Configuring Inventory and Order ManagementLesson 1

Creating Reason Codes for Inventory

Back to D100: Inventory Order Management Basics

Lesson 1: Creating Reason Codes for Inventory

Part 1: Configuring Inventory and Order Management

Reason codes are used to specify why transactions of particular types are performed, as well as which accounts should be updated with the amounts of the transactions. Reason codes should be created for direct inventory transactions, such as issues and receipts, so that the correct offset accounts can be used for these transactions and the reasons for the transactions can be tracked. Users can then select the appropriate reason codes when they create direct inventory transactions in the system. In this lesson, you will create reason codes for inventory operations and for vendor returns.

Reason Codes: General Information

The majority of transactions with inventory items are performed when the items are purchased or sold, and the respective inventory receipts or issues are generated by other documents. These documents include purchase receipts and sales orders from which financial documents, such as AP bills and AR invoices, are generated. Because direct inventory transactions (that is, inventory transactions that are not based on any sales or purchase documents) do not contain information about why inventory items are being moved, users should specify reason codes for them. When a reason code is specified for each direct inventory transaction, your organization can track why the particular inventory transaction was performed. Also, a reason code should be created for vendor returns. In this case, a reason code indicates that when the system creates an inventory issue that corresponds to a vendor return, the system copies GL accounts that will be used for posting to GL from a receipt for which a purchase return is prepared. For details, see Purchase Returns: General Information.

In the following sections, you will read about the creation and use of reason codes in inventory.

Learning Objectives

In this lesson, you will do the following:

  • Prepare the system for the creation of reason codes
  • Create reason codes for inventory operations
  • Create reason codes for vendor returns

Applicable Scenario

You create reason codes when you initially configure inventory and order management in Acumatica ERP. You use reason codes in the direct inventory operations of issuing, receiving, adjusting, and counting physical inventory and in vendor returns.

Creation of Reason Codes for Inventory

Before you start configuring the inventory settings in Acumatica ERP, you need to create all necessary reason codes to be used in inventory transactions. You define reason codes on the Reason Codes (CS211000) form. For each reason code, you should specify the following:

  • Identifier: Identifiers of reason codes may have up to 10 characters and should clearly designate the reason for the transaction, as with DAMAGE, EXPIRATION, SHRINKAGE, and RETURNS.
  • Usage: You specify with what type of transaction or document this reason code will be used, which can be any of the following:
  • Receipt
  • Issue
  • Vendor Return
  • Adjustment
  • Transfer
  • GL account: You select the GL account that the system will use as an offset account for transactions with this reason code specified. Aer you have created all required reason codes, you can specify default reason codes on the Inventory Preferences (IN101000) form.

Default Reason Codes for Inventory Transactions

When an inventory document is created directly on a form such as Receipts (IN301000) or Issues (IN302000)—that is, when the inventory document is not based on a sales or purchase document—the reason code defines what account will be used as a default offset account. On release of the transaction, the inventory account (which is copied from the stock item, its warehouse, or its posting class) and the offset account (which is copied from the reason code) will be updated with the amount of the transaction. For the following types of inventory documents, you have to specify the default reason code on the General tab of the Inventory Preferences (IN101000) form:

  • Receipts
  • Issues
  • Adjustments
  • Physical inventory adjustments When you release one of these inventory documents, the system automatically inserts the specified default reason code into the Reason Code box on the Details tab of the corresponding form:
  • Receipts (IN301000) for receipts
  • Issues (IN302000) for issues
  • Adjustments (IN303000) for adjustments and physical inventory adjustments Users can replace the default reason code with another reason code, if necessary. If users change the reason code, its account or accounts will be used for posting to the GL.

Reason Code for Vendor Returns

When you configure order management preferences, you specify the default reason code of the Vendor Return usage type for vendor returns on the Purchase Orders Preferences (PO101000) form. The system inserts this reason code for inventory issues that are generated during the processing of purchase returns, which are documents of the Return type created on the Purchase Receipts (PO302000) form. Users can change the default reason code in the inventory issue, which is created on the Issues (IN302000) form. For information on configuring order management preferences, see Configuration of Order Management: General Information.

Reason Codes: Implementation Activity

In this implementation activity, you will learn how to create reason codes.

Story

Suppose that you are an implementation manager for the SweetLife Fruits & Jams company, and you need to configure inventory and order management. Before you start specifying the inventory and order management preferences on the appropriate Acumatica ERP forms, you must create reason codes for the direct inventory operations of issuing, receiving, adjusting, and counting physical inventory. You also need to create a reason code for vendor returns, which are not inventory operations but do involve the movement of goods in inventory.

Process Overview

In this activity, you will create reason codes for direct inventory operations and a reason code for vendor returns on the Reason Codes (CS211000) form.

System Preparation

Before you start creating these reason codes, you should do the following:

  1. Launch the Acumatica ERP website with the U100 Basic Company dataset preloaded, and sign in to the system as implementation manager Kimberly Gibbs by using the gibbs username and the 123 password.
  2. On the Enable/Disable Features (CS100000) form, enable the Inventory and Order Management and Inventory features.

Step 1: Creating Reason Codes for Inventory Operations To create reason codes for direct inventory operations, do the following:

  1. Create a reason code for direct inventory receipts as follows: a. On the Reason Codes (CS211000) form, add a new record. b. Specify the following settings:
  • Reason Code: INRECEIPT
  • Description: Direct Receipts
  • Usage: Receipt
  • Account: 20110 - Inventory Purchase Accrual for Direct Receipts c. On the form toolbar, click Save.
  1. Create a reason code for direct inventory issues as follows: a. On the form toolbar, click Add New Record. b. Specify the following settings:
  • Reason Code: INISSUE
  • Description: Direct Issues
  • Usage: Issue
  • Account: 11010 - AR Accrual Account c. On the form toolbar, click Save.
  1. Create a reason code for direct inventory adjustments as follows: a. On the form toolbar, click Add New Record. b. Specify the following settings:
  • Reason Code: INADJUST
  • Description: Direct Adjustments
  • Usage: Adjustment
  • Account: 52000 - Physical Inventory Adjustments c. On the form toolbar, click Save.
  1. Create a reason code for physical inventory as follows: a. On the form toolbar, click Add New Record. b. Specify the following settings:
  • Reason Code: PHYINVADJ
  • Description: Physical Inventory Adjustment
  • Usage: Adjustment
  • Account: 52000 - Physical Inventory Adjustments c. On the form toolbar, click Save.
    You have created reason codes for direct inventory operations.
           Now you can configure basic inventory preferences, as described in Configuration of Order
       Management: Implementation Activity

Step 2: Creating a Reason Code for Vendor Returns To create a reason code for vendor returns, do the following:

  1. On the form toolbar of the Reason Codes (CS211000) form, click Add New Record.
  2. Specify the following settings:
  • Reason Code: VENDORRET
  • Description: Vendor Return
  • Usage: Vendor Return
  1. On the form toolbar, click Save.
    You have created a reason code for vendor returns.
          Now you can configure sales order types as the next stage of preparing the system to configuration of
      order management. For details, see Sales Order Types.