For a variety of reasons which I cannot change at the moment, I use cash basis accounting. I have a question about the inventory tracking in the Profit & Loss report (and likewise the summary page).
It appears that, with cash basis, the system does not adjust “Inventory on Hand” or “Cost of Goods Sold” until after I receive payment for an invoice. For example:
- Enter sales invoice of 10 units to Customer A. Clicking “Inventory on hand” shows nothing.
- Enter delivery note of 10 units to Customer A. Clicking “Inventory on hand” shows offsetting +10 and -10 entries. This doesn’t seem right, particularly with cash basis, as the inventory has certainly left my possession.
- Receive payment for 10 units from Customer A. Now clicking “Inventory on hand” finally shows the -10 entry, and the corresponding cost is moved into COGS. But this not until the date the payment is received.
Is this a problem with the reports? At the least, it doesn’t align with any cash basis accounting I have done before.