Inventory adjustments in AccountRight v19 and AccountEdge
This support note describes how to adjust your inventory quantities and total values using the Inventory Adjustment function.
How are my inventory balances calculated?
The quantity and value of your physical stock holding should match the information in your company file. The software's inventory balances are automatically updated when Item Sales and Item Purchases are recorded.
Occasionally the quantities of your physical stock holdings may differ to the balances in the software. One of the most common causes of this is when stock is written off.
Any situation which affects the quantity or value of your physical stock holding, other than a sale or purchase, needs to be accounted for using an Adjust Inventory transaction.
When can I perform an Adjust Inventory transaction?
Inventory adjustments can only be recorded for items with the option I Inventory This Item selected. You can check your items to ensure this option has been selected as follows:
- Go to the Lists menu and choose Items.
- Click the zoom arrow next to the item to be checked. The Item Information window is displayed.
- Confirm the I Inventory This Item option is selected as shown in the following example:
Adjusting your inventory
Here's what's involved:
Note: Before entering an Adjustment Transaction, determine why the adjustment is needed - this will enable you to allocate the adjustment to the correct ledger account.
Printing the Items List Summary report will give you the current quantity/value of the item being adjusted. To do this:
- Go to the Reports menu and choose Index to Reports.
- Click the Inventory tab.
- Click the Item List Summary report (under the Items sub-heading) then click Advanced or Customise (as applicable based on your software version).
- Select the items you want included in the report.
- Click Run Report or Display (as applicable based on your software version). The Items List Summary report will be displayed as shown in the following example where these 2 items require adjustment.
Task 2 - Determine the adjustment amount
Referring to the above Items List Summary report, assume Rhiannon wants to write off a damaged piano. She also wants to reduce the Total Value of the Beat This - No 1 drum kit by $50, as some ancillary charges where incorrectly included in its purchase price.
So the adjustment amounts are:
- Quantity: -1 for the piano
- Value: -$50.00 for the drum kit
Task 3 - Record the Adjust Inventory transaction
- Go to the Inventory command centre and click Adjust Inventory. The Adjust Inventory window is displayed.
- Enter the Date and Memo. Note: Entering a detailed Memo outlining the transaction's contents provides a visible explanation if you view the transaction at a later date.
- Enter the Item Number then enter the adjusted Quantity or Unit Cost.
- Enter the Account. The example Adjust Inventory transaction for Rhiannon's music shown below will reduce the Quantity of the pianos by one, and also reduce the Total Value of the drum kit by $50.00.
- The adjustment values are used and not the values which are the desired outcome. For example: the desired Quantity is four pianos, but negative one is the adjustment amount and it is this value which is used.
- The ledger accounts used are the ones required to record the relevant expenses.
- Click Record.
Task 4 - Check the results
Display the Items List Summary report as outlined in Determine the item's current quantity/value.
The example below for Rhiannon's Music shows the report after recording the Adjust Inventory transaction.
You can see from this report that the piano's Quantity has been reduced to four. Also, the Piano's Total Value has also been reduced to reflect the reduction of the quantity. Its Average Cost has remained the same. The Total Value of the drum kit has been reduced by $50 to $700.
If you are using one of the versions listed in the note in the section titled Determine the item's current quantity/value, save the report by clicking Send To and choosing PDF. Archive this report and the one created at Determine the item's current quantity/value so the content of the Adjust Inventory transaction can be determined at a later date if needed.
How can the contents of an Adjust Inventory transaction be viewed?
- Go to the Inventory command centre and click Items Register.
- Enter a date range to capture the transaction in the Dated From and To fields.
- Identify the transaction then click its zoom arrow to open it.