LBSi SAP Business One Solution

How to setup GL Accounts For Item Groups and Warehouses

SAP Business One allows you to define GL accounts based on warehouse, item group or
item level as indicated in the following screen.

The following explanation of GL accounts is applicable for the setup of accounts on

the item groups or warehouse screens:

Item groups can be accessed via Administration > Setup > Inventory > Item
Groups.
Item warehouses can be accessed via Administration > Setup > Inventory >
Warehouses.

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 LBSi SAP Business One Solution
How to setup GL Accounts For Item Groups and Warehouses

Expense account: [Cost of Goods Sold account] this account is used on

purchases of non-stock (items in the item master where the inventory item check
box is NOT checked) items to record the expense.
Revenue: [Revenue account] Used to record revenue income on sales
transactions.
Inventory account: [asset account] this account should reflect the value of on
hand inventory. All inventory transactions will post to this account unless the
document is based on a document where the inventory transaction already took
place.
Cost of Goods Sold Account: [Cost of Sales account] Cost of item is debited for
sales documents with inventory movement such as Delivery, AR Invoice, AR
Credit, and Goods Return.
Allocation Account: [liability account] Offsetting account for inventory in Goods
Receipt PO and AP Credit Memos. Represents the total amount of open Goods
Receipt PO. Common name in US is Goods Received Not Invoiced. This account
should be balanced when Goods Receipt PO is closed.
Variance Account: [cost of sales account] only used for items defined as
standard cost. Transactions to this account are the difference between standard

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 LBSi SAP Business One Solution
How to setup GL Accounts For Item Groups and Warehouses

cost of the item and purchase price in the posted document. In some specific
scenarios, if there are differences between the standard cost and the actual cost in
the purchasing document, these differences will be recorded in the variance
account.
Price Difference Account: [Cost of sales account] Used for purchasing
transactions only where there is a price difference between the base and target
documents and all items or the entire inventory has been released prior to posting
the AP Invoice document.
Negative Inventory Adjustment Account: [Cost of sales account] Used when
inventory on hand goes negative (not recommended accounting practice). When
receiving goods while in negative status the difference between the static item
cost and the purchase cost is posted to this account.
Inventory Offset Decrease account: [Cost of sales account]. Used to offset the
inventory account when inventory decreases using Goods Issue feature in
Business One. You can change this account manually when performing the goods
issue transaction.
Inventory Offset Increase account: [Cost of sales account] Used to offset the
inventory account when inventory increases using Goods Receipt feature in
Business One. Normally this account matches the Inventory Offset Decrease
account. You can change this account manually when performing the goods
receipt transaction.
Sales return Account: [asset account] Returned goods from a customer will be
posted to this account. Normally this account is the inventory account that was
used when the item was originally transacted.
Exchange Rates Differences Account: [Financing account] Used in purchasing
transactions only. In certain scenarios, creating a target document from a base
document when the item price is in foreign currency and the target document is a
different exchange rate, a difference in local currency occurs and is posted to this
account.
Goods Clearing Account: [Asset account] Offset to allocation account when
closing a Goods receipt PO or Goods Return PO manually (AP Invoice not
created). Account is credited to reduce costs of goods as no AP Payment is being
created. No transaction to on hand quantity is performed in this transaction.
G/L Decrease Account: [cost of goods sold account] Used to offset the inventory
account when inventory decreases using Material Revaluation feature in Business
One.
G/L Increase Account: [cost of goods sold account] Used to offset the inventory
account when inventory increases using Material Revaluation feature in Business
One. Normally this account matches the Inventory Offset Decrease account.
WIP Inventory Account: [asset account] this account is posted to when goods
are issued to production from inventory.
WIP Inventory Variance Account: [cost of goods sold account] this account is
posted to when there is a difference between the Actual Component Cost and
Actual Product Cost on the production order.

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 LBSi SAP Business One Solution
How to setup GL Accounts For Item Groups and Warehouses

Expense Clearing Account: [liability account] this account is used when posting
Goods Receipt PO with freight that will influence the cost of an item. Works like
the Allocation cost account. This account should be balanced when creating the
AP Invoice against the Goods Receipt PO.
Stock in transit account: [liability account] Account should be the same account
used under Allocation account above (Goods received not invoiced).
Sales Credit Account: [revenue account] Used when posting an AR Credit on the
sales side for non stock items (items in the item master where the inventory item
check box is NOT checked).
Purchase Credit Account: [expense account] Used when posting an AP Credit
on the purchasing side for non stock items (items in the item master where the
inventory item check box is NOT checked).

Notes:
1. The accounts that are setup under GL Account Determination (Administration
> Setup > Financials > G/L Account Determination > Inventory Tab) are only
used when setting up new item groups, items, or warehouses.

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