Allocate inventory write-off to equity account for personal use of stock

Thanks @Tut. I hadn’t seen that. I’ll need to see if I can reallocate one of my limited number of votes to that idea.

I am just applying this logic:

This reason why private use by owner is a write-off applies exactly to sold inventory, and issued for manufacturing:
This also reduces the asset, because you obviously cannot sell it for future income
So I do not see any significant difference.

@Ealfardan, the reasons your arguments fall apart are:

  • Sales transactions require a customer or payer, while inventory write-offs have none.
  • Sales transactions require sales prices, while inventory write-offs have none, only inventory costs.
  • Sales invoices create accounts receivable; inventory write-offs do not.
  • Sales invoices offer options for rounding, tax withholding, early payment discounts, late payment fees, and so forth. Inventory write-offs do not.
  • Sales invoices have due dates; write-offs do not.
  • Production orders generate finished goods; write-offs do not.
  • Production orders allow for non-inventory cost additions; write-offs do not.
  • Production orders take into account insufficient production quantities; write-offs do not.

Suggesting that my comments about inventory write-offs being used for all non-revenue reductions of inventory can be extended to incorporating sales and production is absurd. As I said before, don’t put words into my mouth.

Actually comparing the two way of entering this in Manager the accounting accuracy will depend on if businesses sales are required to be reported in a particular jurisdiction.

When a business uses it’s infrastructure to purchase items then on sell them a cost, then that is part of a businesses sales.

Using a write off suggests the sale is not reported. Doing so is correct when the item is not sold (marketing samples, stolen, broken), but not correct when the item is sold.

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That’s a good point, @Patch. I will need to talk to my accountant about this for my case.

I think that most of the jurisdictions requires your first way of accounting (sales of stocks at cost) since a personal use of stock contributes to the increase of the company turnover with all the consequences (taxation and so on).

Also, accounting should follow the reality of facts and a write off is completely a different thing.

Because option 1 more closely reflects conventional data entry, it also more easily is adapted if circumstances change.

For example, if Owner 1 has their nephew stay, needs an extra bun one week, and physically puts the extra $0.55 in the business till to pay for it.

To enter this using option 1, just increase the bun quantity to 3.

Entering the same transaction via option 2 is more difficult.

In practice, probably an even more likely requirement is Owner 1 sometimes paying directly, sometimes via their capital account, sometimes paying the off the capital account. Then wanting to know overall purchase history trends. Easily done if data is entered via option 1 through customer reports. More challenging if option 2 data entry was used.

You make a good point.

  • Lack of visibility of inventory item available stock and cost price is a difficulty many Manager uses find a limitation.

  • Perhaps Manager should display the quantity on hand and average price in the edit screen when an inventory item is selected. A possible implementation of which is:

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Manager actually maintains three prices for inventory

  • Average price
  • Purchase price
  • Sale price

Maybe all should be displayed on the edit screen. In the above example assuming buy price 0.50 and sell price 1.00 then all could be displayed as

  • ( 6 @ A0.50 P0.50 S1.00)

To cover concerns over display of confidential information, only those values the current users privileges allow could be displayed.

So how do you suggest it handles stock items scattered in many locations?

That is a separate issue, @Abeiku. The program only tracks quantities by location now, not prices or costs.

I do not want the discussion to move away from the topic but I only wanted to make a contribution to what @Patch suggested.

There maybe 10 stock items available but 5 in Location A and 5 in Location B. If I’m selling from location A I really only need to see the balance of the stock item in location A.

So I suggest a location be selected before the stock item balance information get displayed.

If you need to see the inventory items balance for the whole business, go to reports.

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Good question to consider at this time as having an overview of how specific changes will effect other ways of using the program, can help guide early steps. There are a few ways I can think of, my order of preference is:

  1. Make the quantity click-able, then drilling down would give a breakdown.

  2. Only put a link on the payment / receipt page which takes the user to an information page for that item. Not as good in my opinion as it would not work as well as a low quantity warning when ordering (discussed in this idea Inventory zero warning).

  3. Putting all inventory location information on the payment / receipt page. The problem is unbounded space allocation to support the function. Or more specifically the length of the list of inventory locations is unlimited, and the names are under user control so can’t readily be shortened.

An interesting idea.
So you are suggesting

  • each user should specify in their personal setting what is their home location, in the above A, B, or total

  • The quantity displayed on the payment / receipt screen is then for their home location. Drilling down on that would then show the full inventory breakdown (other locations and total for the business)