This document is nothing new but a brief descriptions how the inventory can be adjusted using features provided by SAP Business One.





Adjusting Inventory

Goods Receipt

  • The Goods Receipt window lets you increase the inventory level in situation that is not the direct result of adding a purchasing document.
  • For example, if you discover during an inventory count that part of the stored quantity has not been taken into consideration. You can enter the overlooked quantity in SAP Business One by adding a goods receipt.
  • Goods receipts will result in an increase of stock in the warehouse.
  • Effect of Goods Receipt:
  • The  total value of inventory  is calculated by Quantity multiplied with Unit Price.
  • The  total value of inventory (ie. Quantity multiplied with Unit Price) is debited to “Inventory Account”  and the same amount is credited towards “Stock Difference Gain Account (i.e. Inventory Offset – Increase Account)”

Goods Issue

  • The Goods Issue window lets you decrease the inventory level in situation that is not the direct result of adding a sales document.
  • For example, if some units of an item suffer damage in a warehouse, they cannot be sold and are removed. In such a case, you can post a separate goods issue using the function described here.
  • Goods issues will result in an decrease of stock in the warehouse.
  • Effect of Goods Issue:
  • The  total value of inventory  is calculated by Quantity multiplied with Unit Cost.
  • The total value of inventory is credited to “Inventory Account”and debited towards “Stock Difference Loss Account (i.e. Inventory Offset – Decrease Account)”

Inventory Revaluation:

  • The perpetual inventory system requires accounting records to show the amount of inventory on hand at all times.
  • Revaluation of inventory can be done by :

1.      Changing the price for a specific item

The inventory price is changed and inventory value is recalculated according to the new price.

2.      Changing the value of a specific quantity of inventory

The quantity of inventory remains unchanged, resulting in a change in the price.

  • Effect of Inventory Revaluation:
  • If the value of stock is increased after revaluation:
  • the increase in amount is debited to “Inventory Account”and credited towards “Stock Revaluation Gain Account (ie. G/L Increase Acct)”
  • If the value of stock is decreased after revaluation:
  • the decrease in amount is credited to “Inventory Account”and debited towards “Stock Revaluation Loss Account (ie. G/L Decrease Acct)”

Inventory Counting Transaction:

  • Inventory counting is carried out to verify the quantity and condition of items in the warehouse, and to provide information about existing inventory and inventory valuation to the auditors.
  • Inventory counting is done by following steps:

1.      List of items is prepared in “Inventory Counting” window and printed out.

2.      Actual physical quantities is verified with the printed list.

3.      Actual quanitites are noted down in the respective space provided in the printed list.

4.      These noted quantities are recorded in the SAP Business One in the “Inventory Counting” window.

5.      The differences can be reconciled by either of the following two methods to do inventory posting:

  • In the Inventory Counting window, choosing the “Copy to Inventory Posting” button.
  • Or by opening the Inventory Posting window directly.
  • Effect of Inventory Posting:
  • If the value of stock is increased after counting:

the increase is debited to “Inventory Account”and credited towards “Stock Difference Gain Account (i.e. Inventory Offset – Increase Account)”

  • If the value of stock is decreased after counting:

the decrease is credited to “Inventory Account”and debited towards “Stock Difference Loss Account (i.e. Inventory Offset – Decrease Account)”

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