Item Setup

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Posted on by Romryan

Hi all,

I have some items that are either bought at a cost through gp or can be given for free i.e. at no cost

but are not for sale whatsoever,but they are issued to marketing people,so the quantities need to be tracked in the inventory module i.e. the marketing materials given to sales people.

RomRyan

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Mahmoud Saadi 32,738 on at

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RE: Item Setup

Romryan

I would like to recall what I have mentioned above, it states the following:

"One way you could handle this is to setup a 'Consumables' inventory account - make it a P&L account so the items are expensed when they are received. Then, when the consumables are issued to the requesting department, use the requesting department expense account as the Inventory Offset account. This way, the costs of the consumables would be charged out to the correct department and anything left in that account at period-end could be considered general consumables expense." by Frank Hamelly

I am quoting Frank in this specific issue for the third time maybe this year only !

Allow me to explain the above by showing a simple example:

First, if you want t track the quantity of items, then the item type should be "Sales Inventory". Otherwise, if you don't want to track the quantity, make it a service item. In your case, it should be "Sales Inventory" cause you initially mentioned that you want to track the quantity given to the marketing people.

On the item card, go to accounts and consider the following:

Inventory Account: Profit and Loss account >> in order to expense the items when you post the adjustment transaction. (Debit)

Now should you have a cost amount or zero amount when posting the Adjustment (receiving the items), it actually depends if it has a cost or was donated for free. In case the total amount of the adjustment is zero, when you post the transaction no journal entries will be posted to GL, otherwise, there will a journal entry posted to the General Ledger.

Now when the items are issues to the marketing people, include the marketing department account on the offset side to direct the general expense (proven when you posted the Adjustment) to the specific department.

In summary, let me revise your questions as follows:

Should you put a price or not on the Adjustment In Transaction ? It actually depends on the case, if there is an expense, you should put the amount as item cost. Otherwise, leave it as zero.

If you put a zero cost on the Adjustment in no journal entries will be generated and posted to GL

Issuing to the marketing department is an Adjustment out, which means decreasing your inventory balance. So, yes it is a negative Adjustment

The inventory account is the General Expense account, yes it is a profit and loss account. The offset account of the marketing department (Profit and Loss/ expense account) is filled on the offset when posting the Adjustment out. In other words, when issuing the items to the marketing department.

Let us know if you have any further concerns,
Romryan on at

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RE: Item Setup

I would like to confirm 4 things,

1.If I use IV adjustment to issue.Do I put the cost price or I put 0 price.

2.If I put 0 price,do I need to post the batch to GL.

3.During issuing,I suppose its negative adjustment.

4.On this transaction I have two accounts i.e. Inventory acc and marketing expenses acc (Inventory offset account),now my question is,is marketing expenses a p&l (income or expense) component here?.

RomRyan
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Community Member on at

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RE: Item Setup

I too worked on Frank's suggestion before. AlSaadi reply seems simple in this case.
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Frank Hamelly | MVP... 46,527 Super User 2025 Season 1 on at

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RE: Item Setup

You can use the Inventory Adjustment Transaction to issue the quantity out of stock and charge it to a specific marketing account, if you choose to. Also, the use of a Reason Code in the transaction, mapped to your marketing expense account, would provide reporting capability on the quantity and cost of 'free' products being issued to marketing.
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Mahmoud Saadi 32,738 on at

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RE: Item Setup

Hello Romryan

Check this out How to Post SOP Invoice with No Cost and No Price

Your feedback is highly appreciated,
Yoke May 330 on at

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RE: Item Setup

Create an inventory item in GP and set the cost valuation method as FIFO Periodic (Standard Costing). Set the standard cost as 0. Set the accounts for Purchase Price Variance (PPV) to an account that you would like to expenses off upon purchasing of the inventory. During receiving of the item, the system will Debit the PPV. When you perform a stock adjustment or sales (with both 0 price and cost), there will not be any GL transactions created. That will allow you to track the inventory but yet do not have any affect to the accounting. Hope this will help.