"Local variable referenced before assignment" in Python

This is just another indention issues. You are calling truth_table() in menu() just before it was assigned. You can outdent the def truth_table(): line until your except line by one tab or 4 spaces.

You code should look like this and you're good to go:

import itertools
import sys

def menu() :
    print ("Testing logical equivalences")
    print ("1. View instructions")
    print ("2. Create a truth table")
    print ("3. Exit")
    choice = input ("Please select an option: ")
    if choice =="1":
            print("=================================================================================")
            print ("sdasd")
            print()
            print("Examples will be shown below")
            print("Any of the five inputs have to be lower case and only")
            print("Example: A and B (NOT C) would look like ' a and b and(not c)'")
            print("All inputs are converted to lower-case. Do NOT use '' marks!")
            print()
            print("LIMITS OF THE APP ===============================================================")
            print("1. App won't allow any inputs beside (a,b,c,d,e)")
            print("2. To ensure correct use of parentheses (inner statements are evaluated first)")
            print("3. The limit of inputs is 5")
            print("4. Evaluation of the logical statement will be print in the next availabe column")
            print("5. If your statement can't be evaluate, check for syntax and brackets")
            print()
            print()
            wait = input("Press ENTER to return to the menu. ")
            menu()
    elif choice =="2":
        truth_table()
    elif choice =="3":
        print("Program Terminated")
        sys.exit()
    else:
        print ("Invalid input")
        menu()

def truth_table():
    while True:
        try:
            inps = int(input("Please enter the number of inputs you want 1 - 5. "))
            if inps <1 or inps>5:
                print ("1 input minimum, 5 max")
            else:
                break
        except:
            ValueError
            print ("You must input a number between 1 and 5")

    truths = list(itertools.product([False,True], repeat=inps))

    statement = input("Please input the logical statement e.g. (a and b) not c.")
    statement = statement.lower()

    print ("A AND B OR C")##changeme A is item[0], B item[1] ...E item[4] etc.
    print ("A\t\tB\t\tC\t\tD\t\tE\t\tF")
    print("-"*20*inps)

    for item in truths:
        pos = 0
        if inps == 1:
            a = item[0]
        elif inps == 2:
            a,b = item[0], item[1]
        elif inps == 3:
            a,b,c = item[0], item[1], item[2]
        elif inps == 4:
            a,b,c,d = item[0], item[1], item[2], item[3]
        else:
            a,b,c,d,e = item[0], item[1], item[2], item[3], item[4]
            pos = 0
        while pos < inps:
            print (item[pos],end = "\t\t")
            pos += 1
        try:
            truth = eval(statement) ###turns user input into code
            print (truth)
        except:
            print ("Unable to evaluate. Check statement")
        print()
        wait = input("Press ENTER to return to the menu. ")
        menu()
menu()

Try this. The error you mentioned doesn't appear any more. (There could be other design error, but this solves the problem you mentioned, at least).

import itertools
import sys

def menu() :

    def truth_table():
        inps = None
        while True:
            try:
                inps = int(input("Please enter the number of inputs you want 1 - 5. "))
                if inps <1 or inps>5:
                    print ("1 input minimum, 5 max")
                else:
                    break
            except:
                ValueError
                print ("You must input a number between 1 and 5")
        return inps

    print ("Testing logical equivalences")
    print ("1. View instructions")
    print ("2. Create a truth table")
    print ("3. Exit")
    choice = input ("Please select an option: ")
    if choice =="1":
            print("=================================================================================")
            print ("sdasd")
            print()
            print("Examples will be shown below")
            print("Any of the five inputs have to be lower case and only")
            print("Example: A and B (NOT C) would look like ' a and b and(not c)'")
            print("All inputs are converted to lower-case. Do NOT use '' marks!")
            print()
            print("LIMITS OF THE APP ===============================================================")
            print("1. App won't allow any inputs beside (a,b,c,d,e)")
            print("2. To ensure correct use of parentheses (inner statements are evaluated first)")
            print("3. The limit of inputs is 5")
            print("4. Evaluation of the logical statement will be print in the next availabe column")
            print("5. If your statement can't be evaluate, check for syntax and brackets")
            print()
            print()
            wait = input("Press ENTER to return to the menu. ")
            menu()
    elif choice =="2":
        inps = truth_table()
    elif choice =="3":
        print("Program Terminated")
        sys.exit()
    else:
        print ("Invalid input")
        menu()

    if inps is not None:
        truths = list(itertools.product([False,True], repeat=inps))

        statement = input("Please input the logical statement e.g. (a and b) not c.")
        statement = statement.lower()

        print ("A AND B OR C")##changeme A is item[0], B item[1] ...E item[4] etc.
        print ("A\t\tB\t\tC\t\tD\t\tE\t\tF")
        print("-"*20*inps)

        for item in truths:
            pos = 0
            if inps == 1:
                a = item[0]
            elif inps == 2:
                a,b = item[0], item[1]
            elif inps == 3:
                a,b,c = item[0], item[1], item[2]
            elif inps == 4:
                a,b,c,d = item[0], item[1], item[2], item[3]
            else:
                a,b,c,d,e = item[0], item[1], item[2], item[3], item[4]
                pos = 0
            while pos < inps:
                print (item[pos],end = "\t\t")
                pos += 1
            try:
                truth = eval(statement) ###turns user input into code
                print (truth)
            except:
                print ("Unable to evaluate. Check statement")
            print()
            wait = input("Press ENTER to return to the menu. ")
            menu()
menu() 

You need to move the definition of the truth_table function either:

1. About the if/else blocks that use it, or
2. Out of menu entirely (dedent it, and put either before or after the menu function)

As is, it's a local variable to menu, which is only assigned when you reach the def truth_table line, but you're trying to call it before then.