What is "Cost adjustment to recover from negative inventory"?


I noticed that there is a “Cost adjustment to recover from negative inventory” entry in my inventory item transactions’ history that I’m not quite sure of.

Can somebody point to me to the right direction? Any help would be appreciated =)

The item’s opening balance is zero (0).
I have a purchase invoice that brings the quantity of the item to one (1).
I have a sales invoice that brings the quantity of the item to zero (0).

But there’s an extra entry for “cost adjustments” that I need help explaining.

Other info that might be related:
The purchase invoice was issued by a supplier with foreign currency, and was paid in base currency.


Inventory transactions issue

This is fixing an issue I had


I have also seen that i have several items saying 0 stock but i have a cost amount next to them? There are a few occasions where i order stock, stock arrives, i then sell the items before I have received my supplier Invoice to book them in. Do you think this could be the cause of my problems?


Yeah, Manager cannot handle situation (as per costing calculation) when you sell inventory before purchasing it (assuming you have none on hand already so it goes to negative quantity). This can create anomaly when quantity is 0 while cost is non-zero amount. This is obviously incorrect. The cost should be allocated to expenses by then. The good news is that this bug will be fixed sometime this week.

Problem now fixed.


The transaction is fixing costing issue in your inventory if you sell items before you purchase them. It will eventually have view button so you can review why Manager has adjusted inventory on hand value.

I’ll give you an example of context where cost adjustment will be made.

Let’s say you have no widgets on hand but you issue an invoice to customer selling 5 widgets. Since there are no widgets on hand (qty on hand = 0), Manager cannot determine the cost and therefore cannot make entry to cost of sales during the sale.

Of course, in order to deliver your customer 5 widgets, you have to purchase them from supplier. Let’s say you purchase 10 widgets for $10 each. When you make this purchase (a few days after the sale), Manager will detect that 5 widgets have been already sold previously so it will make this “delayed” $50 cost of goods sold adjustment for those sold 5 widgets.

The result will be that your inventory on hand will be valued at $50 instead of $100. Before fixing this, your inventory on hand qty would be correct but the value on hand would be incorrectly $100.


Ah you guys are right, my sales invoice is requesting payment for an item that was purchased from a supplier at a later date than the sale.
We have use-cases for pre-orders sales, (ie. we request payment from customers first, before purchasing the inventory from the supplier)

Thanks a lot @lubos @itmoto!

Additional question: Is there another way to capture pre-order sales? Or is this already the recommended way, where we let Manager handle the issues with negative inventory as it is and reflecting it with the ‘costing adjustment’ entry?


What you are doing now is correct. It’s perfectly valid to end up with negative inventory quantity from accounting point of view.

It’s just that Manager wasn’t able to deal with this edge-case until yesterday.


Alright, thanks again!