About Categories
You use the I/C Categories screen to create categories for your Inventory Control
system.
You can use categories to:
- Classify items into logical
groups for reporting purposes. More...
Example: A furniture company might use the following categories :
C2 (Chairs, steno)
D1 (Desks, executive)
D2 (Desks, secretarial)
F1 (Filing, cabinets)
- Allocate the cost of goods
sold and revenue by category. More...
When you add a category, you specify the general ledger
cost of goods sold and revenue account numbers for that category. All
items sold in the category use the specified accounts, unless you change
the category when entering transactions.
- Specify whether commissions
can be earned on sales and, if so, the maximum commission rate allowed.
Commission information is used by Order Entry.
- Specify tax authorities
and sales tax classes for use by Order Entry, and purchase tax classes
for use by Purchase Orders.
Note: You must add at least one category before
you can add items to Inventory Control.
You assign a unique code (using no more than six characters) to identify each category.
Category codes can contain upper-case
letters and numbers.
If you do not group your inventory items, you can set up one category
code and assign it to all items.
You can override the category when you ship an item, and you can change
the category assigned to an item at any time. For example, on a
shipment you could specify the category as "sample" to deal
separately with costs and revenues for goods shipped out as samples.
Editing and Deleting Category Records
If you change the tax classes or the price list code in a category after
assigning the category to inventory items, the changes appear only in
the items to which you assign the category after the changes.
You cannot delete a category if it is assigned to any items. (For more information, see About Deleting Categories.)
Integration with General Ledger
For each category, you must enter general ledger
account numbers for the following accounts:
- Sales.
A revenue account that Order Entry credits with
the revenue from goods sold.
- Returns.
A revenue contra account that Order Entry
debits to record the reduction of revenue caused when previously sold
goods are returned or credit notes are issued.
- Cost
of Goods Sold. An expense account that
Inventory Control automatically debits with the cost of goods sold, and
credits with the cost of goods returned.
- Cost
Variance. An expense account in that Inventory
Control records the cost variance between the actual cost and either the
standard cost (for items using the standard costing method) or the most
recent cost (for items using the most recent costing method) of inventory
items sold.
- Damaged Goods. A
revenue contra account that is debited instead of Sales Returns whenever
goods are returned as damaged in Order Entry.
- Internal Usage. The
default expense or asset account that is debited when an item in this
category is used internally. You can override this account when you enter
transactions.
Note: Order Entry
uses the Sales account and Returns account; Inventory Control does not
use them.
Integration with Order Entry
If you use Order Entry, the Inventory Control categories:
- Specify whether commissions
can be paid on the sale of items in a category and, if so, the maximum
commission rate.
- Assign a taxing authority, and tax classes for sales and purchases.
Tax information from categories appears automatically for items
to which you assign the category. You can override the category tax information
in items.
Order Entry uses the commission rate and tax information; Inventory
Control does not use them.
Integration with Purchase Orders
If you use Purchase Orders, the Inventory
Control categories assign a taxing authority and tax classes for purchases.