As you plan and implement a useful Inventory Code system, there are some questions that might help you determine how many and what kind of codes you want to create.

Review your Chart of Accounts and consider each Inventory Asset account. You need one Inventory Code for each group represented by each account. This could be one Inventory Code and one account, or you can set up additional codes based on your account structure.

Consider how you assign costs to your stock items. Inventory Codes determine the valuation method for your stock items and can handle instances in which the cost of a stock item determines the final price to customers.

If you use the same valuation method for all items, you need one Inventory Code for each General Ledger Inventory Asset account. If you value items by different costing methods, then you need an Inventory Code for each different valuation method.

You might want to create an IN Code if you have stock items with different sales tax. For example, if you have non-taxable items, you might attach a non-taxable IN Code to a stock item so when you create a sale, any item with this code is not included in the final Sales Tax calculation.

You might want to create multiple Inventory Codes to accommodate special pricing for customer groups. This type of pricing assigns stock item prices based on the combination of the AR Type Code for the customer purchasing the item and the Inventory Code of the stock item they are purchasing.

If you want to use this pricing option, we recommend you review the complete information about special pricing for customer groups before you set up your Inventory Codes (see Setting Up Special Price Levels for Groups of Customers).

You can sort and/or filter most Inventory reports by Inventory Codes, so you might want to create multiple codes even if you have only one Inventory account in your general ledger and you use the same valuation method for all your stock items.