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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Assembly Order (to Sto...
Small and medium business | Business Central, N...
Answered

Assembly Order (to Stock) Posting to COGS

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Posted on by AXEON Man 1,159
We build computer for stock so we're using "Assemble to Stock" process.

I'm having difficulty understanding the GL Posting associated with assembly orders.

My GL Accounts:
50150  COG Inventory Sales
50110  COG Custom Computers
14120   Software Inventory
14110   Parts Inventory
14100   Computer Systems Inventory
 
Now, when I assemble a computer, I've got GL entries on the inventory accounts that look great.  However, I also get GL entries on my COGS accounts -WHY?  This is not a sales transaction, it's an inventory move.

The problem is that my parts inventory uses a different posting group than custom computers do.
 
So, when I run an assembly order, my COG Inventory Sales is being debited and the COG Custom Computers GL Account is being credited.  This makes it so I can't properly track parts sales profitability.
 
Any ideas?  Why are the COGS accounts involved in the first place?  I know the accounts come from the Gen Posting Setup but why are they even involved in an assembly?
Categories:
Dynamics 365 Business Central
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  • Suggested answer
    OussamaSabbouh Profile Picture
    OussamaSabbouh 12,808 Super User 2026 Season 1 on at
    Hello,
     
    In Business Central, COGS accounts appear in “Assemble to Stock” because the system treats the assembly output as an internal sale and purchase:
    The components are “sold” to the assembly order (credit COGS of components).
    The finished item is “purchased” into inventory (debit COGS of output).
    That’s why your COGS accounts post even though it’s not a customer sale.
    To avoid this, assign matching Gen. Posting Setup for components and the finished item (same COGS accounts). That keeps the entries balanced within inventory without affecting profitability.
     
    Regards,
    Oussama Sabbouh
  • Gerardo Rentería García Profile Picture
    Gerardo Rentería Ga... 25,555 Most Valuable Professional on at
  • Suggested answer
    Jainam M. Kothari Profile Picture
    Jainam M. Kothari 15,732 Super User 2026 Season 1 on at
    Hello,
     
    In Business Central's "Assemble to Stock" process, COGS accounts are involved during assembly because the system treats the consumption of components and the creation of the finished item as internal cost movements, not sales.
     
    These postings are driven by the Gen. Posting Setup and Inventory Posting Groups, which use COGS accounts to record the cost transfer from parts to the assembled product.
     
    To avoid mixing actual sales COGS with internal assembly costs, you can adjust your posting setup to use separate interim or WIP accounts for assembly transactions.
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 32,152 Super User 2026 Season 1 on at

    Assembly orders don’t post to the COGS account, they post to the Inventory Adjustment account. In your General Posting Setup, check whether your inventory adjustment account is linked to the same G/L account as COGS, or if it’s placed in the COGS section of the chart of accounts. That’s likely why it appears as though you’re getting COGS postings.

    When consuming components, the system debits Inventory Adjustment and credits Inventory. When posting the finished good output, it debits Inventory and credits Inventory Adjustment. Unless you’re using standard costing and have variances, these should net out in the G/L.

    Based on what you described, account 50150 – COG Inventory Sales is set up as both your inventory adjustment and COGS account, so that's why it looks like the system is posting to COGS. You should assign a separate account for inventory adjustments.

    Valentin Castravet
    Work: Zander ERP Services
    Blog: Dynamics 365 Business Central Insights
    LinkedIn: www.linkedin.com/in/valentin-c-0500a247/


     
  • Suggested answer
    Rishabh Kanaskar Profile Picture
    Rishabh Kanaskar 6,219 Super User 2026 Season 1 on at
    Hi,
     
    When you post an Assembly to Stock order, Business Central moves cost from component items to the assembled item. This process uses Cost of Goods Sold accounts because the system treats the consumption of components as a cost transfer, not just an inventory move. The accounts come from General Posting Setup and Inventory Posting Setup.

    Why COGS is involved:
    > Components are consumed, so their cost is credited from inventory and posted to the interim COGS account.
    > The assembled item is then debited to inventory, balancing the transaction.
    > If you want to avoid COGS entries for assembly, you need to adjust the General Posting Setup for the combination of posting groups used in assembly or use a dedicated account for cost transfer instead of sales COGS.
     
    Regards,
    Rishabh
  • AXEON Man Profile Picture
    AXEON Man 1,159 on at
    Thank you everyone for helping me confirm what I suspected and adding some perspective.

    Do most of you use a different account for inventory adjustments than COGS?  Seems to me to just make sense to use the COGS account since inventory variances are ultimately COGS impacting.
  • Suggested answer
    Gregory Mavrogeorgis Profile Picture
    Gregory Mavrogeorgis 992 Super User 2026 Season 1 on at
    Hi,
     
    Why do I see COGS on Assembly-to-Stock?
    Because your Inventory Adjustment account (in General Posting Setup) points to COGS. Assemblies post component consumption + finished output and use that account as a clearing. With different posting groups, you get DR one COGS / CR another—net zero, but it pollutes COGS.
    Fix (keep COGS clean):
    • Create/pick one balance-sheet clearing account (e.g., 14190 – Inventory Offset).
    • Set Inventory Adjmt. Account to that same account for all related Gen. Prod. Posting Groups (parts, software, finished).
    • Leave COGS accounts for sales only.
    Resulting entries (Assembly-to-Stock):
    • Components: CR Parts Inventory, DR 14190
    • Output: DR Finished Inventory, CR 14190
      → 14190 nets to zero; no COGS hit.
    Note: Assemble-to-Order will hit COGS at shipment (that’s expected).
     
     
    If you found this helpful please mark it as verified
  • Verified answer
    AXEON Man Profile Picture
    AXEON Man 1,159 on at
    The solution, sadly, was to make a monthly general journal entry from the 50150 account (since changed to the 50190 account for inventory adjustments) to the 50110 account to offset the imbalance created by the assembly GL Posting process.  I could find no better resolution.
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 32,152 Super User 2026 Season 1 on at
    Do most of you use a different account for inventory adjustments than COGS?  Seems to me to just make sense to use the COGS account since inventory variances are ultimately COGS impacting.
     
    Typically I recommend to use different accounts. In your original post you asked this question - "However, I also get GL entries on my COGS accounts -WHY?  This is not a sales transaction, it's an inventory move."
     
    Having different accounts helps you differentiate between inventory movements and actual sales. It would also not require you to make the manual monthly journal entry. 
     
  • Verified answer
    AXEON Man Profile Picture
    AXEON Man 1,159 on at
    So, since originally posting this question, I changed my Gen Posting Setup to make inventory adjustments for parts inventory to my 50190 "Shrinkage" COG account.

    In the build of the computer, the inventory/parts consumed post to this account and there's another posting to the 50110 Custom Computer COG account.

    I have both my COG and inventory adjustment in Gen Posting Setup for Custom Computers set to 50110.

    Is that posting on assembly to 50110 coming from the inventory adjustment account in the Gen Posting Setup for my custom computers posting group?  If I change it to 50190 will the debits and credits wash and I won't have to make that extra Journal entry?

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