Accounting for inventory corrections

Manually adding and removing inventory (IA)

Inventory corrections can be made one item at a time, or in bulk across all products after a stock take by using an import. Regardless of the method, the resulting accounting will be the same.

These types of journal are always in base currency.

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Adding inventory

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Adding inventory always debits your inventory asset code, and credits the "Inventory corrections (adding stock)" code as set under Settings > Company > Accounting: accounts (nominal codes).

Removing inventory

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Removing inventory always credits your inventory asset code, and debits the "Inventory corrections (removing stock)" code as set under Settings > Company > Accounting: accounts (nominal codes).

Inventory price correction (IA)

Any updates made to the price (value) of items in stock will automatically post accounting adjustments. The system removes the inventory at the old price and enters the inventory at the new price.

These types of journal are always in base currency.

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The two journals posted are:

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Instead of debiting and crediting the item's "Purchases" code, the system will debit and credit the "Inventory unit value correction" code as set under Settings > Company > Accounting: accounts (nominal codes). However, you can change which code the adjustments post to when performing the price correction.

Unreceiving items on a purchase (PG)

When items are unreceived on a purchase order, the items will be removed from stock and an accounting journal will be created to decrease assets.

The entries reverse the accounting that was created when the items were received into stock.

Note that unreceiving items on a purchase order differs from a stock correction since the items can be received against the order again.

These types of journals are always in base currency.

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Where multiple items are unreceived at the same time, each goods-in row deleted results in two journal rows as described above.

Where items have been allocated landed costs, the landed costs will also be reversed. If the items are received into stock again, the landed costs will be assigned once more.

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Purchase price corrections (GO)

When items are received into stock, the asset value is the item's price on the purchase order at that point in time. When the purchase invoice is later received, the price may need to be corrected to match the invoice.

Any change to the item price will result in an accounting correction being made to make the necessary adjustments for the difference, since the item was added into stock at an incorrect value.

These types of journals are always in base currency.

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Note that the price correction will be posted directly to cost of goods sold and will not update the item value in stock. Once the items are sold the overall correct cost of goods sold will be reported for the sale.

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