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Valuation and Other Accounts

Valuation Accounts

You choose a default valuation account when you define organization parameters. Under standard costing, these accounts are defaulted when you define subinventories and can be overridden. Under average costing, these accounts (except for Expense) are used for subinventory transactions and cannot be updated. For a detailed discussion of cost elements see: Cost Structure.

Material An asset account that tracks material cost. For average costing, this account holds your inventory and intransit values. Once you perform transactions, you cannot change this account.
Material Overhead An asset account that tracks material overhead cost.
Resource An asset account that tracks resource cost.
Overhead An asset account that tracks resource and outside processing overheads.
Outside processing An asset account that tracks outside processing cost.
Expense The expense account used when tracking a non-asset item.

Other Accounts

Sales The profit and loss (income statement) account that tracks the default revenue account.
Cost of Goods Sold The profit and loss (income statement) account that tracks the default cost of goods sold account.
Purchase Price Variance The variance account used to record differences between purchase order price and standard cost. This account is not used with the average cost method.
Inventory A/P Accrual The liability account that represents all inventory purchase order receipts not matched in Accounts Payable, such as the uninvoiced receipts account.
Invoice Price Variance The variance account used to record differences between purchase order price and invoice price. This account is used by Accounts Payable to record invoice price variance.
Encumbrance An expense account used to recognize the reservation of funds when a purchase order is approved.
Average Cost Variance Under average costing with negative quantity balances, this account represents the inventory valuation error caused by issuing your inventory before your receipts.
Note: For standard costing, only the Purchase Price Variance, Inventory A/P Accrual, Invoice Price Variance, Expense, Sales and Cost of Goods Sold accounts are required. The other accounts are used as defaults to speed your set up.

Note: For average costing, only the Material, Average Cost Variance, Inventory A/P Accrual, Invoice Price Variance, Expense, Sales and Cost of Goods Sold accounts are required. The other accounts are used as defaults or are not required.

See Also

Defining Costing Information

Defining Other Account Parameters.

Subinventory General Ledger Account Fields.

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