Inventory Account

Inventory Account determines the inventory classification of the inventory item sold.  An Inventory Account is required for each inventoried item. 

As items are sold and recorded in the Create Invoices & Credit Memos screen, the Inventory Account will reflect the reduction in value of inventoried items using the cost associated with the item.  When a credit memo is entered in, the Inventory Account will be increased to reflect the return of product to inventory. 

As items are purchased and received in the Enter Bills screen, the Inventory Account will reflect the increase in value of inventoried items using the cost associated with the item. 

You must manually record increases or decreases in value to the Inventory Account as a result of other adjustments not related to a sale or purchase.