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Inventory G/L Reconciliation

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Posted on by Aaron Bauldree 21
Would there be any conflict if we were using the same G/L account for /Purchase Account/ and /Direct Cost Applied Account/?
 
Would having a General Posting Setup like this cause issues in the following reports:
Inventory to G/L Reconcile
Inventory - G/L Reconciliation
 
Thank you in advance for your response.
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Business Central
  • Verified answer
    Valentin Castravet Profile Picture
    Valentin Castravet 24,822 Super User 2024 Season 2 on at
    Inventory G/L Reconciliation
    Would having a General Posting Setup like this cause issues in the following reports:
     
     
    No, if you setup the Purchases and Direct Costs Applied Account as one or two accounts, it will have zero effect into the issues you're having. 
     
    Perhaps there is a problem with how your system was setup/how transactions are performed, or maybe even understanding the Inventory - G/L Reconciliation report, because having to constantly do adjustments at month end is not usual to tie your inventory subledger to the GL.

    • Can you please post a screenshot of your inventory setup page to provide more clarity how your system is setup
    • On your inventory balance sheet accounts, do you have direct posting set to no? Or are you making journal entries directly to those accounts rather than going through the inventory subledger?
    • Have you tried to use the Inventory Valuation Report instead, does the Total Inventory Value that this report provide tie to your inventory GL Account in the balance sheet? 
    • Can you provide screenshots or an example of what doesn't reconcile
     
  • Aaron Bauldree Profile Picture
    Aaron Bauldree 21 on at
    Inventory G/L Reconciliation
    Thank you both for your responses. This is my exact issue. There are a lot of varying opinions yet no real clarity as to how the Inventory G/L reports work. Using our current reconciliation method, we are having to make dramatic adjustments every month to keep things in balance (Inventory to G/L Reconcile"). One month we move a huge balance one way. The next month we shift it back the other way. It's a constant battle.
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 24,822 Super User 2024 Season 2 on at
    Inventory G/L Reconciliation
    The two accounts technically net to zero. Both are used for purchases and purchase returns only. During a purchase, one gets debited, and the other gets credited, which is why they technically net to zero. The direct costs applied account is not used as the COGS accounts during sales. I think there is misunderstanding as to what the direct cost account is used for in the system, and recommending it as a separate account for this reason. 

    If the purchasing account is not used for reporting, there is no need to have two separate accounts; and not many companies report on the purchasing account and for this reason they only have 1 GL Account. This is very common. But like I said, either option works. 


  • Suggested answer
    Jun Wang Profile Picture
    Jun Wang 7,443 Super User 2024 Season 2 on at
    Inventory G/L Reconciliation
    Not sure why you want to try to use the same account. for accurate reporting, it's recommended to use separate accounts for purchase and direct cost applied. this ensures clear traceability.
    Jun Wang
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 24,822 Super User 2024 Season 2 on at
    Inventory G/L Reconciliation
    For items with the type=inventory, no, there would be no conflict. You can have Purchases and Direct Costs Applied as one account or separate accounts, its really up to your preference. 
     
    However, If you have items with the type=non-inventory, or type=services, I would use a separate Purchases account that's different than the one used by items with the type=inventory. 
     

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