Hello,
You overview is correct but let me give you some background to help...
Each inventory transaction, such as a purchase receipt or a sales shipment, posts two entries of different types.
In relation to quantity postings, item application entries exist to link inventory increase with inventory decrease. This enables the costing engine to forward costs from increases to the related decreases and vice versa.
Item ledger entries, value entries, and item application entries are created as a result of posting an item journal line, either indirectly by posting an order line or directly in the Item Journal window.
At regular intervals, value entries that are created in the inventory ledger are posted to the general ledger to reconcile the two ledgers for financial control reasons.
Example
The following example shows how item ledger entries, value entries, and item application entries result in general ledger entries.
You post a purchase order as received and invoiced for 10 items with a direct unit cost of LCY 7 and an overhead rate of LCY 1. The posting date is 01-01-21. The following entries are created.
Item Ledger Entries
Value Entries
Item Application Entries
Next, you post a sale of 10 units of the item with a posting date of 01-15-21.
Item Ledger Entries
Value Entries
Item Application Entries
At the end of the accounting period, you run the Post Inventory Cost to G/L batch job to reconcile these inventory transactions with the general ledger.
The following tables show the result of reconciling the inventory transactions in this example with the general ledger.
Value Entries
General Ledger Entries
Note
The posting date of the general ledger entries is the same as for the related value entries.
The Cost Posted to G/L field in the Value Entry table is filled.
The relation between value entries and general ledger entries is stored in the G/L - Item Ledger Relation table.
Relation Entries in the G/L – Item Ledger Relation table
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