Flow of Inventory

This document explains the flow of inventory through the system (including its affect on the General Ledger)

Purchasing:

When a “Purchase Order” is created and issued in the system:

• The General Ledger account on the Item Master (field 3 in Task 17/Inventory) is not affected at this time.
• The "Want List" (Task 9/Purchase Order) is adjusted for the item - if system parameter is set.

When a "Receiver" is created because the item has been received:

• The General Ledger account from the Item Master (field 3 in Task 17/Inventory) is not affected at this time.
• No affect on the GL, would show as a Month End Variance if not vouchered by month end (found in Received Items – No Invoice and Shipped Back Item – No Credit.  Tasks 22 & 23)

• The inventory count reflects the quantity received

When the vendor's invoice for the item is "Vouchered":

• Debit - The Inventory GL account (i.e. 139-00) reflects the cost charged by the vendor
• Credit - Accounts Payable
• If the vendor's invoice is not received by the time AP is closed for the month, the amount appears on the variance reports mentioned above.

Order Processing:

When the item is sold to a customer:

• Debit - Accounts Receivable account
• Credit - Sales (539-00)
• Debit - Cost of Goods (639-00)
• Credit - Inventory (139-00)