Setting a Default Inventory Costing Method
You can select the type of inventory costing method your business uses. The cost of your inventory is made up by your items' purchase prices and all costs incurred in acquiring these items. The costing method you choose determines how you handle the costs associated with buying the same items at different purchase prices over a certain period. For more information about costing methods, see Costing Methods.
The costing method selected in Accounting Preferences is the default method used to track the cost of your items. When you create a new item, you can accept this default costing method. You can also select a different costing method on the Basic subtab of the item record.
In NetSuite, average costing is the initial default costing method. Only someone with permission to access the Accounting Preferences page can change your default inventory costing method.
After the costing method is saved on the item record, it cannot later be changed.
When inventory costs incur depends on whether you use the Advanced Receiving feature.
To enable the Advanced Receiving feature:
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Go to Setup > Company > Setup Tasks > Enable Features..
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On the Transactions subtab, check the Advanced Receiving box.
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Click Save.
If you use Advanced Receiving, costing occurs when you receive items and generate item receipts.
If you do not use Advanced Receiving, costing occurs at the time of bill entry.
To select a default inventory costing method:
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Go to Setup > Accounting > Preferences > Accounting Preferences.
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Click the Items/Transactions subtab.
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In the Default Inventory Costing Method field, select the method your company uses.
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Click Save.
The Costing Method field on item records shows your selection by default. You can still select another method when creating an item record, if needed.
NetSuite tracks and reports on your inventory based on the costing method selected for items. If a different costing method is needed, an administrator can set your inventory costing method. For more information, see Changing Your Costing Method.
The item cost affects your asset account and Cost of Goods Sold (COGS) account each time you receive or fulfill the item.
For items in your inventory, you can select the COGS account that costs post to on posting transactions.
If you began using NetSuite before LIFO and FIFO costing were available, you cannot automatically apply LIFO or FIFO costing to your current inventory.