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In this part, we will discuss how to use inventory value report to do inventory reconciliation.
Firstly, let’s imagine a company who has two item groups: Bike and Accessory. The inventory GL account for Bike is 140100. The inventory GL account for Accessory is 140200. Then we have a total GL inventory account 149999. In the total GL account 149999, we set up the account interval from 140000 to 149998.
In both item groups posting profile, packing slip/issue and product receipt /purchase, inventory receipt are all set up with the same GL account. That means both physical inventory and financial inventory are using the same GL account.
At the end of year 2016, we begin to do the reconciliation for the total inventory GL account 149999. In inventory value report ID, we enable the option ’print cumulative account values for comparison’ and input 149999 in the inventory account. We also enable resource group and total. Also please do disable the option ‘included not post to ledger’. This has been discussed in the previous article that ‘Inventory: Physical Amount Not Posted’ should not be included in the reconciliation.
So, you can see the ‘Inventory Amount’ in the report for both item groups. You can also see the closing balance for 149999, 140100 and 140200.
Based on the explanations we discussed before in the part 3, you should do the reconciliation as below:
• The value in the column ‘Inventory Amount’ for both item groups -> The balance of 149999
• The value in the column ‘Inventory Amount’ for item group Bike -> The balance of 140100
• The value in the column ‘Inventory Amount’ for item group Accessory -> The balance of 140200
Normally, we recommend to use the same GL accounts. It happens that the user set different accounts for packing slip and issue or product receipt and purchase. In this situation, you cannot use the ‘Inventory Amount’ value to do the reconciliation. Do you remember the conceptions: physical update and financial update we explained in part 3? You need to reconcile the different GL accounts with ‘Inventory: Financial Amount’ and ‘Inventory: Physical Amount Posted’.
If the user also want to check the quantity, you should use the total quantity = Inventory: Financial Quantity + Inventory: Physical Quantity Posted + Inventory: Physical Quantity Not Posted
Hope the above info can help you during your reconciliation. I believe your next question might be how to deal with the situation that there is discrepancy between inventory value and GL balance. We have another very powerful report named potential conflict report. You can use it to drill down the reason why there is discrepancy. In fact, we recommend to run it periodically, like weekly or bi-weekly. So, you can be aware of the discrepancy earlier and only need to work on a very small data set to find the reason.
There will be articles in future about how to use potential conflict report. I will add the links here if they are published.
Again hope the above info can help. Enjoy!
How to use inventory value report: part 1
How to use inventory value report: part 2
How to use inventory value report: part 3