RE: What is the purpose of a balancing account in the chart of accounts?
Well its hard to comment on that without any insight into your setup or your business.
But normally there is one expense account and one balance account involved in inventory transactions. And those you will find in the inventory posting group and in the general posting setup.
And when you post an purchase invoice there is also an expense account involved and you balance that transaction when you increase your inventory.
But if they say it is a system requirement they should also be able to explain to you how they have configured it and how the transactions flow in your specific company.
