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There are no hard-n-fast rules as to how they are used but here are some general guidelines
Service items are used to denote the services you SELL to your customers. These are not buy items but they are orderable.
Expense items are used for items that you BUY the items and expense right away. They are purchable and inventory items. But they are not transactable nor stockable. They are not orderable.
Hope this answers your question
Thanks for reply dear.
I want to know what attributes I have to set at Item Master Level for such type of items ?
Use the seeded "Service" item templates to create your service items.
For expense items, make sure it is purchasble, non-stockable, non-transactable, non-sellable, non-cost enabled, and inventory asset value = no.
What if we need to purchase a service from outside supplier/Vendor.
Do you suggest to use expense item for purchasing the service?
We have seen in many implementations, business normally use services as expense.
/ S.P DASH