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WHY THE INVENTORY DEFAULT SYSTEM EXPENSE ACCOUNT IS USED IN THE AP DISTRIBUTION REPORT.
When an item goes into an Oversold condition the system will use the Oversold Costing
method as defined in the Item Master file to determine which cost to use for creating
the Oversold Cost layers in the Inventory cost file.
When a Purchase is posted through the system which will relieve the Oversold condition
the system needs to get the COGS account used for the original transaction and either
debit or credit it depending on whether the difference between the oversold cost and
the actual cost is more or less.
The system looks in the Inventory transaction history file for the COGS account rather
the Item Location file ( where the COGS account is defined ). If there is no COGS account
in the Inventory transaction history file then the system will look into the Inventory
Name and Options file and take the Default System Expense account as a replacement for the COGS account.
This transaction will show up as a Debit or Credit on the AP Dist to GL report.
