Quoted from another reply:

Where it is consignment stock from a supplier on the client's site we normally create a separate account set where we set the Stock Control and Receipt Clearing account to be the same account, a consignment control account.
This means that when you receive stock it will have no influence on the GL balance.
As you now use (or sell) stock in the month, a credit will be generated to the consignment control account, which at the end of the month must balance back to the total of consignment stock used or sold. This is also then the amount that your supplier must invoice you for stock, but this invoice is done in AP to the Consignment control account.
When the supplier replenishes stock it is done through IC receipts, from the setup above it has no influence on the GL balance.
Obviously when you print your month-end reports to balance IC to GL the consignment stock must be excluded from your IC valuation reports. Use a separate IC location for consignment inventory so that it can be excluded from the item valuation report.