General Ledger category

A general ledger category is a subset, or subcategory, of the chart of accounts that you set up in the General Ledger application.

The general ledger category identifies accounts (such as an inventory account, default offset account, and processing account) for inventory items or a group of inventory items.

You link the general ledger category to each inventory location. Before you can link a general ledger category to an inventory location, you must have already created the accounts in the General Ledger application, and their status must be Active.

The general ledger category accounts are inventory, receipts, issues, adjustment, cost variance, intransit, physical inventory variance, add-on cost, and shrinkage. You must define all of them, even if you do not use them in your daily work.


Inventory	The account where all transactions against an inventory item are posted. Inventory being received is debited and inventory being issued is credited. You can think of this account as the asset or inventory account. For information on the different transaction types, see Transaction types. Note: The inventory transaction total amount is posted here as a debit or credit, depending on whether the transaction increases or decreases the inventory's value.
Receipts	The account where inventory receipts are offset by default. Inventory being received debits the inventory account and credits the offset inventory receipts account. Production Order application users may think of this account as a work in process account, for goods being received from manufacturing into finished goods. Note: You can override this account during transaction entry. Please also note that this is not the PO Receipt Offset.
Issues	The account where inventory issues are offset by default. Inventory being issued credits the inventory account and debits the offset inventory issues account. You can think of this account as the expense account. You can set up this account as the cost of goods sold (for issuing to sales) or work in process (for issuing inventory to manufacturing or assembly). Note: You can override this account during transaction entry.
Adjustment	The account where adjustments to inventory are offset by default. Inventory being adjusted debits the inventory account and credits the offset inventory adjustment account. You can think of this account as a variance or cost of goods sold account. Note: You can override this account during transaction entry.
Cost variance	The account used for Last In, First Out (LIFO), First In, First Out (FIFO), and average cost companies when there is a difference between the order cost and the approved invoice cost, and the items for the receiver are no longer available. The costing methods used with this account are: Standard cost Average cost (all or part of the received quantity for the purchase order has been issued out) You set up a company as being standard cost or average cost using Company (IC01.1). Note: The Purchase Order application uses this account in situations where an item is approved with an invoiced cost that is different from the standard cost. Note that you cannot override this account during transaction entry. Actual posting does not occur until you run General Ledger Interface (IC130) in Update mode.
Intransit	The account used as a temporary holding account when transferring inventory from one location to another (with the Intransit Transfer option). The total transfer amount is posted out of the from location's inventory account as a credit and posted to the to location as a debit to the intransit account. When inventory is received, the amounts are posted to the to location's inventory account as a debit (the offset is then posted to the intransit account as a credit). Note: You cannot override this account during transaction entry.
Physical inventory variance	The account where the physical inventory variance is offset. The account is used to post the difference between stock on hand and what the person performing the physical count finds. The amounts posted to this account are automatically generated when you freeze physical inventory and update physical inventory counts. Note: You cannot override this account during transaction entry.
Add-on cost	The account where the add-on cost is offset by default. During intransit transfer receiving, items sometimes contain a handling charge or add-on cost (to the received unit cost of intransit items). In this situation, the inventory account is debited and the add-on cost account is credited. The received item's value becomes the original transferred cost, plus the add-on cost. Note: You can override this account during transaction entry. Be aware that this account is not the same as the purchase order add-on cost.
Shrinkage	The account where shrinkage from returned catch weight items (from Order Entry customer orders) is offset. During return processing, sometimes the returned catch weight quantity is different from the shipped catch weight quantity. The variance between these two quantities posts to this account. Note: This account is used only by the Order Entry application.