Shipped and Invoiced vs Invoiced and Consumed in Service Module

 In Microsoft Dynamics 365 Business Central, when items or resources are invoiced, the financial impact on the General Ledger (G/L) is realized, as revenue is recognized and the associated costs are recorded. However, the distinction between "shipped and invoiced" versus "invoiced and consumed" often lies in the timing and the nature of the transaction related to inventory or resource management.


Shipped and Invoiced:


When an item is shipped, it generally means it is physically leaving inventory, thus reducing the inventory asset on the balance sheet.

The invoicing of that shipped item will trigger the recognition of revenue and the matching of the cost of goods sold (COGS) to that revenue, impacting the income statement.

Invoiced and Consumed:


For items, "consumed" usually indicates that they are used up in the process of providing a service or producing another item. This reduces inventory and increases COGS.

For resources, "consumed" relates to the utilization of the resource (like labor hours). Invoicing these consumed resources will recognize revenue and may impact the cost of service provided on the income statement.

In both scenarios, once the invoice is posted, the revenue is recognized, and the associated costs are recorded in the G/L. The difference lies in how inventory or resources are tracked and managed before the invoicing:


Shipped usually pertains to the physical movement of inventory items and is related to sales and distribution processes.

Consumed relates to the usage of items or resources within service or production processes.

So in essence, the G/L impact regarding revenue and cost recognition is similar once invoicing occurs, but the shipment and consumption reflect different operational processes that have their own implications on inventory management and resource allocation before the financial impact is realized through invoicing.

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