Skip to main content

Notifications

Microsoft Dynamics AX forum
Answered

Difference between physical and financial cost amount

Posted on by 240

Hi all,

I'm making a returned purchase transaction with an item, and the cost amount posted when the product receipt was posted is different with the one posted when the order was invoiced, although there was no transaction occurred with this item in between these 2 actions. Can anyone suggest any reason why this could happen?

5_2D00_12_2D00_2016-4_2D00_29_2D00_44-PM.jpg

Thanks in advance,

Regards.

  • GuyUK Profile Picture
    GuyUK 28,343 on at
    RE: Difference between physical and financial cost amount

    On a Purchase order, the physical and financial cost amounts could be different if the price on the PO line is different from the price on the Vendor Invoice. They could also be different if you added a Charge to the PO after the Invoice was posted, or if your Product receipts are not set to have charges included.

    Whatever the reason, a difference between physical and financial cost amounts does not normally cause a problem with the Trial Balance. Hopefully someone who is a bit better than me at the financials side will spot these messages and try to help.

  • neethukbabu Profile Picture
    neethukbabu on at
    RE: Difference between physical and financial cost amount

    Hi Guy,

    In fact, the problem starts from trail balance, debit and credit is not matching for one business unit. For that we checked its transactions and found that mismatch in one purchase order. So we again checked the items under that PO and found that financial cost amount is different and this amount is showing in the trail balance transaction other than the invoice amount of that PO.

    Is there any way to match both the physical and financial cost amount. This happens only for few items,why? All other transactions are okay?What could be the reason?

    Regards,

    Neethu K B

  • GuyUK Profile Picture
    GuyUK 28,343 on at
    RE: Difference between physical and financial cost amount

    Hi,

    This is normal behaviour with the Weighted Average cost model. What scenarios do you have where this is causing a problem with the Trial Balance?

  • neethukbabu Profile Picture
    neethukbabu on at
    RE: Difference between physical and financial cost amount

    Hi Tung,

    I am also facing the same issue. Financial cost amount is different from the physical cost amount. We are also using weighted avg costing model. Because of this difference, trial balance also showing some values. Please help me to sort this.

    Regards,

    Neethu K B

  • Tung Duong Profile Picture
    Tung Duong 240 on at
    RE: Difference between physical and financial cost amount

    Hi Guy,

    Thank you for the explanation. Should've known it!

    Regards.

  • Verified answer
    GuyUK Profile Picture
    GuyUK 28,343 on at
    RE: Difference between physical and financial cost amount

    Hi Tung,

    This is how the Weighted average costing model works. In the period, you have received a quantity of 3, with a total value of 250,000. And you have sold (issued, returned, whatever) one. The one you sold is valued at the average, which is 250,000/3 = 83,333.

    If you want the return to be valued at 50,000, you need to use Inventory marking to mark the issue to the first receipt.

  • Tung Duong Profile Picture
    Tung Duong 240 on at
    RE: Difference between physical and financial cost amount

    Hi Andre,

    Thanks for your suggestion. There was no additional charge in the transaction. I've rebuilt my customer's case with a new item (which has the same item model group with the last one) in the test environment as follows:

    1. I purchased and fully invoiced 1 unit of this item with the price of 100,000/unit:

    5_2D00_13_2D00_2016-4_2D00_08_2D00_56-PM.jpg

    5_2D00_13_2D00_2016-3_2D00_25_2D00_25-PM.jpg

    5_2D00_13_2D00_2016-3_2D00_26_2D00_26-PM.jpg

    2. I created a new PO and received another unit for 50,000/unit

    5_2D00_13_2D00_2016-3_2D00_53_2D00_23-PM.jpg

    5_2D00_13_2D00_2016-3_2D00_55_2D00_58-PM.jpg

    5_2D00_13_2D00_2016-3_2D00_57_2D00_58-PM.jpg

    3. However, the price was not right and before invoicing this order line, I attempted to return the item (without marking order line) and add another line with the right price. I created another product receipt for these 2 new lines:

    5_2D00_13_2D00_2016-4_2D00_07_2D00_29-PM.jpg

    5_2D00_13_2D00_2016-4_2D00_08_2D00_56-PM.jpg

    The physical cost amount of the deducted line (2nd line) was calculated based on the current on-hand cost price:

    5_2D00_13_2D00_2016-4_2D00_09_2D00_54-PM.jpg

    The 3rd line was physically posted using the unit price:

    5_2D00_13_2D00_2016-4_2D00_14_2D00_37-PM.jpg

    4. I posted invoice for all 3 lines:

    5_2D00_13_2D00_2016-4_2D00_16_2D00_40-PM.jpg

    However the financial cost amount for the returned line was quite strange:

    5_2D00_13_2D00_2016-4_2D00_17_2D00_26-PM.jpg

    5_2D00_13_2D00_2016-4_2D00_19_2D00_21-PM.jpg

    After this, I also made an inventory recalculation for this item, but there was no adjustment to the cost amount. I don't know how the system got this number. Since it would affect the ledger, I want to know how this happened.

    Any help would be great,

    Regards,

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 283,682 Super User on at
    RE: Difference between physical and financial cost amount

    HI Tung,

    It will be hard to tell without knowing all detailed transactions related to this item. Are there any miscellaneous charges? You can also try to run an inventory recalculation to see if this would correct the cost price. Probably test it in a copy environment first.

  • Tung Duong Profile Picture
    Tung Duong 240 on at
    RE: Difference between physical and financial cost amount

    Hi Andre,

    I recognize that the physical cost amount was calculated based on the current on-hand cost price at that time. However, the financial cost amount was different with the return price: the quantity was 1, the return price was 100,000 but the financial cost amount was 81,667...

    5_2D00_12_2D00_2016-5_2D00_34_2D00_47-PM.jpg

    Regards.

  • Suggested answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 283,682 Super User on at
    RE: Difference between physical and financial cost amount

    Hi Tung,

    The physical amount is taken from the inventory cost principle. Which inventory model are you using for this item? Also this amount depends if you are returning with a return Lot ID or not. If you are using e.g. average it will have a cost price related to the on-hand at that time.

    The financial amount is related to the unit price posted during the credit note. Indeed there can be a difference between the inventory cost and the return price.  

Helpful resources

Quick Links

Community Spotlight of the Month

Kudos to Mohamed Amine Mahmoudi!

Blog subscriptions now enabled!

Follow your favorite blogs

TechTalk: How Dataverse and Microsoft Fabric powers ...

Explore the latest advancements in data export and integration within ...

Leaderboard

#1
André Arnaud de Calavon Profile Picture

André Arnaud de Cal... 283,682 Super User

#2
Martin Dráb Profile Picture

Martin Dráb 225,000 Super User

#3
nmaenpaa Profile Picture

nmaenpaa 101,146

Featured topics

Product updates

Dynamics 365 release plans