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Key Concepts 99

an account assignment category of K (cost center) is provided to override the
data that are included in the material master, which would otherwise defi ne
helmets as stock material. Because category K is used, a specifi c consumption
account (e.g., advertising expense) and a cost center associated with the trade
show are required.
In our example, the t-shirts are purchased to stock. Because material
master data for the t-shirts are defi ned in the ERP system, the data needed
for account assignment will be obtained automatically from the material
master.

STOCK TYPE OR STATUS
Stock or inventory of materials is classifi ed into different stock types or sta-
tuses that determine the usability of materials— that is, how the company can
use the materials in its various processes. Four common stock types are unre-
stricted use, in quality inspection, blocked stock, and stock in transit. Materials
that are classifi ed as unrestricted use—as the name implies—can be used in
any manner that management feels will benefi t the enterprise. They can be
consumed internally—for instance, to produce other products—or externally,
to meet customer demand. In contrast, materials defi ned as in quality inspec-
tion or blocked stock can be withdrawn only for sampling or for scrap. A
company uses the in quality inspection status when the goods it receives from
a vendor must undergo inspection before being released for consumption.
Blocked stock is typically used for materials that are damaged or unusable
for some reason, such as the when the vendor delivers the wrong materials.
Finally, when materials are being moved from one plant to another, they are
classifi ed as stock in transit.

GOODS MOVEMENT
A process step that results in a change in stock results in a goods movement.
The goods movement is associated with receiving materials from a vendor,
shipping them to a customer, or otherwise “moving” them from one loca-
tion within the company to another. The four common goods movements are
goods receipt, goods issue, stock transfer, and transfer posting. The fi rst three
movements involve the physical movement of materials from one location to
another. The fourth, transfer posting, is used to change the stock type or status
of material (e.g., from in quality inspection to unrestricted use) or to reclassify
the material into a different material type.
A goods receipt records the receipt of materials into storage, which
results in an increase in inventory quantity. A company usually generates
a goods receipt when it receives materials either from a vendor or from
the production process. The material document created as a result of a
goods receipt will show the location (plant and storage location) where
the materials are received as well as the specifi c movement type used. The
accounting document will identify the various general ledger accounts that
are updated.

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