Some issues with receiving inventory and updating QOH

I had established my opening inventory, manually keying these items in. I also set the date to 12/31/2014 to establish this inventory as beginning inventory for fiscal year 2015. I then prepared purchase invoices to add inventory items. I received these purchase invoices into the inventory. The items appeared as “on hand” on the inventory full list, but when I clicked on each individual item, it not only showed the quantity on hand as 0, but it also showed them as received on the 12/31/14. Was I supposed to change the date to 01/01/2015 before I created the purchase invoices and posted them against the inventory? Also, why did the QOH not change with the receiving of the purchase invoices on each individual item? This is a problem, because when inventory-sales are posted from the Sales Invoices, it will change the QOH listed on the full inventory list, but because the individual items shows no QOH, it does not apply a cost of goods sold in the inventory cost field on the summary page. It will show the item as sold, but because no QOH, none of these items will have an individual cost in this line.

Thoughts? I see what this software is doing, accounting-wise, and I am more convinced this will work for me.

If your first day with Manager is Jan 1, 15, then I think your Settings - Start Date should be the same not a day earlier, but this may not cause you a problem.

Have you entered your “Set Period” date as Jan 1,15? Summary tab above Balance Sheet heading.

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Are you doing accrual- or cash-basis accounting? Cash basis can play havoc with things when you are not paying for them within the reporting period.

The exact Start Date to set will depend on exactly how you are adopting use of Manager. If the business was ongoing prior to January 1, 2015, and you had inventory or fixed assets on that date, set the Start Date to December 31, 2014. The principal advantage of doing this is that various reports generated for periods starting January 1, 2015 will show the balance as an opening amount. If you set the Start Date for January 1, 2015, those reports will show no opening balance, with your carried-over amounts appearing as transactions for 2015. This may be a small issue, depending on what reports you want to use. Otherwise, there is no difference and it doesn’t matter which date you set.

I really suspect the issue lies with your accrual/cash selection. Depending on your jurisdiction, you may be required by law to use accrual accounting simply because you have inventory. Cash accounting misrepresents your true position when you have inventory.

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On which reports is this happening? This is a bug and should be fixed. I don’t encourage users to do work around specific bugs. So start date should be set on January 1, 2015.

From my experience, all businesses created have had a start date of Jan 1, all opening entries have been processed/entered as Jan 1 and all reports are exactly correct, therefore no need for Dec 31 entries.

Those reports (dated Jan 1) shouldn’t have any opening balances if you are transferring an existing business, otherwise you are suggesting that your previous accounting system is running until the end of Dec 31, but your Manager accounting system is starting from the beginning of Dec 31. How can you have two separate accounting systems operating on the same day - Dec 31? (accounting systems only know whole dates, not points of time during the day)

The reality is this, your old accounting system functions until one second before midnight on Dec 31 and Manger starts functioning at one second past midnight (now Jan 1). At this point all account balances in Manger are zero, you enter your first transaction (opening balances) and all reports will show your opening position…

Putting in Opening Balances is a transaction relating to a starting point in time, you can’t manipulate this starting point in time just so reports look/appeal right to the eye,

No different for a new business, you start Manager on day 1 and all your account balances are zero, then you enter your first transaction

They actually should. If you ask for a report such as General Ledger Summary from January 1st then opening balance column should display balances as at beginning of the period. But I think Manager doesn’t do it if you set start date on January 1st. Starting balances are treated as regular transactions but they should really be recognized to have special meaning and show under Opening balances column.

But because Manager doesn’t do it, @Tut is proposing workaround to set starting balances on the day before so they will show as opening balances on January 1.

No they shouldn’t.

I understand what you are saying but I think that is only trying to make something attractive/pleasing to the eye rather then practicing accounting. Entering opening balances is a valid accounting transaction and to make it appear as “aged” means the opening balance transaction has been converted to “Brought Forward” data. (Do you want that headache, rather see Manager Budgets first)

I don’t know of any accounting text book or program which suggests/adopts this conversion. It would appear that this perceived problem only exists within a reporting presentation perspective, Day 1 in the life of a Manager business soon becomes a distant memory so hardly any lingering problem.

Currently, the narration “Starting Balance” is self explanatory and understood by all. To display it as a “Brought Forward” balance implies that the figure has been created within Manager via transactions and can be analysed by drilling down.

Keeping transactions as transaction is far simpler then converting them to data which they not. .

I missed the last few posts on this topic due to time zone differences.

@lubos, the only two reports available with my particular setup where this is an issue are the Fixed Asset Summary and General Ledger Summary. In both my cases, only fixed assets and accumulated depreciation accounts are affected. I suspect it would be the same for inventory summaries, though. It is as you said in your last post: if you set your Start Date to the actual date you begin using Manager, no opening balance appears in these summaries, and the starting balances are shown as additions for the defined reporting period. But of course, they were not additions during the reported period. They were carryovers. Other reports, like the Balance Sheet, are as of a moment in time, so there is no issue.

@Brucanna, you are correct that this situation exists only within a report presentation perspective. Manager’s summary reports are not, of course, the most essential of standard accounting reports. They are not nearly as important, for example, as the balance sheet and profit and loss statement. But given how they are presented, it seemed desirable to have them present what they say they present. The one-day-earlier Start Date fulfills that desire. And you are also correct that all of this vanishes into the past, so it is not a major problem.

This situation is similar to account balance reporting from an investment firm. A client’s year-to-date statement might show the balance as of the last day of the previous year, followed by buy and sell transactions for the current year, and the current balance.

As for the question of switching from one accounting system to another, I don’t see an issue. The old accounting system includes all transactions through a certain date. Manager includes all transactions beginning on the following date. There is no overlap in transactions between systems and none are left out. Necessary balances are carried forward via starting balances without the need for any other entries. Since all reports can be created for defined time periods, all those for the first accounting period begin on the actual date Manager is first used. The Start Date parameter itself appears only on the Starting Balances report, not any of the actual financial reports.

In summary, I don’t think this is a problem that needs to be fixed in the short term. In the long term, it might be convenient if starting balances were placed in the Opening Balance column of affected reports.

Yes, I set my “Set Period” date to 1/1/14 to 12/31/14 and manually keyed in my starting inventory. I don’t think I changed that when I received my purchase invoices, dated 1/5/2015, so I am guessing that’s why the date didn’t change on the Items. I would post a screen shot, but I am not sure how to do it here.

I am using the accrual basis accounting.

When you are entering a reply, there is a row of icon above your typing.
Clicking on the icon with a arrow over a line allows you to upload your screenshots

Here are the fields I am talking about in the item edit field of an individual inventory item. I placed this item on a purchase invoice and received it into inventory.

Note in the bold type, check marked that this is part of the inventory balance as of 12/31/14.

Here is the inventory list shot showing item 00364 as “on hand” with a quantity of 1. However, the previous screen shot shows QOH of zero.

Oh, and thanks for telling me how to do this screen shot upload!!!

So what do you see when you click on that quantity of 1? That should give you an idea where this qty 1 coming from. It didn’t come from starting balances.

The QOH under the starting balance, represents the stock on hand as at 12/31/14 - already in your possession, previously purchased. It doesn’t represent the current QOH status.

As you purchase items after that date, the starting balance QOH doesn’t change as they didn’t exist on that date.

This topic strayed considerably from your original questions, @kayhaus09. I apologize for my part in that. Trying to get back to your original problem, however, I am not sure I am following what you said. And your screen shots seem to contradict what I thought I understood. So here are some thoughts/questions that may help me understand and hopefully will help you out, too.

  1. You said you entered opening inventory balances. But in your first screen shot, the quantity on hand is zero. You should enter the actual quantity you owned as of your Start Date and the average cost (which you did). Manager will then calculate value for that item. The quantity you enter should include anything you had purchased, whether or not it had yet been delivered. That should specifically include things for which you had purchase invoices, since that is how Manager establishes Accounts payable on the Start Date. (Right now, Manager assumes that once you enter the purchase invoice, you have the inventory. Later on, a new warehousing module will allow you to distinguish between things in house and in transit.)

  2. If you already had the items in stock on your Start Date, you should not enter new purchase invoices for them unless the bill is still owed to the supplier. This will cause double counting. The starting balance tells Manager you have it. You don’t need to indicate acquisition a second time. The purpose for entering purchase invoices when payment is still due is to create the account payable. If you do that, be certain the purchase invoice date is before the Start Date or Manager will, as mentioned, double count.

  3. You say your Set Period is 1/1/14 - 12/31/14. But your Start Date was 12/31/14. That won’t work. The Set Period must begin on or after your Start Date. Based on what you’ve said, I believe you should have entered a Set Period of “1/1/2015 through Today” for 2015 operations. That would give you an up-to-date profit and loss picture in your Summary. Now that we are in 2016, you should change it to “1/1/2016 through Today.” Other reports can be created for desired date ranges, but all must begin on or after the Start Date, too.

  4. It is important to know that Manager ignores transactions before the Start Date except for determining accounts payable and receivable. This may have something to do with your difficulties. I can’t be sure based on what you’ve shared.

Let us know if this information helps sort things out. If not, ask more questions.

Here is the screen shot you asked for, Lubos

Tut, I see more and more how this software works, and I have sufficient information to experiment with things. Thanks so much, everyone, for your assistance!

Ok, so the invoice date is 1/5/15, therefore that purchase doesn’t change your opening stock QOH as its after 12/31/14.

Your latest screen shot shows another potential issue, @kayhaus09. It lists your name as contact. Did you buy this item from yourself? You want to be sure purchase invoices are associated with a pre-established supplier who you will pay.