Hello,
I start using Manager exclusively since last mid-June. So, we only got last month (July) as a full month.
Just to make sure of our Inventory Sales VS Inventory Cost, I was reconciling the two transactions to check if each sales invoice has been properly accounted for in Inventory Cost. There were differences as some Sales Item were not booked in Inventory Cost.
So, I searched the forum to check if there was any discussion on this topic and I did find some previous discussion. I noticed the anomaly resulted where those items that were not in stock (in other words negative quantity on hand), the COGS will not book those items. Under such circumstances, it is expected that Sales Inventory transaction should be typically more than the inventory cost. But, in my case, the records show that the Inventory Sales transactions were recorded as 540 whereas the COGS recorded as 561.
If it were the “vice versa” case, I could assume that some items were not booked for in COGS due to on hand negative quantity. But, in this case, it is the other way round. The COGS transactions are more indicating that some transaction in Inventory Sale could be missing. What could be the possible cause/reason that I should be looking for?
Inventory sales reflects the sum of all sales transactions, either by receipt or sales invoice, of inventory items. It is adjusted downwards by credit notes that include inventory items. The figures contributing to Inventory sales depend on Unit price as entered on actual transactions, not necessarily the sales price listed in an inventory item definition, which is only a shortcut for data entry on the transaction form.
Inventory - cost reflects the average cost of inventory items at the moment they are delivered. Average cost goes up and down, depending on purchase history. Cost of an inventory item can be more or less than it was purchased for as a result. It could also be more than the sale price. As you have seen, this balance is affected when inventory cannot be delivered. The exact behavior of this account depends on whether goods receipts and delivery notes are being used, as well.
Both Inventory sales and Inventory - cost are also affected by your selection of accrual or cash basis accounting. (Many jurisdictions require accrual basis when a business sells inventory.)
For information on profitability of inventory items, create an Inventory Profit Margin report.
For more overall information about inventory management, read the Guide series beginning with Manager Cloud.
If you really think something is wrong in your records, you’ll have to furnish much more specific information before anyone can help you track down the reason. Screen shots of transactions involving suspect items will almost certainly be necessary.