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Dear
Can someone briefly explain the difference between physical and financial cost in Dynamics AX?
Regards
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Hi N.W.,
The physical cost is related to items which has been received or issued, but not invoiced yet. For production orders it is physical before you actually end the production order.
Financial means that the real cost price is determined and can only be adjusted by the periodic option Closing and adjustment for inventory models requiring this feature.
Usually at the stage of financial costs, miscellaneous charges and differences like price difference is determined and posted.
Most simply, the physical cost is the inventory value associated with the physical posting, or packing slip step of a movement (aka order), and the financial cost is the inventory value associated with the financial posting, or invoice step of the same movement.
The physical cost is often accrued. In the case of a sales order, the physical voucher accrues the inventory asset value into a "shipped not invoiced" account similar to a "received not invoiced" account for purchase order packing slips. Then the invoice voucher reverses this accrual exactly (or proportionately as needed), and posts the proper cost according to the invoice document. Because of this design, you can change the cost between the packing slip and invoice steps, without all the nonsense that most systems make you go through having to reverse the packing slip and re-post the packing slip at an updated cost in order to invoice at a different cost, which never relieved all the downstream FIFO issues anyway.
Hi N.W,
let me explain with one example.
If you are posting PO packing slip or GRN, inventory will update with physical coat with physical quantity. Amount will go interim liability account (packing slip / packing slip offset)
If you go to Inventory on-hand for this particular item, you can see physical available quantity and physical value.
Now you are doing same item invoice, inventory will update with financial cost and posted quantity. (It will go to liability account and interim will be nullify)
If you go inventory onhand for same item , you can see physical cost moved to financial cost field and receipt quantity will move to posted quantity.
PO packing slip - physical cost
PO Invoice - financial cost
hope you are cleared.
Thanks
Bhaskar
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