Assigning Inventory Valuation Methods to Items

The account set that an item uses determines its item valuation (or costing) method. This means that assigning or changing the item valuation method really involves two steps:

  1. Use the Account Sets screen to assign the item valuation method to the account set, creating a new account set for the valuation method, if necessary.
  2. Use the Items screen or the Items Wizard to assign the account set to inventory items.
  • Print the Account Sets report to see the inventory valuation methods assigned to account sets.

    Double-click the Account Sets icon in the Setup Reports folder to open the report.

  • If you are updating an existing account set, print the Item Status report, including the Profile information for the account set you want to change, so you know which items will be affected.
  • If you are assigning an existing item to an account set that uses a different costing method:
    • Print the Item Valuation report for all items that are changing.

      You need to transfer the asset amount of all items that you change from the old inventory control accounts to the new control accounts in the General Ledger after updating item records.

    • Run Day End Processing.

      Note: Inventory Control displays an error message if you try to change an item's account set while there are posted transactions for the item for which Day End Processing has not been run.

To assign the inventory valuation method to an account set:

  1. Open Inventory Control > I/C Setup > Account Sets.

  2. Fill in the fields on the Account Sets screen as follows:

    Account Set Code. Type a code of up to six characters to identify the account set.

    Description. Type a description for the account set.

    Costing Method. Select the costing method that the account set will use for valuing your inventory and determining the cost of goods sold.

    General Ledger Accounts. Enter general ledger account numbers for the inventory control, payables clearing, adjustment write off, assembly cost credit, non stock clearing, transfer clearing, shipment clearing, disassembly expense, and physical inventory adjustment accounts that make up the set.

    Click the Finder or press F5 to display a list of general ledger account numbers. Highlight the account you want, and then press Enter to select it.

  3. Click Add or Save (if you created the account set before).

To assign or change the inventory costing method for an item:

Note: If you are adding a new item, follow the steps in Adding Inventory Items Using the Items Wizard.

  1. Open Inventory Control > I/C Items and Price Lists > Items.

  2. Enter or select the item number.
  3. On the Items tab, click the Finder beside the Account Set Code field.

    The Finder displays the account set codes, along with their description, status, and costing method.

  4. Select the account set that uses the costing method you want to assign.
  5. Click Save.

  6. If you are changing the costing method for an existing item:

If you ship units of an item that use the standard costing method and you have not entered a standard cost, Inventory Control calculates the cost of goods sold using a standard cost of zero.

Similarly, if you ship units of an item that uses most recent costing and you have not received any stock or entered a most recent cost, Inventory Control calculates the cost of goods sold using a most recent cost of zero.

  • Print the Item Status report, including the Profile information for the account sets you want to change, to check the items that you changed.
  • Transfer the asset amount from the old inventory control accounts to the new control accounts in the General Ledger after updating item record account sets. (Otherwise, you will have old balances that are never reconciled.)