Hi,
Somewhat new to GP. Can someone help me understand the true intended use of "Variance" vs. "Adjustment"? Is an "adjustment" strictly for "0" Dollar transactions and Variance for "$" transactions?.....when used within Inventory?
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Hello rincontom
You are welcome to Dynamics GP Community,
I would say simply that they are two document types associated with somehow several business processes to ensure that each process have its own document type and sequence number as well.
Variance Transaction
For the variance transactions, they are mostly attached with the inventory stock count, which occurs on a frequent bases to track the physical quantities versus the system quantities and record the variance (either negative or positive) and correct the quantity balances accordingly.
For this transaction, specific accounts should be picked such as "stock count variances", if you check the item card > Accounts. You will find an account for variances. This is used to link the items with the proper "variances" account so that journal entry is automatically generated when a stock count is run.
Adjustment Transaction
A different document type, which is used for different purpose, such as items issued for hospitality, damaged, spoiled ...etc. In this essence, an adjustment transaction is recorded to keep track of this process. The accounts used for this type of the inventory transactions are practically the "Inventory account " and the "Inventory offset" account, which can be found on the item maintenance card > accounts.
Now technically speaking, they are different document types used for different processes. Although, I know several clients using the document type "Adjustment" to record all inventory variances and other inventory related decreases or increases which are not a result of purchasing or sales. So it is after all how you design the system process to reflect your business needs and ensure proper book keeping
Please never hesitate to share any further inquiries,
Please have a look on the below GP abbreviation for Document Type Variance vs Adjustment.
Document Type
Specify whether the transaction is an adjustment or variance. Select Adjustment to record an increase or decrease to inventory quantities because an item has been received or sold. Select Variance to record an increase or decrease to inventory quantities based upon a physical count of the items on hand.
Be sure to select the correct document type. If you select the wrong one, you'll need to delete the transaction with the wrong type and start over. A variance transaction records an increase or decrease, but is based upon discrepancies between a physical count and the system record. Because adjustments are based on receivings or allocations, entering a variance as an adjustment would distort reports of quantities received and allocated. Similarly, entering an adjustment would distort reports of quantity discrepancies. These discrepancies would appear on the Transaction Posting Journal, Reprint Transaction Posting Journal and Purchase Receipts Report.
Hope this helps!!!
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