Setting up Inventory and General Posting Groups in Microsoft Dynamics NAV

Applications for a distribution company using FIFO or LIFO costing methods

This article outlines the steps to follow given several common accounting tasks in response to several events in Microsoft Dynamics NAV.

Event: Receive Purchase Order

Accounting Transactions Created:

1) Debit Inventory Account (Interim) with Expected Amount from the Purchase Order Line

2) Credit Inventory Accrual Acc. (Interim) with Expected Amount from the Purchase Order Line

Inventory Posting Setup

General Posting Setup

Event: Invoice Purchase Receipt

Accounting Transactions Created:

1) Debit Inventory Accrual Acc. (Interim) with Expected Amount from the Purchase Order Line

2) Credit Inventory Account (Interim) with Expected Amount from the Purchase Order Line

3) Debit Purchases Account with the Actual Amount from the Invoice

4) Credit Accounts Payable with the Actual Amount from the Invoice

5) Debit Inventory Account with the Actual Amount from the Invoice

6) Credit Dircect Cost Applied Account with the Actual Amount from the Invoice

Inventory Posting Setup

General Posting Setup

Event: Ship Items

Accounting Transactions Created:

1) Credit Inventory Account (Interim) with Cost from the Item FIFO/LIFO Layer

2) Debit Interim COGS Account; (A Balance Sheet Account) with Cost from the Item FIFO/LIFO Layer

Inventory Posting Setup

General Posting Setup

Event: Invoice Shipment

Accounting Transactions Created:

1) Debit Inventory Account (Interim) with Cost from the Item FIFO/LIFO Layer

2) Credit Interim COGS Account with Cost from the Item FIFO/LIFO Layer

3) Debit COGS with Cost from the Item FIFO/LIFO Layer

4) Credit Inventory Account with Cost from the Item FIFO/LIFO Layer

5) Debit Accounts Receivable with Sales Amount

6) Credit Sales Account with Sales Amount

Inventory Posting Setup

General Posting Setup