{"id":1045,"date":"2019-03-18T20:04:49","date_gmt":"2019-03-18T20:04:49","guid":{"rendered":"http:\/\/www.metaoption.com\/blog\/?p=1045"},"modified":"2026-04-14T07:08:20","modified_gmt":"2026-04-14T07:08:20","slug":"how-to-use-the-item-types-in-microsoft-dynamics-365-business-central","status":"publish","type":"post","link":"https:\/\/www.metaoption.com\/blog\/dynamics-365-business-central\/how-to-use-the-item-types-in-microsoft-dynamics-365-business-central\/","title":{"rendered":"How to use the \u2018Item Types\u2019 in Microsoft Dynamics 365 Business Central?"},"content":{"rendered":"\n<p><style>p{float:left;}<\/style><\/p>\n\n\n\n<p>A useful feature in Microsoft Dynamics 365 Business Central is the \u2018Item Types\u2019 where you can set an Item depending on how your company is using it.<\/p>\n\n\n\n<p>For example, if you use the items for consumables such as; packaging tape or office supplies and don\u2019t track the inventory, or scenarios where you treat an item as a time unit to track the spent labor for supporting the business, for example, a consultancy hour.<br>The Item Types feature has been further enhanced in Microsoft Dynamics 365 Business Central compared to the previous versions, \u2018Item Types\u2019 were only categorized as either \u201cInventory\u201d or \u201cService\u201d. A third Item Type called \u201cNon-Inventory\u201d has been introduced in Microsoft Dynamics 365 Business Central. There is now better control in terms of setting up the pricing for items and defining the expense or revenue accounts, rather than the very limited option of using G\/L Accounts or Resources in the purchase or sales order lines. The \u2018Item Type\u2019 can be entered in the \u2018Item Card\u2019 as per Figure 1 below:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.metaoption.com\/wp-content\/themes\/metaoption\/images\/item-option1.jpg\" alt=\"Microsoft dynamics business central 365\" title=\"\"><\/figure>\n\n\n\n<p><strong>The three \u2018Item Type\u2019 options:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Inventory<\/strong><br>This is the standard type of Item that we are all familiar with where the physical item stocks are tracked and values are accounted for. There is an actual item handling involved, therefore the Inventory item type is widely supported across different areas which include; Sales, Purchasing, Job Consumption, Service Consumption, Assembly Consumption, Production Consumption, Assembly Output, Production Output and Item\/Physical Inventory Journals.<\/li>\n\n\n\n<li><strong>Non-Inventory<\/strong><br>These are typically low-cost physical items that are used internally by the business where the item\u2019s stock and value is not tracked. This option is mostly used if you want to record item purchases and capture it as an expense without affecting inventory. A good example of this item type is expense items such as office supplies. This Item Type cannot be used as Assembly Output and Production Output.<\/li>\n\n\n\n<li><strong>Service<\/strong><br>These are non-physical items which often represents a time unit such as labor time. There are only limited transaction types for Service items that include; Sales, Purchasing, and Job Consumption.<\/li>\n<\/ul>\n\n\n\n<p>Some of the vital points about Non-Inventory and Service Item Types are below:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>An Item Ledger Entry is created when a sales or purchase transaction is posted. But there will be no Cost Amount Actual and Remaining Quantity that will be recorded, hence the inventory and value are not tracked. The Quantity is still recorded in the ILE and the value is recorded in the Non-Inventoriable field.<\/li>\n<\/ul>\n\n\n\n<p>See Table 1 below<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.metaoption.com\/wp-content\/themes\/metaoption\/images\/item-option2.jpg\" alt=\"Microsoft dynamics business central 365\" title=\"\"><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The posting to respective the G\/L Accounts has changed because Inventory Accounts and COGS Account are not recorded. It uses the combination of the General Bus. Posting Group and Gen. Prod. Posting Group to map the G\/L Accounts. Table 2 below shows which G\/L Account will be recorded when a Purchase or Sales transaction is posted.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.metaoption.com\/wp-content\/themes\/metaoption\/images\/item-option.jpg\" alt=\"Microsoft dynamics business central 365\" title=\"\"><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Non-Inventory and Service items are excluded in the Inventory Valuation report.<\/li>\n\n\n\n<li>Item Journal adjustments or a stocktaking cannot be posted for these item types.<\/li>\n\n\n\n<li>Location Codes cannot be used when posting transactions. The transaction can still be posted if the location code is blank and the Location Mandatory field is enabled in the Inventory Setup.<\/li>\n\n\n\n<li>Stockout warnings, planning parameters, reservations, item tracking, inventory posting groups cannot be used.<\/li>\n\n\n\n<li>Using Item Types allows better control in processing transactions especially purchase and sales as you can setup a pricing structure like a normal item while ensuring the transaction entries are recorded to the correct expense or revenue accounts. It also enhances the reporting capability as it records the entries in the Item Ledger Entries so you can access historical information and report on purchase or sales trends.<\/li>\n<\/ul>\n\n\n\n<p>Learn more about <strong><a rel=\"noopener noreferrer\" href=\"https:\/\/www.metaoption.com\/dynamics-365-business-central\/\" target=\"_blank\">Microsoft Dynamics 365 Business Central<\/a><\/strong>.<\/p>\n\n\n\n<p><a rel=\"noreferrer noopener\" href=\"https:\/\/www.metaoption.com\/microsoft-dynamics-business-central-nav-add-ons\/?utm_source=MetaOption%20LLC&amp;utm_medium=Blogs&amp;utm_campaign=Add-Ons\" target=\"_blank\"><strong>Explore<\/strong><\/a><strong><a rel=\"noreferrer noopener\" href=\"https:\/\/www.metaoption.com\/microsoft-dynamics-business-central-nav-add-ons\/?utm_source=MetaOption%20LLC&amp;utm_medium=Blogs&amp;utm_campaign=Add-Ons\" target=\"_blank\"> Microsoft Dynamics 365 Business Central and NAV Add-Ons<\/a> <\/strong>from MetaOption which helps your businesses and boost your operations efficiently across various industries. <\/p>\n\n\n\n<p>For more information and a tailored demonstration, please <strong><a rel=\"noopener noreferrer\" href=\"https:\/\/www.metaoption.com\/contact-us\/\" target=\"_blank\">contact us<\/a><\/strong> at MetaOption to learn more: (201) 377-3150.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n<h3><span class=\"ez-toc-section\" id=\"What_are_Item_Types_in_Dynamics_365_Business_Central\"><\/span>What are Item Types in Dynamics 365 Business Central?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n    Item Types define how an item is used in the system, allowing businesses to classify items as Inventory, Non-Inventory, or Service.\n<\/div>\n\n<h3><span class=\"ez-toc-section\" id=\"What_is_the_purpose_of_the_%E2%80%9CInventory%E2%80%9D_item_type\"><\/span>What is the purpose of the \u201cInventory\u201d item type?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n    It is used for physical items with stock tracking, valuation, and full support across sales, purchasing, production, and inventory processes.\n<\/div>\n\n<h3><span class=\"ez-toc-section\" id=\"When_should_a_Non-Inventory_item_type_be_used\"><\/span>When should a Non-Inventory item type be used?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n    For low-cost items used internally, where stock and value are not tracked\u2014such as office supplies.\n<\/div>\n\n<h3><span class=\"ez-toc-section\" id=\"What_is_a_Service_item_type\"><\/span>What is a Service item type?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n    It represents non-physical items like labor hours, used mainly in sales, purchasing, and job consumption transactions.\n<\/div>\n\n<h3><span class=\"ez-toc-section\" id=\"What_limitations_apply_to_Non-Inventory_and_Service_items\"><\/span>What limitations apply to Non-Inventory and Service items?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n    They do not track inventory value, cannot use location codes in postings, are excluded from valuation reports, and cannot be used for assembly or production outputs.\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>A useful feature in Microsoft Dynamics 365 Business Central is the \u2018Item Types\u2019 where you can set an Item depending on how your company is using it. For example, if you use the items for consumables such as; packaging tape or office supplies and don\u2019t track the inventory, or scenarios where you treat an item\u2026 <span class=\"read-more\"><a href=\"https:\/\/www.metaoption.com\/blog\/dynamics-365-business-central\/how-to-use-the-item-types-in-microsoft-dynamics-365-business-central\/\">Read More &raquo;<\/a><\/span><\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","footnotes":""},"categories":[629,11],"tags":[613,325,61,637,45,612],"class_list":["post-1045","post","type-post","status-publish","format-standard","hentry","category-dynamics-365-business-central","category-general","tag-dynamics-365-business-central","tag-dynamics-365-for-business","tag-dynamics-nav-financial","tag-item-card","tag-microsoft-dynamics-erp-partner-in-new-jersey","tag-microsoft-dynamics-partner-new-jersey"],"featured_image_src":false,"rttpg_featured_image_url":null,"rttpg_author":{"display_name":"Naushad Ahmed","author_link":"https:\/\/www.metaoption.com\/blog\/author\/naushad\/"},"rttpg_comment":0,"rttpg_category":"<a href=\"https:\/\/www.metaoption.com\/blog\/category\/dynamics-365-business-central\/\" rel=\"category tag\">Dynamics 365 Business Central<\/a> <a href=\"https:\/\/www.metaoption.com\/blog\/category\/general\/\" rel=\"category tag\">General<\/a>","rttpg_excerpt":"A useful feature in Microsoft Dynamics 365 Business Central is the \u2018Item Types\u2019 where you can set an Item depending on how your company is using it. For example, if you use the items for consumables such as; packaging tape or office supplies and don\u2019t track the inventory, or scenarios where you treat an item\u2026&hellip;","_links":{"self":[{"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/posts\/1045","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/comments?post=1045"}],"version-history":[{"count":30,"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/posts\/1045\/revisions"}],"predecessor-version":[{"id":5394,"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/posts\/1045\/revisions\/5394"}],"wp:attachment":[{"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/media?parent=1045"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/categories?post=1045"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.metaoption.com\/blog\/wp-json\/wp\/v2\/tags?post=1045"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}