Accounting Information System

At the end of the lesson, the student will be able to:

• Set up item groups and define warehouses
• Manage items with batch and serial numbers
• Transfer goods using goods issue, good receipt and
inventory transfer
• Use pick and pack in the sales process
• Create new pricelists and provide discounts
• Make order recommendation using Materials
Requirements Planning

Accounting Information System (AIS)

LESSON SIX: INVENTORY CYCLE: Items and Warehouses

SAP Business One enables you to manage all the items that you purchase, manufacture, sell, or keep
in stock. Services, such as labor, can also be defined as items. This can be useful for defined services you
sell on a regular basis. Items can also be used to describe fixed assets that are tracked for accounting
purposes

For each item, enter the data relevant for a particular area in the system. This data is used automatically
by the system for purchasing, sales, production, managing your warehouse, and accounting. SAP
Business One, therefore, provides optimum support for your business processes.

Using the item data in the system, you can optimize your stock. You have complete control over stock
quantities at all times and can also analyze the financial aspects of stockholding at the same time. In
SAP Business One, there is a direct relationship between warehouses and items

Accounting Information System (AIS)

Defining a Warehouse

Choose (1) Administration > (2) Setup > (3) Inventory > (4) Warehouses to define new warehouses.

Accounting Information System (AIS)

Defining a Warehouse
You can enter a Warehouse code and a Warehouse name. Take note of the following tabs/parts:

ADDRESS FIELDS: Specifies address details for the warehouse. This address defaults into the purchasing
document for the ship-to address for the warehouse.

LOCATION: Specifies the warehouse location. Use this field to classify warehouses according to their
physical location.

DROP SHIP: Defines the warehouse as a drop-ship warehouse. Use this option when the company does not
manage inventory for specific items, but receives commission for every order. SAP Business One will not
calculate stock postings for this warehouse

In the ACCOUNTING TAB, you define various default accounts used for inventory management per
warehouse. To define a warehouse as a default in the MRP wizard, select the Nettable checkbox. If
unchecked, the warehouse can still be chosen in MRP, but does not appear as default.Stock Change –
Marketing Documents

Accounting Information System (AIS)

Inventory Transactions

Accounting Information System (AIS)

Inventory Transactions

When an item is purchased or sold, warehouse inventory is automatically reduced or increased when
the transactions are entered in purchasing and sales.
ü For example, if a delivery note is created based on a sales order for a customer, the warehouse
stock is reduced by the delivery quantity when the delivery note is added.
ü If an incoming invoice is entered in purchasing, the warehouse stock increases by the delivery
quantity when the incoming invoice is added.

The purchase or sale of an item is, however, not the only transactions that result in a goods receipt or
goods issue
ü For example, if five pieces of an item are found damaged in the warehouse as a result of water
damage, rendering them useless, they are removed from the warehouse
ü These items cannot, however, be sold because they are now useless. In this case, you have to post a
separate goods issue with the function described here.

Accounting Information System (AIS)

Inventory Transactions – Goods Receipts and Goods Issue

For goods receipts and goods issues that do not refer to a sales process or purchasing process, you must
specify the warehouse to which or from which you want to post the goods. The system always uses the
default warehouse from the item master record if you do not specify otherwise

A GOODS RECEIPT creates a journal entry that posts the value of the received goods on the debit side of
the stock account and the credit side of the inventory offset – increase account.
ü You can use the Goods Receipt if there is an increase in the quantity of inventory outside the
regular purchase and sales process (e.g., Samples or freebies from Suppliers) or if you are
reconciling the system inventory count and physical inventory count (e.g. Physical inventory count
is higher than the system inventory count).

Accounting Information System (AIS)

Inventory Transactions – Posting Goods Receipt
To post a goods receipt: e.g. The company received 2 A00001 from its suppliers as freebies due to recent bulk
purchase.

Go to (1) Inventory → (2) Inventory

Transactions → (3) Goods Receipt.
4. On the Item No. field, click the
selection list (picker’s list)
button. Select A00001.
5. Input ‘2’ on the Quantity field.
6. In the Remarks field, put
‘Freebies from Suppliers’
7. Add.

Accounting Information System (AIS)

Inventory Transactions – Goods Receipts and Goods Issue

A GOODS ISSUE creates a journal entry that posts the value of the issued goods on the debit side of the
inventory offset – decrease account and the credit side of the stock account. The stock accounts are
retrieved from the Inventory Account fields on the Inventory Data tab of the item master record.

You can use the Goods Issue if there is a decrease in the quantity of inventory outside the regular
purchase and sales process (e.g., Theft in the warehouse, flood/fire damaging warehouse goods) or if you
are reconciling the system inventory count and physical inventory count (e.g. Physical inventory count
is lower than the system inventory count).

Accounting Information System (AIS)

 Inventory Transactions – Posting Goods Issue
To post a goods issue: e.g. The warehouse manager recently discovered a theft in the warehouse
with 5, A00001 items missing.
To record the missing items:

Go to (1) Inventory → (2) Inventory

Transactions → (3) Goods Issue
4. On the Item No. field, click the
selection list (picker’s list)
button. Select A00001.
5. Input ‘5’ on the Quantity field.
6. In the Remarks field, put
‘Warehouse theft’
7. Add.

Accounting Information System (AIS)

Inventory Transactions – Inventory Transfer

When you post an inventory transfer from warehouse 02 to warehouse 01, the system creates an
inventory transfer document and a journal entry. The journal entry posts the value of the transferred goods
on the debit side of the stock account of warehouse 01 and on the credit side of the inventory account of
warehouse 02.

Accounting Information System (AIS)

 Inventory Transactions – Posting Stock/Inventory Transfer
To post a stock transfer: e.g. The current branch wanted transfer 5 pcs of A00001 from Warehouse 1 to
Warehouse 2.

Go to (1) Inventory → (2) Inventory

Transactions → (3) Inventory
Transfer.
4. Input the following information:
Item No: A00001
To Warehouse: 01
From Warehouse: 02
Quantity: 5
5. Click Add.

Accounting Information System (AIS)

Inventory Management – By Serial Numbers

SERIAL NUMBERS can help you track items down to the level of each individual object in your warehouse,
so you know exactly which one was sold to a customer. The typical criteria for determining if an item
needs a serial number are:
§ Is the item a high value item?
§ Should the item be tracked for security or repair reasons?

SERIAL NUMBERS are also important in Service. A serialized item can be set up to automatically
create a customer equipment card and a service contract when the item is delivered to a customer. The
customer equipment card is used to store service information, such as valid service contracts, any
service calls, and inventory transactions for the item

Accounting Information System (AIS)

Inventory Management – By Serial Numbers

EXAMPLE: Add the following item on the Item Master Data:

Item No. Description Item Group Price Managed by

SN1000 Acer Aspire 5 A514 Laptop 30,000 Serial Numbers

(1) OEC Computers UK received 10 items of SN1000 from Acme Associates.

Serial Number String: OEC-AcerL-00001

(2) Later on, OEC computers UK delivered 5 items of SN1000 to Norm Thompson.

Accounting Information System (AIS)

Inventory Transactions – Inventory Management by Serial Numbers

Go to (1) Inventory → (2) Item Master Data. Switch to Add mode (Ctrl + A).
3. Input the information above regarding the item.
4. On the general tab, there is a Manage Item By drop down list, select ‘Serial Numbers’.
Management Method, ‘On every transaction’.
5. Click Inventory Data tab
6. Input the information according the warehouse assigned to your branch.
Warehouse Code: 01
Warehouse Name: General Warehouse
7. Click Add.

Accounting Information System (AIS)

Accounting Information System (AIS)
The whole Procurement and Sales
Process should still be done
completely. But for example purposes
and to address this topic directly, we
will only use Goods Receipt PO and
Delivery.

Go to (8) Purchasing A/P → (9)

Goods Receipt PO
10. Input the following information:
Vendor: V10000 Acme Associates
11. Item No: SN1000
Quantity: 10
12. Click Add. Click Yes, if prompted
the message “You cannot change
this document after you have
added it”.

Accounting Information System (AIS)

13. Serial Numbers Set-up window will appear. Click the ‘You can also’ button on the lower right corner of the
window, and select automatic creation.

Accounting Information System (AIS)

14. Automatic Serial Number Creation
window will appear. Click this
button beside the Serial
Number field.
15. Automatic String Creation window
will appear. Input the following:
# String Type Operation
1 OEC-AcerL- String No Operation
2 00001 Number Increase

16. Click OK
17. Click Create.

Accounting Information System (AIS)

18. Serial Number for all 10 items
should be created.
19. Click Update.
20. On the Goods Receipt PO window.
Click Add.

Accounting Information System (AIS)

Go to (21) Sales A/R → (22) Delivery
23. Input the following information:
Customer: C20000 Norm
Thompson
24. Item No: SN1000
Quantity: 5
25. Click Add. Click Yes, if prompted
the message “You cannot change
this document after you have
added it”.

Accounting Information System (AIS)

26. Serial Number Selection
window will appear. Click Auto
Select. 5 items will
automatically selected on a
First-In First-Out basis.
27. Click Update. Click OK.
28. On the Delivery window, click
Add.

Accounting Information System (AIS)

 Inventory Management – By Batches

BATCHES are used to track groups of items with characteristics in common. These characteristics
might be attributes you define such as a shade of color, granularity or PH balance. The characteristics
could be dates, such as expiration dates, manufacturing date, or the date the items were received into
inventory.
EXAMPLE: Add the following item on the Item Master Data:
Item No. Description Item Group Price Managed by
BN1000 Mousepad Accessories 50 Batches

(1) OEC ordered & received 100 items of BN1000 from Acme Associates. Items will be divided into 10 batches.
Batch number: Box-0001
Batch Attribute 1: OEC-MP-00001

(2) OEC sold 27 items of BN1000 to Norm Thompson, via FIFO.

Accounting Information System (AIS)

 Go to (1) Inventory → (2) Item Master Data. Switch to Add mode (Ctrl + A).
3. Input the information above regarding the item.
4. On the general tab, there is a Manage Item By drop down list, select ‘Batches’. Management
Method, ‘On every transaction’.
5. Click Inventory Data tab
6. Input the information according the warehouse assigned to your branch.
Warehouse Code: 01
Warehouse Name: General Warehouse
7. Click Add.

Accounting Information System (AIS)

Accounting Information System (AIS)
The whole Procurement and Sales
Process should still be done completely.
But for example purposes and to
address this topic directly, we will only
use Goods Receipt PO and Delivery.

Go to (8) Purchasing A/P → (9) Goods

Receipt PO
10. Input the following information:
Vendor: V10000 Acme Associates
11. Item No: BN1000
Quantity: 100
12. Click Add. Click Yes, if prompted the
message “You cannot change this
document after you have added it”.

Accounting Information System (AIS)

13. Batches Set-up window will appear. Click the ‘You can also’ button on the lower right corner of the window,
and select automatic creation.

Accounting Information System (AIS)

14. Automatic Batch Creation window
will appear. Set the number of
batchers to 10.
15. Click this button beside the
Batch field.
16. Automatic String Creation window
will appear. Input the following:
# String Type Operation
1 Box- String No Operation
2 0001 Number Increase

17. Click OK.

Accounting Information System (AIS)

18. On the Automatic Batch Creation
window, click this button beside
the Batch Attribute 1 field.
19. Automatic String Creation window
will appear. Input the following:
# String Type Operation
1 OEC-MP- String No Operation
2 0001 Number Increase

20. Click OK.

21. On the Automatic Batch Creation
window, click Create.

Accounting Information System (AIS)

22. Batchers for all 100 items should
be created.
23. Click Update.
24. On the Goods Receipt PO
window. Click Add.

Accounting Information System (AIS)

Go to (25) Sales A/R → (26) Delivery
27. Input the following information:
Customer: C20000 Norm
Thompson
28. Item No: BN1000
Quantity: 27
29. Click Add. Click Yes, if prompted
the message “You cannot change
this document after you have
added it”.

Accounting Information System (AIS)

30. Batch Number Selection window
will appear. Click Auto Select. 5
items will automatically selected
on a First-In First-Out basis.
31. Click Update. Click OK.
32. On the Delivery window, click
Add

Accounting Information System (AIS)

Inventory Management – Price Lists and Discounts

A PRICE LIST contains items. Price lists can be

based on other prices lists by using a percentage
mark-up. Every item is linked to every price list.

ü You can assign a price list to the customer

master record on the Payment Terms tab.
When you enter the customer in a sales
document, the assigned price list will defaults to
the document. The system will then use that
price list to price the items in the order
ü more complex pricing can be used such as
special prices, discount groups, and pricing
hierarchies. Prices can also be changed in the
sales order by authorized users. For example, a
salesperson might give a 5% discount to a
particular item or to a whole sales order.

Accounting Information System (AIS)

Inventory Management – Price Lists and Discounts

Using the different pricing options in SAP Business One, you can set predefined prices for selling
and buying items. Typically, a business will choose only those options that make sense for how
they price items.
ü For example: If a company sells smaller items to other businesses, they are more likely to use
volume discounts. A company selling higher priced items may focus on special prices created for
particular business partners. Prices are assigned to price lists and to specific business partners.

On top of the basic price list functionality, you can add discounts based on item group,
properties, and manufacturer. You can use special prices to define detailed pricing and discount
structures for a business partner. You can base your discounts on any price list, or simply enter them
manually. Special prices override all other prices.

Accounting Information System (AIS)

Inventory Management – Price Lists
For PRICE LISTS, you define discounts based on
percentages or quantities.
ü For example, if all your large accounts have
discounted prices since they purchase in
larger volumes, you can create a
relationship between pricing levels that
updates automatically.

When the system searches for a price, it first

looks at special prices. If no special price, it
looks for discount groups. If no discount group,
it looks for period and volume discounts. If no
period and volume discount, it uses the basic
price list assigned to the business partner

Accounting Information System (AIS)

Inventory Management – Period and Volume Discounts
You can use this function to define
special prices for price lists. A special
price can apply to a defined period or
to a quantity scale.

In SAP Business One, time-based

discounts are defined in the window
“price list item details by period” and
volume discounts are defined in
hierarchies for those validity periods.

Add new items to the list by choosing

(1) Inventory > (2) Price Lists >
(3) Period and Volume Discounts

Accounting Information System (AIS)

Inventory Management – Discount Groups
You can define discount groups for a business partner. These discounts are defined by an item group, a
combination of item group properties or an item manufacturer.
ü When you use discount groups at the item properties level, SAP Business One allows you to define a discount
for several properties. You can use a rule to decide which discount is used by the system for the calculation:
HIGHEST DISCOUNT -The property with the
highest discount will determine the overall
discount calculated for the item.
LOWEST DISCOUNT -The property with the
lowest discount will determine the overall
discount calculated for the item..
AVERAGE DISCOUNT -The system calculates the
average of all the discounts for the properties. The
average is used as the discount
DISCOUNT TOOLS -The system adds together all
discounts of the properties that apply to the item.
The total (up to 100%) is used as the discount.

Accounting Information System (AIS)

Inventory Management – Discount Groups

To define discount groups you choose

(1) Inventory > (2) Price Lists >
(3) Discount Groups

Accounting Information System (AIS)

 Inventory Management – Special Prices
Special prices enable you to give a
discount or surcharge for a specific
business partner.
Choose
(1) Inventory > (2) Price Lists >
(3) Special Prices >
(4) Special Prices for Business
Partners

With special prices you also have the

possibility to assign a different pricelist
for selected items to a business partner.
You can copy special prices to other
business partners using Inventory >
Price Lists > Special Prices > Copy
Special Prices to Selection Criteria.

Accounting Information System (AIS)

Inventory Management – Special Prices

For copying special prices from one business partner to other ones the following copy rules exist:
• Replace All Items:

The system copies all the special prices and possibly overwrites existing ones.
• Replace Only Existing Items:

The system overwrites all the special prices that exist in the source business partner (BP) and target BP
records. It does not add any new special prices.
• Do Not Replace Items:

The system adds new special prices, but does not change existing ones.

Accounting Information System (AIS)

At the end of the lesson, the student will be able to:
• Set up item groups and define warehouses
• Manage items with batch and serial numbers
• Transfer goods using goods issue, good receipt and
inventory transfer
• Use pick and pack in the sales process
• Create new pricelists and provide discounts
• Make order recommendation using Materials
Requirements Planning

Accounting Information System (AIS)