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...
  • 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 categories before you can add items to Inventory Control.

You assign a unique code, using up to six characters, to identify each category you create. 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 record 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 item records 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.
  • Internal Usage.

Note: Sage 300 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 in item records to which you assign the category. You can override the category tax information in item records.

Order Entry uses the commission rate and tax information—Inventory Control does not use them.

Integrating with Purchase Orders

If you use Purchase Orders, the Inventory Control categories assign a taxing authority and tax classes for purchases.