DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Inventory accounting using Opening Stock + Purchases - Closing Stock


#1

I don’t want to use Inventory items etc. I want it to be turned off but at the same time when i make a sales invoice the figure gets added to the sale and the tax goes to it’s designated account. but where is the stock getting decreased for sales and increased for purchases what steps should be taken to correct this.I should know the position of my stock after each sale or purchase. Please help.


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#2

You can only do this by using Inventory - there is no other method in Manager
Depending on the number of stock items, you could always maintain stock cards manually.


#3

As someone who uses the Inventory, I have to say that the Inventory Module in Manager has transformed my accounting. It is so much easier to keep track of purchases and sales using inventory.

Inventory solves the problem of stock increasing and decreasing after purchases and sales. When you go to purchase invoice and you add inventory on hand and select the inventory item it will increase the item by the amount you select. When you sell items in sales invoice and select sales on invoice, it will decrease inventory items by the amount that you select.

If you are waiting on warehousing module which tells you the physical quantity that you have as you might have paid for stock (but not yet received) and you might have invoiced for stock (but not yet shipped) the warehousing module is coming shortly.

The only issue with the latest versions of Manager is that you even if you are only buying one item or selling one item, at the moment you need to put 1 into quantity - it no longer defaults to 1. The developer is looking at that.

Also in time, the developer is looking into adding custom control accounts which will allow you to break the sales of inventory and inventory cost on the summary page down into sub accounts.

So I am not sure why you do not want to use inventory as it makes handling inventory so much easier. You have the name of the product, what it cost you to buy, what you want to sell it for, the amount you have in stock (accounting stock that is) and it gives you useful reports such as profit on inventory sales. Works very well for me and is the biggest improvement to my accounting needs to be honest.


#4

inventory on hand is not getting increased or decreased on sales and purchase transactions, what could be the possible reason ? Also even if sales have been made the total for sales is still zero and taxes to be paid is zero. Please help.


#5

Can you do a sample screenshot of what you are doing in the edit section of inventory items, purchase invoices and sales invoices. I have used the inventory module for a year now and have never experienced any problems like the ones that you are experiencing.

Bear in mind that sales and tax only changes when you actually receive the money if you have set summary page to cash basis. It is by default set to accrual so this should not be your problem. If you click set period on top of the summary page you will see if you have it set to accrual or cash basis.

But it sounds to me like you are doing something wrong. Without screenshots its impossible to say what is happening.


#6

It is set to cash basis but the figure for sales is very less now as compared to the sales invoice value , same for the tax portion.


#7


Only 1 sale invoice for 50000 + 5% Tax ( 2250 )

Sales is Nil in summary

Tax Payable is also Nil


#8

Your quantity field is blank. So you didn’t sell anything.


#9

As I said to you, @lubos updated the program a few weeks back to address an issue with inventory.

You need to put a quantity in as this will affect the inventory going up or down. If you have set the summary page to use cash basis, then it will not show the inventory sales until you have received the money from the client!

I would recommend that you use the summary page as accrual basis and use your reports as cash basis. This way, your tax returns etc all work in cash basis, but the summary page gives you a more accurate idea of the current financial state of your business in my opinion.

!. Put in a quantity in sales invoice - until Lubos fixes this issue because otherwise your inventory will never go up and down. This is problem one and has been reported here
Bug when invoicing inventory
2. Change the summary page to use accrual (set period) and this will show the sale of inventory and it will show accounts receivables which will make you aware of how much money clients owe you. I honestly don’t see the point of the cash basis view of the summary page. Once you have invoiced a client, that sale is regarded as good and should be reflected in your sales. Especially as the cash basis causes the exact confusion that you are experiencing where you have made a sale, but nothing seems to have happenend.

Remember accrual is when you invoice (sales and purchase) whereas cash basis, you only see the transaction once you have either paid money or received money - you have not received the money from the client so in cash basis you are not seeing the sale as yet.


#10

Thanks @dalacor now i understand the accrual and the cash basis confusion. Just 1 more query regarding the inventory updation. sales invoice should be on sales account or Inventory sales and then ( stocks as second column ). Please explain the entry for purchase invoices also that they should go to inventory on hand or to some another account to keep the stock moving up and down as the case maybe. Thanks in advance.


#11

Sales invoice - you select inventory-sales and then in the next column you select the inventory item that you want to sell to the client

Purchase invoice - you select inventory on hand (under assets), then you select inventory item from the drop down in the next column.

You should not be using stocks as the second column. That is what inventory-sales and inventory on hand is - stocks. What you should be using for the second column is you should be creating different inventory items like apples, oranges, bananas or laptop abc, computer xyz and Ipad MNO or whatever it is that you are selling. The purpose of inventory items is to have the prodcut such as an apple listed in inventory items with its purchase price, selling price, VAT inclusive or not as well as part code. Don’t use stocks as second column - it needs to be the actual product that you are selling.


#12

I am not using the inventory tab and want to manage sales and purchases and my gross profit by adding closing inventory. Everything is working fine the sales and the purchases. Just tell me a way to add opening stock and closing stock to show gross profit without using the inventory tab.


#13

You cannot do that, because the recording of inventory counts or values is not a financial transaction. That is just a verification.

If you want to account for inventory without using Manager’s inventory features, you will have to maintain a completely separate inventory system and enter inventory movement with journal entries. But why don’t you want to use the built-in capability if you have inventory?


#14

Your initial opening stock (inventory) would be part of your starting balances.
Your closing stock (inventory) would either be an adjustment value entered via Journal.
E.g. If your opening stock was 7500 and your closing stock was 8250 then the Journal would be
Debit - Asset - Stock on hand 750 and Credit P&L - Purchases 750

Or to be more correct your P&L should reflect Opening Stock, Purchases and Closing Stock

But in your screenshots the Inventory Items tab is clearly listed and being used as it has (1) displayed within the tab. So you are sending mixed messages.

If you aren’t going to use the Inventory system then Sales would go to a P&L Income - Sales account and Purchases would go to a P&L Expenses - Purchases account.

By this, are you meaning stock values rather then stock quantities, if yes, then you would do this by having stocktakes and adjusting the values via Journals as detailed earlier


#15

I don’t understand! What is your reason for not using inventory tab. It does everything that you want it to do! Not using the inventory tab is akin to using a typewriter instead of a computer to type out a letter. You can do it on a typewriter but you spend a lot more time blotting out typos and spelling errors than if you did it on a computer. You seem to be taking something that is so simple and making it harder to do. The inventory tab is exactly what you need if you are buying and selling inventory and you want to record sales, tax and inventory movement.

Before you go further, we need to understand why the inventory module is not suited for your needs as you seem to want all the features of the inventory module, but without using the module?


#16

@Brucanna - I have created a new account Opening Stock ( How to add opening stock value to this title ).
2.) How to add closing stock at the end of the accounting period. ( Account already created )
3.) I want a column Gross Profit also in the Trading Account. ( Trading Account has - opening stock,sales , purchases and gross profit ).
4.) Then I want the expenses to be deducted from Gross Profit to give Profit / Loss. ( Even if this Gross profit thing can not be done I am ok with it )

( The item which i am selling is that 1 item can be broken and sold ( Also a single item can be converted to 4 or 5 pieces or even more ) This is the reason i do not want to use the quantity feature and only concentrate on the purchases and sales once i have entered the opening stock, and i should have the option of adding gross profit and closing stock at the end.

I am fine with all other entries till now.


#17

OK - things can be setup as you requested but you need to delete any Inventory Item transactions and then un-tick the Inventory Item tab under customise. Also you need to have entered a date under Settings - Start Date.

In the BS Asset section you create “one” account called Stock on Hand (NOTE: do not create separate opening/closing stock accounts in the BS). To enter the opening stock value go to Settings - Chart of Accounts and click "Edit: next to Stock on Hand, then click Starting Balance and enter a value & Update.

Next you create your P&L Chart of Accounts to reflect the Gross Profit as illustrated below

Noting the following 1) Cost of Sales is a new group, 2) Gross Profit is a new total and 3) the light grey numbers are the codes used to get the layout/structure correct.

Throughout the accounting period you allocated all purchases to the Purchases account. The P&L Opening/Closing Stock accounts are “only” used to make any valuations adjustments at the end of the accounting period and the Journal would be with the P&L showing:


How to set up Manufacturing Cost of Goods Sold accounts
#18

@Brucanna


1 ) Gross Profit should be 480.
2) Net Profit is Ok as far as I have not entered any expences.
3) Please look at suspence account ( It is showing purchase figure here ? )
4) How to show Trading Account as Opening Stock / Closing Stock / Pur / Sales and get GP as 480

We are quite close now :slight_smile:

Once again Thanks in Advance.

Waiting for your reply.


#19

@Brucanna

There was a problem making chart of accounts which i have solved.

Please look at the suspence account part only :slight_smile:


#20

So what do you see when you click on Suspense balance… there are some transactions in it, right? Can you show screenshot of any of those transactions? That would explain why the amount is in Suspense