Inventory transactions affect the General Ledger (GL) in three different places:
1. Invoicing – During invoicing of a Sales Order, items are added to the Physical Inventory and also to the GL. Items that were pulled from inventory during the Purchasing cycle are also accounted for in the General Ledger.
2. Payables – When Payables connected to Product Purchase Orders are entered into the system, Inventory is increased.
3. General Journal Entries – General Journal entries can be made to affect any GL account and are used when adjustments need to be made to the GL.