Inventory - Non Inventory Items

Is there a way to change from an inventory item, stock control, to a non inventory item without upsetting invoices, purchase orders etc.
I really do not want to setup new non inventory items.

Also why will the system not allow to do a journal entry from GL code inventory to a Cost of Sales GL code? or am I missing something.

Not directly, because items already used in transactions would be affected. And the inventory items that have been used cannot be deleted.

However, both inventory and non-inventory items can be manipulated with batch operations. But, the list structures are different, so after copying and pasting the inventory item list, you would have to massage it into the right format for non-inventory items before using it in a batch create operation. Some columns would have to be deleted, some reorganized, and possibly some added.

Depending on how many items you are trying to convert, normal creation of non-inventory items might be faster.

Because they are control accounts being used by background processes.
Cost of Sales is a background process directly related to Sales Invoices.

To add just a bit to what @Brucanna wrote, transactions post to Inventory - cost (which you may have renamed Cost of goods sold) only when inventory is sold. Until inventory is sold, its value is an asset. That asset is transformed by the sale into income. But the income is (hopefully) partially offset by the expense represented by the cost of the item. The difference, of course, is profit.

If you were to transfer directly from Inventory on hand to Inventory - cost, you would be understating your income. And that’s a crime everywhere I know of.

What was your underlying purpose in trying to make this journal entry? If we know what you are trying to accomplish, we can tell you the correct way to do it.

How come ?
Normally, except Manager, various inventory adjustments can be posted directly to Inventory - cost.
Just because you transfer directly from Inventory on hand to an Inventory write-off account instead of an Inventory - cost account doesn’t suddenly change the impact on income.

Yes if the intention is an artificial transaction, but not for valid substantiated reasons.


We purchase an inventory item that we do not sell, but use parts of it to manufacture other inventory items.

For example:

We purchase a sheet of plywood that we cut into several different shapes. These shapes have their own inventory item code.

The plywood initially when purchased would be added to the plywood inventory code.


a) So what I envisioned was to hold, say one sheet of plywood in stock. Then when this was used we would purchase another sheet and transfer the cost of the first sheet from inventory to cost of sales and so on. To do this I would create a journal entry.

b) The other way, if possible, would be to create a customer called inventory, invoice the sheet to them at zero.

This would, as I understand, take the sheet out of stock at cost and transfer this amount to cost of sales.

I would be too hard to allocated each square inch of plywood to each of the different shapes, using BOM’s, as we can have 10’s of different shapes from each sheet of plywood.

Do you have any other ideas on how we can achieve this?

you should use Production Orders to convert an inventory item to another inventory item.
read this guide Use production orders to manufacture inventory items | Manager

Transferring to the inventory write-off account doesn’t affect average cost of the item in Inventory on hand. You reduce the quantity at the current per item valuation. Both quantity and account balance are adjusted in parallel.

A direct journal from Inventory on hand to Inventory - cost has no provision for adjusting quantities. So you would be lowering the average cost of remaining stock in Inventory on hand while posting an expense for a transaction that did not occur, thus reducing net income. I suppose you could argue that whether the expense goes to cost of goods or a write-off account, the affect on net income is the same, but I see two problems with that: (1) it misrepresents what actually happened and (2) it affects all future inventory transactions for that item, because average cost has been lowered.

If you are talking about some other type of transaction, I’m open to correction.

This is why I asked @vanluk about the underlying purpose of the transaction. For example, if inventory has been damaged or lost, a write-off is appropriate, not a transfer to cost of goods sold.

Too hard to do. BOM’s are the same as Production Orders.

We have different fractions of plywood going into other inventory items.

I am answering only because you directed your question to me. @sharpdrivetek’s answer and link point you toward the correct process.

Yes it does.

As you explained, Production Orders are impractical to use as you are converting a single raw material item into a multiple of finished goods - this Production Order short coming has been well documented.
Refer to this topic: Production Orders - Enhancements

Also noting the impracticalities of recording the single raw material under a different unit size - square inch.

Therefore your options are:

  1. As you noted - create a customer and invoice the inventory to them at a zero value.
  2. Use Inventory Write-off but to specific account - Unallocated Raw Materials.

Not sure how converting to non-inventory items would assist.

You’re right. My bad. I was erroneously thinking about the fact that you can’t directly select an inventory item like you do on a sales or purchase invoice. You have to select the account and only then can you choose the item.

I keep forgetting about this shortcoming. The necessary improvement has been discussed so many times and the need is so obvious I forget that the capability isn’t available yet.

even though it is impractical in Manager at present, it still is the correct process to be followed.
while the ability to produce multiple finished goods from a single raw material is a necessity, a user should improvise to an alternate solution while still utilizing the production order feature.

@vanluk has mentioned the use of plywoods. so if a plywood sheet of standard size 6x6 sq.ft is purchased, a production order should be made to make multiple quantities of the plywood sheet, say of size 0.5x0.5 sq.ft.
Then as per the sales requirement, a multiple quantity of these 0.5x0.5 sq.ft raw inventory can be used to produce a single finished goods of size say 3x3sq.ft.

Yes, and it has never been implied otherwise but only if its achievable / workable.

Not all raw materials have an alternate solution, as they don’t have an alternate measurement because the input material changes (converts) as an output material.

The plywood can be a sheet or a square foot or a square inch - it always remains as plywood.
A kilo of wheat produces different grades of finished flour - it doesn’t remain as wheat.
A litre of milk fat becomes milk, cream and cheese - it doesn’t remain as milk fat.