Inventory Codes determine the GL accounts the stock item affects, the valuation method for the stock item (FIFO, LIFO, Weighted Average, or Standard Cost), and the sales tax that will be applied to this stock item.

You must establish Inventory Codes before you set up your stock item records. Inventory Codes enable you to separate your inventory items into different categories you can then use to post or report separately for each group. You can also use these codes to set special pricing for a group (see Setting Up Special Price Levels for Groups of Customers).

It’s important to understand how your company tracks inventory so you can plan and implement a useful Code system.