Difference between Asset and Expense Items

Difference between expense item and inventory item

Those Item that needs to maintain stock and tracking are inventory Items.
Creating unique Item coding for each SKU's
Non-Stock able Items that is direct IN & OUT, are expense items. For such
items no need to create Item code for all. Only few codes can be created and in
PR & PO description can be change
For example
Inventory items: Machine parts, Raw Materials, Any Trading Items etc
Expenses Items: Assets, services, Projects, consumables (Office Stationery)
etc.
You cannot define an item as expense and inventoried at the same time. But
you can define the item as inventory item.
And when you want to use it as expense, move it to an expense subinventory.
We need to uncheck the attribute "Asset Subinventory" in the specified
subinventory.
You should uncheck the asset flag for that subinventory. Make sure that the
subinventory accounts are setup correctly.
The terminology of items is rather confusing from an
Purchasing/Inventory point of view:
For easy understanding these will be referres to as A , B and C,
A - Expense Items
B - Inventory Expense Items
C - Inventory Asset Items

A - These items have attributes checked

a - Purchasable
b - Purchased
B - These tems have the following attributes checked
a - inventory item = YES
b - stockable
c - transactable
d - Inventory Asset Value = NO
e - Costing Enabled = No
C - These items have the following attributes checked
a - inventory item = YES
b - stockable.
c - transactable
d - Inventory Asset Value = YES
e - Costing Enabled = YES
As you know "procure to pay" Business Flow start Purchasing requisition till
paying to vendors and most important, in all the case the purchase is made for
basic element called Items.
As you know there are three types of items:
Inventory Expense Item
Inventory Asset Item
Expense item
Definition of above Items used in Purchasing can be best understood as:

Asset flag means means it is an asset and the items value will show in your
inventory valuation.
Inventory Item

Expense Item
These are one which is used for consumable items purchase for your
organization. More importantly , for creating an expense item you have to
perform following setup doing in the Master Item form.Go to same path in
oracle inventory
Oracle Inventory -> Items -> Master Items
When master items form open Go to Inventory Menu you need to tick
followings
1. Inventory item
2. Stock able
3. Transactble
4. Resolvable
And you can also setup in Costing and purchasing menu account code as per
your requirement.

Asset Item
As discussed above , the following attributes need to be enabled for such an
item.
Inventory item
Stock able
transact able
Costing flag
Inventory asset value
For entering on purchase orders
It should have purchased and purchasable flags enabled and you have to make
sure you are assigning this item to the Purchasing org which you have defined
at
Oracle Purchasing > Setup > Organizations >
Financial Options > 'Supplier-Purchasing' alternate region 'Inventory
Organization' field.
The accounting can be best described for such kind of items is;

Is there any effect on Step 5 in all three cases, that mean do

matching have different accounting entry?
The answer is no; as per my understanding purpose of setting the PO to a
2way, 3 way or 4 way match is to ensure that the corresponding hold is
generated on the invoice.
The holds are basically designed for control purposes, they do not have any
accounting effects.

1. What is the setup for expense item?

Ans: Disable the asset and costing flags in Item master costing tab
2. Significance of Purchasable & Purchased option?
Ans: Purchasable is an item defining attribute, it tells that item can be
purchased from external Suppliers
Purchased is an item status attribute, item can be purchased in this status
3. Significance of Customer Ordered & Customer Orders enabled?
Ans: CO: Item defining attribute
COE: item status attribute