Published Date:30 Nov 2009
FAQ No:0068
Value is not Zero while Updating

Question: When posting transactions, why does the system stops updating as Stock Item Value is Not Zero?




Answer: While posting Purchases, Return to Suppliers, Adjustment Add and related WIP Transactions, the system includes a validation to confirm that the stock valuation integrity is maintained throughout the system.

There are two main reasons why this happens:
  • The current quantity in stock is negative and the user is trying to update a Purchase or an Adjustment Add with the same quantity but with a different value from the current average cost. Refer to example.
  • The user is trying to process a Return to Supplier for an item with the same quantity as currently in stock but with a different value from the current average cost. Refer to example.

Example

Item ABC123: Current quantity in stock -20 average cost is € 10 valuation is -€ 200

Purchase 20 at a cost of € 12 per item which works out at a total value of € 240

The above will result in a cost different per item of € 2, total € 24.

Details
Quantity
Average Cost
Valuation as per Inventory
Valuation as per Balance Sheet
ABC123
-20
10.00
-200
-200.00
Purchase ABC123
+20
12.00
+240
+240.00
Balance
0
12.00
0
24.00

If the user prints a valuation report from SIMS, the value will be zero (Qty 0 * 12 = 0) while your accounting system will show a discrepancy of € 24 which is not accounted for.



The Solution

The system provides the following option to account for these discrepancies as follows:



For users who have an interface with SFM, first create an Account in the Profit & Loss part of the Chart of Accounts, under the Cost of Sale Sub Header accounts, which can be called Cost of Sales Valuation – SIMS. From SIMS select the ADMIN option from the Menu, Company Maintenance and click the TAB Settings and amend the account code as created in SFM. When ready click the TAB Settings and tag the option to post average cost difference in the above account



NOTE

Full SFM Interface: For users who have the full interface with SFM, the system will post these values by debiting/crediting the account code as defined above and the stock control account.



Sales Only Interface with SFM: For users who do not interface the cost of sale, the system will not post any entries in SFM and it is up to the user to account for these values.

For both the above two settings, the system provides an audit trail of these adjustments which are available from the ADMIN Menu, SFM Interface, Average Cost Posting.
Category:Stock Valuation & Average Cost