Automatic Cost Posting Field in Inventory Setup Table

What is “Automatic Cost Posting” field in Warehouse > Setup > Inventory Setup used for? What is the difference between having the “Automatic Cost Posting” field value set to “Yes” and “No“?

According to Dynamics NAV help files:

A check mark in this field indicates that the program will use the Automatic Cost Posting function. If you use this function when posting items to an item account, the program will automatically post to the inventory account, adjustment account and COGS account in the general ledger. If you use this function, however, it is still necessary to run the Adjust Cost – Item Entries (or use Automatic Cost Adjustment) and Post Inventory Cost to G/L batch jobs periodically.

If you only use Automatic Cost Posting, your inventory account will not be accurate in cases where you do not know the cost of items at the time of sale. For example, if you sometimes sell before buying.

So, what does it mean in simple user-friendly terms? Well, I think, the easiest way to explain things, is to show how they work. Let’s test two scenarios: posting purchase orders when “Automatic Cost Posting” is disabled and posting same (a copy of) purchase order when “Automatic Cost Posting” is enabled.

Posting Purchase Order when “Automatic Cost Posting” is set to No.
1. Set “Automatic Cost Posting” to No in Inventory Setup.
Automatic Cost Posting - No

2. Create a new purchase order. Click Posting > Post and select “Receive and Invoice”.
Automatic Cost Posting - No - Purchase Order

3. Go to Purchase > History > Posted Invoices and find newly posted purchase invoice and click Navigate.
Automatic Cost Posting - No - Navigate

4. Select “G/L Entries” and click Show and analyse posted G/L Entries.
Automatic Cost Posting - No - Posted GL Entries

Here, you will see that 3 G/L Entries have been created for posted purchase invoice. If you would drill down into G/L Accounts and click Account > Where Used, you could work out which G/L Accounts have been hit:

  • Debit 7110 – Purchase Account from General Posting Setup
  • Debit 5630 – Purchase VAT Account from VAT Posting Setup
  • Credit 5410 – Payables Account from Vendor Posting Setup

Posting Purchase Order when “Automatic Cost Posting” is set to Yes.
Let’s run through the same scenario with different setup option.

1. Set “Automatic Cost Posting” to Yes in Inventory Setup.
Automatic Cost Posting - Yes

2. Create a new purchase order. Click Posting > Post and select “Receive and Invoice”.
Automatic Cost Posting - Yes - Purchase Order

3. Go to Purchase > History > Posted Invoices and find newly posted purchase invoice and click Navigate.

Automatic Cost Posting - Yes - Purchase Invoice

4. Select “G/L Entries” and click Show and analyse posted G/L Entries.
Automatic Cost  Posting - Yes - GL Entries

Here, you will see that more G/L Entries have been created for the same (a copy of previous) purchase order. Same 3 G/L Entries for:

  • Debit 7110 – Purchase Account from General Posting Setup
  • Debit 5630 – Purchase VAT Account from VAT Posting Setup
  • Credit 5410 – Payables Account from Vendor Posting Setup

And additional G/L Entries for:

  • Debit 2110 – Inventory Account from Inventory Posting Setup
  • Credit 7191 – Direct Cost Applied Account from General Posting Setup

So, the difference between having “Yes” or “No” in Automatic Cost Posting field in Inventory Setup is how additional G/L Entries are posted (specifically, for Inventory Account, Direct Cost Applied Account, and COGS Account for Sales) – they will be either posted automatically (if field is set to “Yes”), or they will need to be posted manually (if field is set to “No”).

In order to post “remaining” G/L Entries for the first scenario (where only 3 G/L Entries have been created), we would need to run Financial Management > Inventory > Costing > Post > Post Inventory Cost to G/L batch job.

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4 Responses to Automatic Cost Posting Field in Inventory Setup Table

  1. Kavisha Ahuja says:

    good explanation Tomas

  2. Ayham Mhd says:

    Great article, Thanks a lot…

  3. Gabriel Guerrero says:

    Very good explanation!!!!

    Thanks a lot

  4. Chandan Kumar says:

    Good way to explain, thanx

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