The Importance of GL-Class Codes in Inventory Reconciliation – Part 1

11898842 994156840615743 2522711434937191130 nEd Gutkowski, Chief Architect - RapidReconciler, Products

In my experience as a distribution consultant, I have noticed many users don't fully understand item GL class codes in JD Edwards. This code is the link between the inventory subsystem and the general ledger (GL). All inventory transactions are mapped to the general ledger through the distribution/manufacturing automatic accounting instructions (DMAAI's), with the GL class code playing an important role in determining which accounts see the debits and credits.

It is important to understand where these codes are located, how they are used and the ramifications that changing them has on the reconciliation process. In part 1 of this article, I'll talk about where they are located and how they are used in the software. I like to think of it in terms of levels, which there are 4:
Item Master – the GL class code is first entered here as items are created. This class is rarely used for stock transactions.
Branch Master – Once an item has been created, it is then copied down to all of the branch plants that use it. The GL class code is part of that copy process. Manufacturing accounting uses this code to book its entries.
Item Location – Each item has a primary location, and possibly 1 or more secondary locations set up in the system. The GL class code is copied down from the branch plant when these records are created. Standard inventory transactions, such as issues, adjustments and transfers use the code from this level to book entries.
Sales and Purchase Orders – Each stock line item on sales and purchase orders obtain a copy of the GL Class code when they are created. The PO receipt program and sales update use this level to book entries.

As you can see the set-up of item GL class codes is quite complex. Once an item has been configured and transactions start to flow, changing these codes can have a negative impact on the reconciliation process. In the next edition of the Insider, we will look at the consequences of changing a GL class code. Stay tuned ...

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