ANS-0728 · INVENTORY & ITEM MANAGEMENT
Understanding the GL Impact of Inventory Received Not Billed in NetSuite
This guide clarifies the temporary accounting entries and General Ledger impact of inventory transactions from item receipt to bill payment in NetSuite.
Short answer
The Inventory Received Not Billed account is a temporary liability in NetSuite, used to balance the General Ledger between item receipt and vendor bill. It debits when inventory is received and credits when the vendor bill is processed, ensuring accurate tracking of goods received but not yet paid for, ultimately reflecting increased inventory and decreased bank funds.
Scenario
Users often seek to understand the General Ledger (GL) impact of the 'Inventory Received Not Billed' account within NetSuite. This account serves as a crucial temporary holding place in the accounting process, particularly when inventory is received before the corresponding vendor bill is processed. Clarifying its role helps in reconciling inventory and accounts payable.
Solution
The 'Inventory Received Not Billed' account functions as a temporary balancing account within NetSuite's General Ledger. The typical transaction flow and its GL impact are as follows:
Item receipt:
Debit: Inventory (asset account) [goes up!]Credit: Inventory Received Not Billed (other current liability) [goes up!]
Vendor Bill:
Debit: Inventory Received Not Billed (other current liability) [goes down!]Credit: Accounts payable (A/P) [goes up!]
Bill Payment:
Debit: Accounts payable (A/P) [goes down!]Credit: Bank account (Bank) [goes down!]Ultimately, this process reflects the purchase of inventory, where the Inventory asset account increases and the Bank account decreases.
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