Inventory

The Inventory system tracks inventory stock levels and costing.

Inventory is received via receipts and depleted via sales. Warehouse transfers, physical count corrections, and reduction of inventory due to spoilage/breakage, theft and samples, etc. are entered via adjustments.

The GL inventory account(s) are updated by Journal Vouchers created automatically from AR invoices and AP Invoices, and Journal Vouchers entered directly to the GL. They aren't updated by inventory receipts, or adjustments, by changing a cost manually, or by changing the item to a different item type that uses a different costing method or is non-inventory.

At period-end you should enter an accrual (reversing JV) for any inventory that has been received but you haven't yet received an AP invoice. (Debit Inventory and credit AP journal). To facilitate the accrual and to ensure that you don't get billed twice, etc. by the vendor:

- When the goods arrive the receiving document is matched to a copy of the PO and sent to the AP clerk.
- The AP clerk maintains a file of outstanding (unbilled) receipts (PO and receiving document). When the AP invoice is received it is matched to the PO and receipt, which are filed with the AP invoice. At period-end any outstanding (unbilled) receipts are totalled and used for the accrual.

Then you should print a Value by GL Account /Item report and enter a JV to synchronize the GL inventory account(s) to the inventory report (typically one entry to Inventory and the opposite entry to Cost Of Goods Sold) to account for any adjustments or manual cost changes, etc. or weighted average cost discrepancies caused by selling negative inventory (for example if the receipt wasn't entered yet) where the sale would update the GL using the old cost.