Which statement is true about Drop Ship and Special Order items?

Both Drop Ship and Special Order processes in NetSuite allow for the creation of a purchase order directly from a sales order to fulfill a specific customer's request. This functionality is applicable to both Inventory Items and Non-Inventory Items for Resale. While the subsequent fulfillment and accounting treatments differ (e.g., Special Orders for inventory items are physically received into stock), the initial step of linking a sales order line to a corresponding purchase order can be performed for both item types in either process.

B. Items can be marked as both Drop Ship and Special Order. This is incorrect. On an item record's Purchasing/Inventory subtab, an item can be set as a default Special Order Item or a Drop Ship Item, but not both simultaneously.
C. Vendor ships items to customer’s address. This statement is only true for the Drop Ship process. For Special Orders, the vendor ships the items to the company's location for receipt into inventory before fulfillment to the customer.
D. Impact Asset and Cost of Goods Sold (COGS) accounts upon item receipt and fulfillment. This accounting impact is characteristic of Special Orders for inventory items. Drop Ship items bypass the company's inventory, so they do not impact an asset account.

1. NetSuite Help Center. (2023). Creating Purchase Orders from Sales Orders.

Reference: This document states, "You can create purchase orders for both drop-ship and special order items directly from sales orders... For items that are not inventory items, you can create a purchase order that is linked to the sales order. This enables you to track the purchase for the sale, but it does not require that you stock the item or track it as inventory." This supports that the process can be used for both inventory and non-inventory items.

2. NetSuite Help Center. (2023). Drop Shipments and Special Orders.

Reference: This topic defines the two processes. For Special Orders, it states, "you order them from the vendor when a customer places an order... you receive the items into your warehouse." For Drop Shipments, it states, "having a vendor ship an item directly to your customer." This confirms that option C is only true for Drop Ship.

3. NetSuite Help Center. (2023). Special Orders vs. Drop Shipments.

Reference: This guide details the accounting impacts. For Special Orders, it notes, "When you receive the item, the asset account for the item is debited." For Drop Shipments, it clarifies, "Drop-shipped items are not processed through your inventory, so they do not post to an asset account." This confirms that option D is incorrect for Drop Ship items.

4. NetSuite Help Center. (2023). Setting Up Item Records for Drop Shipping and Special Orders.

Reference: This article explains the item setup: "On the Purchasing & Inventory subtab of an item record, you can check the Drop Ship Item box or the Special Order Item box..." The use of "or" and the user interface design confirm that these are mutually exclusive default settings, making option B incorrect.