Example: Applying item tax

An organization uses ibuprofen for first aid kits in the administration office and in the hospital. The table shows the setup of item records for ibuprofen:

Item record	Taxable status
Item master record	Non-taxable
Item location: Admin office	Taxable
Item location: Hospital	Non-taxable

Purchase order	Taxable status
PO default tax	Taxable
Item tax	Default

Given the situation above, you add a purchase order for ibuprofen for the administration office. The result is that the ibuprofen is taxable on the purchase order. The item is taxable because the item location record for the administration office overrides the item master record. Using the item tax option for the purchase order line, you can override this status when creating a purchase order.

These are the types of taxes:

• An invoiced tax represents an increase to the transaction's amount and prints on the purchase order.
• An accrued tax has no effect on the transaction's amount and does not print on the purchases order.