Inventory transactions can be physically updated and financially updated in Microsoft Dynamics AX, and certain types of physical and financial transactions increase inventory quantities, while others decrease the quantity.

This topic provides an overview of which types of transactions increase and decrease inventory quantities.

When a physical transaction is posted, the status of the transaction record is Received. The following transactions are considered physical increases:

  • Purchase order receipt

  • Sales order packing slip return

  • Production order report as finish

  • By-product on a production order picking list

When a financial receipt transaction is posted, the status of the transaction record that increases the quantity is Purchased. The following transactions are considered financial increases:

  • Purchase order invoice

  • Sales order invoice for a return

  • Production order costing

  • Positive quantity inventory journals, such as movement, profit loss, counting journals, bills of material, and transfer

When transactions that increase quantity are posted, Microsoft Dynamics AX calculates a running average cost price that is based on the cost of each of these transactions for each inventory dimension that is being tracked financially. (For information on running average cost price, see About running average cost price.)

Microsoft Dynamics AX uses the calculated running average cost price when a transaction that decreases quantity is posted, no matter which inventory model is associates with that inventory, so long as the transaction that decreases quantity was not previously marked to another transaction before posting. If the physical on-hand inventory goes negative, then Microsoft Dynamics AX will use the cost defined for the item on the tab of the form (click > Places> ).

Note Note

If multi site functionality is enabled, this cost will instead be the inventory cost defined for a site on the form ( > Places> > ).


When a physical issue transaction is posted, the status of the transaction record is Deducted. The following transactions are considered physical issues:

  • Production order picking list journal

  • Sales order packing slip

  • Purchase order packing slip return

When a financial transaction is posted, the status of the transaction record is Sold. The following transactions are considered financial issues:

  • Production order ended

  • Sales order invoice

  • Purchase order invoice return

  • Negative quantity inventory journals, such as movement, profit loss, counting journal, bills of material, and transfer

Since transactions that decrease quantity are posted at the running average cost price, the inventory close procedure is needed to settle the issue transaction to a receipt transaction based on the inventory model assigned to an item.

See Also