Setting Up Inventory Tracking

To set up inventory tracking, you must complete these three tasks:

1. Activate inventory integration.
2. Select the inventory management method.
3. Select default inventory GL Accounts.

Activate Inventory Integration

1. Navigate from Main Menu > System Admin > Preferences > Fulfillment.
2. In the Inventory section, mark the flag to Enable inventory integration. 
   
3. Click Commit Updates.

Accounting Preferences

The inventory management method and default inventory GL account settings are located in the Accounting Preferences module. Navigate from Main Menu > Accounting > Preferences. 

Select the Inventory Management Method

1. At the Accounting Preferences module, click Data Entry.
2. In the Inventory section, click the COGS Method dropdown list and select the appropriate option:
   • LIFO (last in / first out) — May result in slightly reduced profits, but correspondingly lower tax rates.
   • FIFO (first in / first out) — Typically results in additional profits, if the costs of items consistently increase.
     Note: For special order, lot tracked, and serialized items, the COGS Method generally does not apply. Instead, specific items are received and shipped.
     
3. Click Commit Updates.

Select the Default Inventory GL Accounts

1. At the Accounting Preferences module, click Chart of Accounts.
2. In the Assets section, click the dropdown for Default Inventory Account and select a default account.
3. In the Liabilities section, click the dropdown for Accrued Inventory and select a default account.
   
4. Click Commit Updates.