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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Which shoulf I choice ...
Small and medium business | Business Central, N...
Answered

Which shoulf I choice Service or Non-Inventory in item Card

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Posted on by CU08052056-0 1,249
Hi all,

I would like to ask a question below. 
What is the difference between Service and Non-Inventory on the Item Card?
What differences do they create in the accounting data for each?


Look forward to your suggestions

Nobuhara
Categories:
Dynamics 365 Business Central
I have the same question (0)
  • Suggested answer
    AndrewThomas81 Profile Picture
    AndrewThomas81 518 on at
     
    Top level, you can use non-inventory items in BOMS, you can't items of type service - so that main difference is the costing of your produced/assembled items
     
  • Suggested answer
    Assisted by AI
    Ravi Karda Dynamics 365 Business Central Profile Picture
    Ravi Karda Dynamics... 63 on at

    In Microsoft Dynamics 365 Business Central, both Service and Non-Inventory item types are used for items that are not physically stocked, but they serve different business purposes and behave differently in transactions and accounting.

    Below is the practical difference.

    1. Service Item Type: A Service item represents work or labor provided to customers rather than a physical product.

    Typical examples:

    • Consulting services

    • Installation charges

    • Maintenance contracts

    • Training services

    Key characteristics

    • No inventory quantity is tracked.

    • Cannot be used in inventory planning or warehouse operations.

    • Used mainly in sales documents and service management scenarios.

    • Posting generates revenue entries, but no inventory value entries.

    Accounting behaviour: When a Service item is invoiced:

    • Revenue is posted to the Sales Account defined in Posting Setu

    • No inventory accounts are involved.

    Example posting:

    Account Type Example
    Customer Dr
    Sales Revenue Cr

    No Cost of Goods Sold (COGS) or Inventory entries are created.

    2. Non-Inventory Item Type: A Non-Inventory item represents a physical product that you sell or purchase but do not manage as stock.

    Typical examples:

    • Office supplies resold to customers

    • Small consumables

    • Special-order items purchased and sold immediately

    Key characteristics

    • No inventory quantity tracking.

    • Can be used in both purchase and sales documents.

    • Costs can still be recorded when purchased.

    • Often used for direct buy-and-sell items.

    Accounting behaviour: Posting can include cost recognition depending on configuration.

    Example posting:

    Purchase

     
    Account Type Example
    Expense / Direct Cost Dr
    Vendor Cr

    Sale

    Account Type Example
    Customer Dr
    Sales Revenue Cr

    Unlike inventory items, no inventory asset or COGS entries are created through inventory valuation, because the system does not maintain stock.

    Further: For the tabular understanding and use of Service and Non-inventory, please see the following guidance link of MS Learn:

    https://learn.microsoft.com/en-us/dynamics365/business-central/inventory-about-item-types

  • Verified answer
    YUN ZHU Profile Picture
    YUN ZHU 99,322 Super User 2026 Season 1 on at
    Hi, you only need to refer to this table.
    Item Type Sales Purchasing Job Consumption Service Consumption Assembly Consumption Production Consumption Assembly Output Production Output Location Transfer Physical Counting Inventory Revaluation Inventory Costing Item Tracking Reservation Warehousing Planning Order Planning
    Inventory Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
    Non-Inventory Yes Yes Yes Yes Yes Yes No No No No No No No No No No Yes
    Service Yes Yes Yes Yes No No No No No No No No No No No No Yes
  • Suggested answer
    Dhiren Nagar Profile Picture
    Dhiren Nagar 2,898 Super User 2026 Season 1 on at
    Hi,
     
    If we consider Business Central accounting, actually there is no difference between Non-Inventory Items and Service items if you just doing Purchase and Sales.
     
    If you are using Manufacturing or Assembly, you can use Non-Inventory Items in BOMs but not the Service Items.
    When you use Non-Inventory Items, the consumption of the quantities and value is capitalized in the Item cost.
     
    Concept wise, Non Inventory items are the physical items for which you do not want to track the inventory. You buy it, use it may be sell it, Inventory is not tracked but cost is tracked.
    Service is actual services that you procure or sell for e.g. Consultancy, Electricity services, Repair labors etc.
     
     
     

    ✅ Tick the checkbox below to mark the answer as verified, if it helped resolve your question.

    Regards,
    Dhiren.
     
  • Suggested answer
    OussamaSabbouh Profile Picture
    OussamaSabbouh 13,316 Super User 2026 Season 1 on at
    Hello Nobuhara,
    In short: both Service and Non-Inventory items are not tracked in inventory, so they don’t create inventory value or item ledger quantities. The difference is mainly their business purpose. Service items represent labor or intangible work (consulting, maintenance, service hours), while Non-Inventory items usually represent physical goods that you don’t want to stock or track (consumables, small parts, fees). From an accounting perspective they behave very similarly—costs are recorded in Value Entries as Cost Amount (Non-Invtbl.) and not reconciled with inventory G/L like normal inventory items.
     
    Regards,
    Oussama Sabbouh

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