What is valuation strategy in SAP FIN-BAC-INV - Inventory Accounting?

SAP Term: valuation strategy

• Component: FIN-BAC-INV

• Component Name: Inventory Accounting

• Description: Defines how goods movements are valued. The valuation strategy is not permanently defined in the materials inventory object but rather determined based on the particular business transaction. Different valuation strategies can be used for different processes. Examples: For a purchase order, the goods receipt can be valued with the order price. The valuations for goods issue can be derived from the inventory value.

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• Key Concepts: 
  Valuation strategy is a feature of the FIN-BAC-INV Inventory Accounting component of SAP. It is used to determine the value of inventory items and to ensure that the correct value is used in financial reporting. The valuation strategy can be set up to use different methods, such as FIFO (First In, First Out), LIFO (Last In, First Out), or Average Cost. 
  
  How to Use it: 
  The valuation strategy is set up in the SAP system by entering the desired method into the system. This can be done by going to the Inventory Accounting component and selecting the Valuation Strategy option. Once the desired method is selected, it will be applied to all inventory items in the system. 
  
  Tips & Tricks: 
  It is important to select the correct valuation strategy for your business needs. Different methods may produce different results, so it is important to understand how each method works and which one will best suit your business needs. Additionally, it is important to regularly review and update your valuation strategy as needed. 
  
  Related Information: 
  For more information on setting up a valuation strategy in SAP, please refer to the official SAP documentation on Inventory Accounting. Additionally, there are many online resources available that provide more detailed information on setting up and using a valuation strategy in SAP.