Dear @lubos, is it possible to make the average cost of inventory is updated after we Goods Receipts the inventory ? Current calculation is just based on invoicing sequences when in the business reality sometimes the supplier asking for full payment before delivery but in the end there’s an issue with the delivery hence the average cost been calculated with the “Goods in Transit”.
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The cost of inventory is based on purchases and sales invoices, debit and credit notes as these are the monetary transactions that affect the inventory value.
Goods that have a purchase invoice are considered as yours, as the payment is now due. If you have a problem with a delivery, then you should raise a debit note with the amount disputed
Goods received and Goods dispatch do not affect the monetary value
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This is legit if what you buy is a solid inventory, it doesn’t work this way for the Crude Palm Oil Industry. From my experience using a lot of ERP, usually the item cost wont be calculated into account until the goods been received.
Well, that is poor accounting. When you issue the purchase invoice or payment, you have accrued the expense. You own the inventory, even if it is still in transit. So its cost is reflected in Inventory on hand and, therefore, average cost.
If you don’t want to own it until it arrives in your warehouse, do not issue the purchase transaction. The terms of the acquisition contract or agreement will govern. Also, if you don’t want to own the inventory until goods arrive, there is no point in using the Goods Receipt tab. Wait for arrival and issue the purchase invoice or payment. Manager will then assume instantaneous arrival of the goods.
If you must pay in advance, enter the transaction as a deposit to your account with the supplier rather than as a purchase of inventory.
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Well, maybe my accounting degree made my accounting really poor @Tut. Please do your research with another system if you think that my method is really poor. I’m made my suggestions based on what my experience before with another accounting system.
Average cost accounting as used by Manager is different from the FIFO Inventory costing so you do not have a choice if you want to use Manager’s inbuilt accounting features
Inventory can only obtain value after the value has been transferred from another account into the inventory item. This can only be done with a Payment, journal entry, expense claim or by invoicing.
Goods received note is only used to tell a system inventory items are now under full control of the organisation and is located in the organisation’s warehouse (it also serves as an evidence for the delivery of goods). Invoices and receipts etc are the vouchers used to generate value (cost) for inventory items.
Other systems may be using goods receipt notes to generate value for inventory but it not right. It takes away the functions invoices and payment vouchers do.
You can create some account and credit it and debit the inventory items when you issue good receipts notes. When the invoices are finally prepared or payment is finally made, debit that account and credit cash or account payable. This suggestion is a bad suggestion but maybe it will help you in your situation.
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There’s a lot of situations where you need to paid the invoices in advanced before the vendor send the goods. In this case of situation is where the Goods Received play the part in the inventory as a control. This method is applied with the SAP and Netsuite as well.
In that case, you become the owner of the goods as soon as your supplier has received your payment, ownership of the goods is not deferred until the goods are delivered, which may be months later. It is just, that your owned goods are still in your suppliers warehouse instead of being in your own warehouse.
Take a business who uses a distribution warehouse service. The business pays the distribution warehouse to release the goods directly to their customers. The business never receives the goods themselves but does take ownership of the goods as soon as the distribution warehouse receives their payment.