Periodic Inventory method
The system uses perpetual inventory method as the default system inventory method.
Inventory is calculated when the document is saved.
For users that keep track of their stock cost outside of the system can use the periodic inventory method.
this mean that a stock count is taken at periodic intervals to calculate your cost of goods sold (COGS).
Opening stock + new stock purchases - Closing Stock = COGS
to use periodic method ensure the following
- Balance sheet has a stock account
- if you have inventory type items they are taken into the system at zero cost this is to prevent the system from affecting the stock account.
Require Setup.
Chart of account.
An account with the category type 'cost of goods' need to be created.
the account category is the same as cost of sales type only difference is that the system will use the cost of goods type for P&L reporting formatting purpose.
Sample entry for stock purchases.
it is not necessary to have such entries, but in order to cover more types of workflow it is included as an example.
the entry consists of 2 types of purchases.
a stock type purchase and a non-stock purchases.
the purpose is to show how you can still take in purchases using periodic method.
the non stock purchase entry is for the report to show the how the report will present the information.
Periodic Inventory Journal
A Journal entry will be created to take in the closing stock value.
the opening stock(current system) value is the previous closing stock value. (value can be taken from GL using as at filter)
the closing stock value is the value from outside the system.
P&L report
the P&L report only has the following entries
choose the Periodic Inventory report
the periodic inventory report.
opening stock is the value as at value from the GL before the selected period (in my sample the values is taken as at 2019)
closing stock value is the GL value as at the last day of the selected period. ( in my sample the value is taken as at 31 dec 2020)
purchase/adjustment values are from any transaction on the COGS account.
the purchase entry of 3000 is outside the COGS box.
Opening stock + stock purchases - Closing stock =COGS
10000 + 500 - 3000 = 7500
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