accounting_budgeting_shutterstock_57516148-5bfc2f3a46e0fb00511a5a64

What Is The Difference Between Expense And Inventory Items In Oracle?

Expense Item:

  • Captive consumption of the organization
  • It will not be transferred (Stockable & Transactable ) to the inventory
  • It will not hit the inventory valuation account.

Inventory Item:

  • It will hit the inventor as well as the inventory valuation account
  • It will be used in the production of finished goods.

Difference between expense item and inventory item

Those items that need to maintain the stocks and the trackings are inventory Items. Creating unique Item coding for each SKU’s

Non-Stock able Items that are direct IN & OUT, are expense items. For such items no needs to create Item code for all. Only a few codes can be created and in PR & PO description can be change

For example

Inventory items: The inventory items are Machine parts, Raw Materials, Any Trading Items, etc

Expenses Items: The expense items are Assets, services, Projects, consumables (Office Stationery), etc.

You cannot define an item as an expense and an inventory at the same time. But you can define the items as inventory items.

And when you want to use the items as an expense, you have to simply move it to an expense subinventory.

We need to uncheck the attributes “Asset Subinventory” in the specified subinventory.

You should uncheck the asset flag (Asset flag means it is an asset and the value of the items that will show in your inventory valuation.)for that subinventory. Make sure that the subinventory accounts are all set up correctly.

The terminology of  the items is rather confusing from a Purchasing/Inventory point of view:

For an easy understanding of this. These will be referred to below points.

These Expense Items have the attributes checked

a – Purchasable

b – Purchased

These Inventory Expense Items have these following attributes checked

a – Inventory item = YES

b – Stockable

c – Transactable

d – Inventory Asset Value = NO

e – Costing Enabled = No

These Inventory Asset Items have these following attributes checked

a – inventory item = YES

b – stockable.

c – transactable

d – Inventory Asset Value = YES

e – Costing Enabled = YES

As you know “procure to pay” Business Flow start the Purchasing requisition till paying to vendors and most important, in all the case the purchase is made for a basic element called Items.

As you know there are three types of items:

  • Inventory Expense Item
  • Inventory Asset Item
  • Expense item

Definition of above Items used in Purchasing can be best understood as:

Expense Items Inventory Items Inventory Asset Items
PURCHASING ITEM FLAG Y Y Y
INVENTORY ASSET FLAG N N Y
INVENTORY ITEM FLAG N Y Y
COSTING ENABLED FLAG Y

Share the Post