Setting a Default Inventory Costing Method
You can select the type of inventory costing method your business uses. The cost of your inventory includes your items' purchase prices and any other costs you incur to get them. The costing method determines how you handle the costs of buying the same items at different prices over time. For more information about costing methods, see Costing Methods.
The costing method you select in Accounting Preferences is the default method used to track the cost of your items. When you create a new item, you can accept this default costing method or select a different one on the Basic subtab of the item record.
In NetSuite, average costing is the costing method selected by default. Only a person with permission to access the Accounting Preferences page can change your default inventory costing method.
You can't change the costing method after you save it on the item record.
NetSuite records inventory costs at different times depending on whether you use the Advanced Receiving feature.
To enable the Advanced Receiving feature:
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Go to Setup > Company > Setup Tasks > Enable Features..
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On the Transactions subtab, check the Advanced Receiving box.
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Click Save.
If you use Advanced Receiving, costing happens when you receive items and create item receipts.
If you don't use Advanced Receiving, costing happens when you enter the bill.
To select a default inventory costing method:
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Go to Setup > Accounting > Preferences > Accounting Preferences.
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Click the Items/Transactions subtab.
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In the Default Inventory Costing Method field, select the method your company uses.
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Click Save.
The Costing Method field on item records shows your default selection. You can still select another method when you create an item record.
NetSuite tracks and reports your inventory based on the costing method you select for each item. If you need a different costing method, an administrator can change your inventory costing method. For more information, see Changing Your Costing Method.
The item cost updates your asset account and Cost of Goods Sold (COGS) account each time you receive or fulfill the item.
For items in your inventory, select the COGS account where costs post for posting transactions.
If you started using NetSuite before LIFO and FIFO costing were available, you can't automatically apply LIFO or FIFO costing to your current inventory.