity of stock components (if any). The system generates an inventory adjustment to account for the extra costs that incur in the process of disassembling, if any.

Currency of the Inventory Documents

For all inventory documents, the base currency is used. Even if the original documents in the Purchase Orders or Sales Orders modules were created in foreign currencies, the inventory documents generated for them are always in the base currency.

Data Entry Options

The settings that can be used to manage the data entry of inventory documents are located on the Inventory Preferences (IN101000).

When a new inventory document is created, the system assigns it a reference number according to the numbering sequence specified for documents of this type in the Numbering Settings section of the form.

You can select the Hold Documents on Entry check box to make On Hold the default status. Then on saving, a new inventory document will get the On Hold status. To save it in another status, the user will need to click Remove Hold on the form toolbar.

To reduce the input error rate, you can select the Validate Document Totals on Entry check box. Then, the user will need to review the document and enter manually the control quantity as a value that is equal to the document quantity and control amount as a value that is equal to the document amount.

To make data entry for receiving operations more efficient with the help of barcode scanners, select the Automatically Add Receipt Line for Barcode check box to enable adding a line to receipt each time a new barcode has been scanned or entered manually.

Also, you can select the Add One Unit Per Barcode check box to indicate to the system that the item quantity on the receipt should be increased by one unit each time the item's barcode is entered into the system, manually or by using a barcode scanner.

Statuses

An inventory transaction can pass through the following statuses:

On Hold: The transaction is a draft and may require further editing. With this status, the transaction cannot be released. If the Hold Documents on Entry check box is selected on the Inventory Preferences (IN101000) form, the system assigns the On Hold status to new inventory transactions by default. To change the status of the transaction, you need to click Remove Hold on the form toolbar and save the transaction.
Balanced: This is the default status for new transactions if the Hold Documents on Entry check box is cleared on the Inventory Preferences form. The transaction still can be edited and can be released. If the Validate Document Totals on Entry check box is selected on the Inventory Preferences form, you must enter the control quantity and control amount to save the transaction in this status.
Released: The transaction has been released and cannot be edited. Releasing the transaction updates the availability data.

Releasing Options

You can release inventory transactions one-by-one using the appropriate form: Issues (IN302000) Receipts (IN301000), or Adjustments (IN303000). In addition, you can release multiple inventory transactions by using the Release IN Documents (IN501000) form.

You can select the Update GL check box on the Inventory Preferences form to enable posting of the transactions generated in the Inventory module to the general ledger. If the check box is cleared, the system doesn't generate GL transactions on release of inventory documents and the general ledger will not be updated by the inventory documents.

Upon release, the system takes the following actions:

Updates the availability data according to the transaction type of each line.
Updates the cost statistics for each item.
If the updating of the general ledger is enabled, generates the general ledger transactions according to the transaction type of each line. You can view the balance of each inventory account and the list of documents (that updates the account) on the Inventory Transactions by Account (IN403000) form.

Posting Options

The settings that can be used to manage the posting process for inventory documents are located on the Inventory Preferences (IN101000).

Note: You may need to temporarily clear the check box before you start import of historical inventory documents if you do not want them to affect the balances of GL accounts.

The system assigns the batch numbers according to the numbering sequence selected in the Batch Numbering Sequence box on the Inventory Preferences (IN101000) form. The system immediately posts the GL transactions if the Automatically Post on Release check box is selected.

Also, you can use the Post Summary on Updating GL check box to control how transactions are posted. If you use the GL accounts that allow posting of summary values, you can select this check box. Then, the transactions in the batches will be grouped by account and subaccount pair and only the sum for each pair will be posted.

Transaction Reason Codes

You use reason codes, defined on the Reason Codes (CS211000) form, to indicate why direct inventory transactions are made. Each reason code has a default account and subaccount specified that are used as the offset account and subaccount for the inventory transactions. You can specify the reason codes to be used as the default reason codes for inventory receipts, issues, and adjustments on the Inventory Preferences (IN101000) form.