Inventory - Cost not tally with Purchase invoice


I am using this system for my inventory movement, which means generating purchase invoice and sales invoice. The amount is correct. However, when i go through the inventory - cost details, it shows Sales Invoice instead of Purchase Invoice.

I suppose inventory-cost would show Purchase Invoice ?

I had attach some picture. Please help me to solve this.

Hendrick Lim

I pretty much agree with your issue. I also addressed same earlier in separate post but no one paid heed. But this is something @lubos could explain.

When you sell inventory, the cost of the inventory is charged to the inventory cost account that is why it shows there.
Until then, the cost is capitalized on the balance sheet in the inventory on hand account.

The answer is simple. In accrual basis accounting, the cost of inventory is not recognized until the inventory is sold. Until then, inventory value is an asset, not an expense. So the Inventory - cost account ledger takes its inputs from sales invoices. This cost, in turn, is based on average cost of the inventory item sold, not any specific purchase invoice cost.

And as I prepare to hit the Reply button, I see @Abeiku has posted a very similar response. :slight_smile:

Thanks for the reply.

So, is there anyway that i could easily detect my total purchase ?

You can extract that from the inventory on hand account

Depending on what information you are trying to extract, you might also find it in the various inventory-related reports under the Reports tab.

One improvement I’m planning is that when you drill-down to Inventory - cost account, the ledger will look a bit different. Rather than showing individual transactions (e.g. sales invoices) which triggered the cost, it will show a report for each day how the cost was calculated.


@lubos, Will we be able to use FIFO (First In First Out) instead of the average cost method in future in this new report? Generally my older stock is used first so would reflect the true value of my stock. The difference isn’t huge for me but would prefer FIFO if possible…

I think that would be a difficult change, because it would mean tracking purchased lots through the entire process from acquisition to selling. And that implies the ability to identify individual units within inventory. That seems like a major change from average cost, which requires no individual unit tracking and can be updated purchase by purchase through simple algebraic calculations.

The benefit of tracking individual items would probably generate significant interest in though. Lots of companies need to track individual items such as those in Food & Healthcare industries as well as many others.

Additionally, unless I am very much mistaken (which i often am!!!) then I believe it is possible to work out FIFO algebraically…

Just a thought anyway. :smiley: