Balancing inventory

Good day.
I am a small business owner and was looking for an accounting program to help me keep track of all business activities. I just want to say that thanks to Manager I can do just that, keep up the great work!
Now I am no accounting guru, but I do have some experience in this field. I just have one small query… I can’t get my stock to balance.

This is what I have done:

  1. Created the supplier,
  2. Created the inventory item,
  3. Created and emailed the purchase order,
  4. Created the purchase invoice after receiving the supplier invoice,
  5. 50 units of the items now shows in my stock… (great)
  6. sold 14 units,
  7. Only now realized that I need to create a journal entry, (but this should not have influence on my stock levels, should it)
  8. Created a journal entry, one for Accounts payable and one for Inventory on hand,
  9. linked the Accounts payable entry to the purchase invoice and linked the Inventory on hand entry to the inventory item bought.

Before I created the journal entries the inventory was correct at 50 items bought, 14 sold and 36 on hand. (But the purchase invoice shows as over due)
After creating the journal entry the purchase invoice shows as paid as it should, but the stock level is now -14?

Please can anyone assist me in explaining what I have done wrong or missed?

Was this a cash or credit sale.
Cash Sale would be via Cash Accounts - Receive Money
Credit Sale would be via create Customer and create Sales Invoice.

Why - no Journal entry should ever be required at all.
If you want to pay the purchase invoice use Cash Accounts - Spend Money

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Okay, thank you very much for this answer…
I basically wanted to use Manager to follow stock and to be able to invoice clients and send statements.
I was under the impression that I should use the journal entry (to do the double entry principle) to create payments to suppliers and from clients.
luckily this was my second transaction in Manager so starting fresh and creating Cash Accounts will not me too much of a hassle. My first transaction was for business cards and I used the journal entry to show cash paid to supplier (accounts payable) and Stationary received. I will now also use the cash accounts function to do that. I do apologize for seaming so ignorant regarding accounts and how this process works but I think i will get there soon enough. :slight_smile:
Again, thank you very much, your answer did help me allot, now let me go and redo everything.

It sounds like you understood the double-entry accounting process, but didn’t realize Manager makes those double entries behind the curtain for you. There are many reasons why transactions involving movement of funds into or out of the company are not allowed in the Journal Entries tab. I won’t bore you. Suffice it to say, a Spend Money transaction is the record-keeping equivalent of:

Debit - expense account, account payable or other liability account, or an equity account (whatever is selected for transaction allocation)


Credit - cash account from which the expenditure is made

The entry screen just makes it seem like there is only one entry.

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Thank you Tut, it does make much more sense now and over the next few days I will try to make myself more familiar with Manager and how this program work.:+1:

The only time that I use Journal entries is to record an expense for this year even if I am paying the bill in the following tax year as I use cash based accounting not accrual. Other than that, I never ever touch the Journal Entries. For virtually every normal business day transaction, you should never need to use Journal Entries.

In a sense you have to unlearn some of what you know about accounting and pretend that journal entries don’t exist because thats the old way of doing things ie debit this account and credit that account. Use Cash Bank Spend and Receive etc or in Purchase Invoice, you can click spend money and pay the invoice that way. No need to ever touch Journal Entries.

Shot, thanks Dalacor.
I tried hiding that tab, but it doesn’t allow me in the settings to un-check it.
I will just look past it and ignore it.

One more Question…

One I use the Spend Cash option, select supplier and match it to an invoice, will it automatically allocate the stock on that invoice to my inventory? If i select that specific item off-coarse… IE. I purchase 500 business cards, allocate it to stationary under expenses and match it to the invoice. and for normal sales stock I will select accounts payable under liabilities and match the supplier and invoice like that. I don’t still have to input the stock somewhere else right?

If you are buying the inventory for cash - Spend Money and under Account select Inventory Item.
If you are buying on credit use Purchase Invoices and under Account as above.

To pay the Purchase Invoice - Spend Money and under Account = Accounts Payable + Supplier + Invoice.

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A couple more points, @Fosee:

  1. Journal Entries tab cannot be hidden because it is one of the default tabs in Manager. I will observe with tongue in cheek that @dalacor has always expressed a desire never to use them. :wink: But they are sometimes necessary. For example, if you are using Capital Accounts, they are pretty well unavoidable at certain times during the year, at least if you make a profit. :slight_smile:

  2. You, of course, are free to track your supplies as you see fit. But it seems like overkill to have an inventory item for business cards, because then you will need to continually write them off as you use them. Probably better to allocate such a purchase to a stationery or expendable supplies expense account. Most accounting standards would have you do that for anything you will consume within the span of an accounting period or for which it is impractical to maintain inventory. I don’t think any auditor would quibble about business cards. Supplies such as raw materials that go into produced inventory items might be a different story.

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Thanks for the replies guys/ladies, much appreciated. I will keep note of these points. I wanted to keep track of office consumables as it should minimize costs, wastage and theft, but I agree with you that it will be a mission to do the accounting and to keep track thru the stock/inventory system.:slight_smile:

They are only necessary until Manager makes them unnecessary. I envisage a day when Manager will render Journal Entries obsolete. I think of Journal Entries as the old fashioned way of doing things and accounting programs like Manager have created shortcuts or simpler ways of doing the job that was originally done in Journal Entries. One day, Manager will be able to do all the jobs via simpler methods and render Journal Entries obsolete.

That will never happen - why - because Journals in it various disguises are the foundation of accounting. Just because Journals are re-badged with different titles doesn’t change their existence

Sales Journals - Sales Invoices
Purchase Journal - Purchase Invoices
Cash Receipts & Payment Journals - Cash Accounts.

Then there are the special purpose Journals
Production Orders
Inventory Write off

Also the “General” Journal used for
Year end adjustments
Correcting errors

In fact, all Journals are only a sub-set of the General Journal - breakaways which are given specific tasks - create transaction organisation

Every transaction posted is an entry into a “Journal” which is subsequently transferred to a ledger. Couldn’t get much simpler - accounting software just enables it to occur more efficiently.

Allow me to clarify my point. What you say is correct and this is not what I meant to imply. Journals will always exist in the same way that one and zeros will always be the building blocks of computer programming. But programmers don’t have to know about on/off states for getting a computer to do something because operating systems, firmware and programming languages have made it far more simpler and efficient to do. However, everything a programmer does is ultimately resolved into on/off states i.e. ones and zeros.

Likewise with Manager and Journal Entries. Journals will never cease to exist as they are the building blocks of accounting, but what I meant was the Tab Journal Entries will no doubt eventually be removed when Manager is capable of doing all transactions (such as reverse journal entries like my famous post some months back) through the other tabs. Thus Journal Entries for the end user will become obsolete in that while Journals will still exist as the bedrock of accounting the end user won’t know or care about them.

No, every thing can’t be programmable so there can be no elimination.
Take your own previous topics - provision for tax - dividends - account fees

Your accounting profit could be 30,000 and the tax rate = 33%
So a programme calculates the tax provision at 10,000
But your tax return profit may be 24,000 or 36,000 due to timing differences.
So how does your tax provision become either 8,000 or 12,000

Same with dividends, making a provision for them could never be programmable.
How will the programme know your accountants fees to accrual.

I guess on could develop a whole series of various input tables where one just fill the boxes
eg. Year End Adjustments table

Not to drag the topic on, but to give you an example - Lubos said that for reverse journal entries, he is going to do something like that. Lubos new module

I wasn’t meaning to imply that everything would be programmable, I simply meant that instead of using the Journal Entry to do the aim, it would be done in a different way as per the example above. When I was talking about programming, I was simply refering to the concept of ones and zeros not being necessary for end users to know when doing programming, not implying that Manager could make everything programmable.

To use your examples above Provision for Dividends may be done in a new Tab called Company Accounts where you can pay/Provisions Dividends, Corporation Tax etc. You already have a tab for Capital Accounts, so its only a matter of time before a Company LTD Tab comes in to handle Dividends and Corporation Tax etc. Thats all I meant.

You may well be right that we would never be able to eleminiate Journal Entries, but I can see a number of things that can be done differently in the program such that it would remove the need for one to use the Journal Entries. I don’t like Journal Entries because its too easy to make a mistake whether one should use Debit or Credit for an account such as provision for Dividends.