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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Discrepancy Between Ba...
Microsoft Dynamics AX (Archived)

Discrepancy Between Balance Sheet and Inventory Value

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Posted on by Rosey

Hi All,

I have a very large discrepancy between my Balance Sheet and Inventory Value Report.  Below you can see my inventory item groups and where they are posting. 

We are comparing account balances 104100 + 104600 with Inventory value report for Raw Materials - Sum Inventory: Amount (This is Financial Amount + Physical Amount Posted + Physical Amount Not Posted).

Raw Materials Item Group:

Raw_2D00_PO.PNGRaw_2D00_Inventory.PNGRaw_2D00_Production.PNGFG_2D00_SO.PNG

We are comparing account 104300 with Inventory Value Report for Finished Goods-Sum Inventory Amount (Financial Amount + Physical Amount Posted + Physical Amount Not Posted). 

Finished Goods Item Group:

FG_2D00_PO.PNGFG_2D00_Inventory.PNGFG_2D00_Production.PNG

Can anyone see any reason for the discrepancy because of our posting profiles??  The value of both the Raw Materials and Finished goods are significantly less than what is listed on the balance sheet accounts.  We have Post Physical Inventory and Post Financial Inventory Checked for both Item Model Groups.

Any ideas would be very appreciated!!!

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  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,195 Super User 2025 Season 2 on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    Hi Rosey,

    What is the value model of your inventory? Have you run the Inventory closing job? Did you include the Phisical value for inventory recalculations?

    Please provide some more information.

  • Rosey Profile Picture
    Rosey on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    Inventory value model is weighted average.  I did run the closing job and it seemed to make the discrepancy even worse for Finished Goods.  I did include Physical value for inventory recalculations, however, after running close I received several error messages that said the unit cost price can be wrong as the transaction cannot be fully settled.  

    Also I ran the List of Potential Conflicts report for the Raw Materials account, and received several comments that said: Direct postings on this main account representing inventory value will cause imbalance.

  • Rosey Profile Picture
    Rosey on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    Something else that I noticed is that none of my "production" transaction types have a ledger account for Physical Posting.  All other types have a Financial Revenue, and Physical Revenue Posting, but Production orders only have Financial Revenue.

  • Suggested answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,195 Super User 2025 Season 2 on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    Hi Rosey,

    In the past I have seen issues caused by customizations, wrong setup but also bugs.

    When I look at your screenshots, I don't know the meaning of all account numbers, but make sure the purchase expenditure options (both) are profit and loss accounts. Both expenditure settings can have the same main account, but are used different compared to the options Product receipt and Purchase, inventory receipt. The expenditure options are offset accounts.

    This can be the cause of your problems.

    Further:

    Can you verify if there are manual direct postings on the inventory accounts which could also cause this issue?

  • Rosey Profile Picture
    Rosey on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    Hi Andre,

    I really appreciate your advice.  I do see some manual direct postings, but these are all before we went live with Raw Materials, so just to keep track of the accounting side.  

    A couple of things: the Product Expenditure accounts are both set up as asset accounts going to the same accounts as the Physical and Financial postings for inventory.  Could this  be a major issue?? How do I test if this is the issue?  I see that any Expenditure transactions are crediting and debiting the same account for the same amount.  

    Could it be an issue that we have no account set up for Production Picking list for finished goods?  Or that the Production Picking list and Picking list offset for Raw materials are going to the same account (a WIP account)??

    Finally, can you explain what Physical Value not Posted means on the Inventory Value Report, and what implications this has on the Inventory Value Sum??

  • Rosey Profile Picture
    Rosey on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    One more thing...since the Purchase Expenditure transactions are crediting and debiting the same account (essentially cancelling each other out), how would this have an effect on the main account??

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,195 Super User 2025 Season 2 on at
    RE: Discrepancy Between Balance Sheet and Inventory Value

    Hi Rosey,

    If the credit and debit are posted, the main account has no movement (zero) but the inventory transaction does. So indeed this can cause the issue. It will be hard to give a good advice since I don't know all details of your setup and posted transactions.

    Maybe it is better to get someone on-site (with deep knowledge of inventory transactions and financial integration) to advice what to do. Also given the fact you are using production which has a lot of parameters. If you have a test environment available you can try to see what happens if you change the expenditure accounts. Note that old transactions will still remain on the old account.

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