Three general ledger accounts are associated with each inventory product: a cost of goods sold account, an inventory account and a sales account. These accounts are posted to automatically when the closing routines are run at the end of a period. Since these accounts are entered for each inventory product individually, it is possible to have multiple accounts. For example, you could have a separate sales account for each category of inventory if you wished. These general ledger accounts must be set up before any inventory products can be entered.
One of the three accounts associated with each product is a controlling account. This account, inventory, is handled in a manner similar to that of the accounts payable or accounts receivable accounts. When the general ledger balances are being set up, the balance for the inventory controlling account is established using a General Journal entry.
Refer to the Set Up section in the General Ledger manual for further instructions on setting up general ledger balances.