May I know how the average calculation cost of credit note ? I have a transaction from 2022 that just been returned last year, when I check the average cost in the inventory I couldn’t manage to get where the numbers come from. I need to give explanation to the auditor how the system calculate the average cost.
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In my test,
Credit Notes Inventory Cost = Last Sales Inventory Cost
Look at Credit Note Date and Last Sales before/after Credit Note
I have same Quesrtion, how it should, and how Manager work on this
Hi, May I know which report that you use to generate that report ?
It’s not showing like that in my case, I tried calculated manually the numbers is not the last sale avg cost.
Reports - Custom Reports
Inventory costs are not calculated before there is a sale
Could you show me how to set the custom report to generate the same as yours ?
@rully_p, you illustrate why forum rules limit you to one topic per thread. I don’t know which issue you want help with. @Mabaega already answered your original question. .
Hi @Tut I created 3 Credit note for 3 different invoices with the amount as per my screenshot, then I check on my inventory average cost I found out that the amount been debited into my average cost calculation is not the same with the credit note that I created, in the Qty side it’s correct, so that why I got questioned from my external auditor to clarify this number. What’s the basis of the calculation in the system that made it showing amount different between the credit note and the inventory.
@rully_p, it is impossible to answer your question.
First, you have shown three screen shots with no explanation as to what they are.
Second, average cost calculations can only be investigated by following the entire acquisition history of an inventory item. The timeline is critical. This is not something that can be diagnosed without full access to your accounts. You just have to track the item through every transaction since the last time its average cost was zero and you had no units in stock.
This shouldn’t have happened.
In the case of a Credit Notes without Sales, the Manager assesses the Inventory Item cost as zero.
Maybe you need to see the initial balance of your Inventory Items from the Inventory Items Report.
Sorry if my screenshot doesn’t clear.
In this, screenshot are the 3 credit notes that I created with value of 850,000,000 ; 47,600,000 ; 914,660,450.
This screenshot is from the inventory total cost, where you can see that the value been debited to the inventory are 514,095,539.96 ; 474,520,527.93 ; 26,573,149.56
This screenshot is from the inventory qty owned.
So what my question is why the value of the credit note when it goes to the inventory it’s showing different amount and I still can’t figured out where the numbers of the average cost came from. The logic of the calculation that I need to know.
But this is what happened with my case that’s why I’m asking the logic behind the credit note.
My inventory is a liquid inventory (Oil).
Returning the item back to inventory using credit note will use average cost of last sold items before or on the date of credit note.
When you look at your screenshot, the last sale would be your sales invoice on 02/08/2023 (the same date as your credit notes).
The cost of sales on that invoice was 9,490.41 per unit.
Credit note is using the same cost basis - 9,490.41 per unit.
So based on your screenshot I see no issue and it works as intended.
Is there any specific reason why the average cost that used by the credit note is not the average cost of the sales invoice been credited ? From the accounting point of view isn’t supposed to be reversed the sales transaction that been credited on that specific time ?
Sure, but what if credit note is not linked to any sales invoice. Or what if linked sales invoice didn’t sell what credit note is crediting back to inventory. You need to have some alternative calculation method for costing to handle edge-cases. This means there would be at least 2 calculation methods and now it’s becoming even more complicated to trace down how the cost of sales is being actually calculated.
Inventory costing is already complicated as it is. I’m more interested how to make it simpler and more straightforward than it is now.
There is going to be ability to override cost of goods sold amount on credit notes if the automatic figure is not what you want it to be. So that will give you more flexibility to just enter the amount manually.