I know this post is related to my other post here I noticed it was moved from bugs to ideas. Maybe because it was more about reports and how it was shown.
However, I believe it is a very serious issue that I have items with large quantities and the wrong cost amount.
If you look at the example below shows the average cost is 2.17 USD the Inventory on hand is 509,256.82
But here Manager ignores the cost of a quantity of 258 in that credit note and that’s why the average cost is correct. In other words, it only accounts for the cost of 513 returned units when in reality I have 711 Qty of that item!
Please recommend a solution for this because right now my inventory on hand and my balance sheet reports are all wrong. The real inventory on hand is 510,033.4, not 509,256.82 and this is just a test case in my real business it is a huge difference.
P.S please don’t tell me that I should not have more returned products than what was available initially in my inventory because that is not something I can control. I migrated to manager from excel so this problem is not uncommon
You have not furnished sufficient information to completely understand your situation. How was the Apple inventory item set up? Are you tracking quantities to receive and/or deliver? Have you entered corresponding delivery notes and goods receipts? How could you receive more units back on a credit note than you ever sold? How would you expect Manager to know the cost of returned items you never owned?
If you don’t want the answer, don’t ask the question. If you cannot control the entries into your accounting records, who can?
You have diagnosed your own problem: your records in Manager are incomplete because you are trying to enter transactions that depend on preceding transactions you never entered. So you must enter all relevant transactions, at their original dates: purchase invoice for the apples, payment for the apples, sales invoice for the apples, receipt for apples.
Instead, you have relied on a starting balance for the apples, which assumes all relevant transactions are permanently settled and will never be referenced again. Since that appears not to be true, you must enter the individual transactions that produce the starting balance.
Excel has nothing to do with this. Your problem is that you are entering transactions that rely on old information the program does not have.
@Tut Thank you for your input, i will answer your questions to the best of my ability.
I edited my post and attached a photo.
No, I don’t have tracking quantities to receive because I don’t use delivery notes and goods receipts.
I sold these products prior to using Manager some customers returned them because the products are new to the market and we accept returns. This issue should not be uncommon for those transitioning from other programs to Manager.
I don’t know that is why I ask, Maybe use the last/current averaged cost. Bare with me here please, If I had 10 units sold to customer A then and got a credit note for the returned amount of 50 from customer B. How sensible is it that Manager decides that 10 of those 50 units have a cost and the other 40 have no cost even though it is a totally different customer?
Exactly! This should be a deal breaker if someone wanted to transition to Manager they must enter all their previous records from years before using Manager. Because Manager cannot rectify this (If this is acceptable it should be noted in the guides).
So you suggest I enter all the transactions before using Manager? I don’t know what product might return next and how much should I go back maybe 6 months, one year, or two years!
I have worked on other accounting programs in my career and have never seen something like this. I hope I get a better solution because this is really not practical.
Which ones? There is no accounting program that can guess what you sold in the past without you inputting that information. Maybe rather than using credit notes in such instances you should issue a Sales Invoice and thus need to add the Customer to the Suppliers list (copy to Supplier). In such case the items will be added to your inventory and the payment is open and needs to be offset in future agains a Sales Invoice to that customer.
The One System for Accounting or Al-Ameen, are the ones I remember and they used GAAP. As for guessing the cost, I don’t know how they do it. but it is not mission impossible perhaps they used the current cost of the product.
I believe you mean a Purchase Invoice I thought about it but It seemed very complicated. I have to enter the cost myself and then figure out how to add the sales price because I need to deduct the amount from my customer’s account using the selling price not as cost.
@BawarYassin it is you as user that enters the information. I could show a similar screenshot from Manager. I f anything the one you showed is having 1 December 2022 as the Date and the other entries are already from January 2022. so one can assume that all transactions were already in the system. Your argument remains void.
I think there is a misunderstanding Zoho sorts by oldest to newest contrary to how Manager sorts. You can see opening stock is at 01 Jan 2022.
@lubos Manager cannot use averaged cost so it introduces items with zero cost in credits notes! I would argue this is a bug and no other accounting software behaves like this. Average cost makes more sense than zero cost at any given moment.
Your argument is that for whatever reason other accounting programs are clairvoyant and can guess and input information from the past without any user input. Manager is not magical but as mentioned I am curious for you to show others as well because the Zoho example doesn’t show what you argue it would.
Although I share @BawarYassin’s views on costing of inventories, the developer is of the view that inventory cost should never be estimated by Manager in any situation, whether it was production with negative stock or in this case returns of items not in stock.
I think there is value in Manager estimation of transaction costs mainly due to the following:
Whatever effects of estimation on inventory value is highly likely to be corrected once the stock has been revalued at reporting dates.
Non estimation could distort profit and loss statements and cause management to be confused.
The investigation done by @BawarYassin is commendable but normally the user wouldn’t be able to precisely point the finger on where the discrepancy originated. Much like this other topic:
These kinds of errors are difficult to catch and correct and – realistically – this would more likely than not cause management to blame it on the system rather than the original user error.
Imho, I would prefer if Manager could do the cost estimation, but in case it doesn’t, a raised flag of the document (Credit Note in this case) together with a journal view for each document could help users identify such discrepancies and manually correct for them when they arise.
@Ealfardan I fail to see the benefit of how the Manager does it but I hope it is worth it.
I have around 4800 USD difference between the actual stock amount and what Manager reports.
I don’t know how to readjust all these items. Using an expense account and journal entry will create a huge dent in my P/L statement.
If the developer has no intention of fixing this then finding an alternative solution is more tempting than entering all the previous transactions.
Manager employs the perpetual average cost method for inventory valuation. This method divides the total acquisition cost of units of an inventory item in stock by the number of that item in stock. Thus, if more units are acquired at a cost higher than the current average cost, the average cost of all units will go up, no matter how many units are acquired or in stock or what their individual costs were.
When items are produced, the cost of inventory consumed is transferred to the new finished goods at the average cost of each input item. Any non-inventory costs are also apportioned among the finished goods.
@eko there is, I clearly stated it in this post I’m certain there are users who have the same issue and haven’t found out yet. Please note, by “fix” I don’t mean to change how Manager calculates cost ( although this is the optimal solution ). I just want to fix these discrepancies. one option is to allow the user to manually input the cost for these “Insufficient Qtys”
No, only Manager makes this impossible. You mention other accounting software I hope you validate your claim and provide at least one example. I have yet to see an accounting software introducing items at zero cost!
It is not like I have a choice. I was hoping to get some help here.