Difference between expense item and inventory item in Oracle.

Difference between expense item and inventory item in Oracle.

Expense Item:

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

Inventory Item:

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

Difference between expense item and inventory item

Those Item that needs to maintain stock and tracking are inventory Items. Creating unique Item coding for each SKU's

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

For example

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

Expenses Items: Assets, services, Projects, consumables (Office Stationery) etc.

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

And when you want to use it as expense, move it to an expense subinventory.

We need to uncheck the attribute "Asset Subinventory" in the specified subinventory.

You should uncheck the asset flag for that subinventory. Make sure that the subinventory accounts are setup correctly.

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

For easy understanding these will be referred below points.

These Expense Items have attributes checked

a - Purchasable

b - Purchased

These Inventory Expense Items have the 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 the 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 Purchasing requisition till paying to vendors and most important, in all the case the purchase is made for 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:

Asset flag means means it is an asset and the items value will show in your inventory valuation.