If you are running in FIFO inventory costing mode, every time you receive a piece of inventory, the system creates a new sub-account under your inventory asset account for the product and store the inventory value there. This sub-account is called a FIFO costing bucket. Every time you sell the inventory, the system deducts the inventory value off this sub-account.
This is how the system determine the unit cost of inventory items (by looking at total balance of the FIFO bucket account and then divided it by quantity on hand of the remaining inventory items from a shipment receipt). Inventory cost are calculated per shipment receipt meaning every time you receives inventory, a new inventory FIFO costing bucket is created. The value and quantity on hand for inventory items are tracked on a per bucket basis.
If you are running in Average inventory costing mode, there is one sub-account created for each product. If there are multiple measurement units being used for the product, there is one sub-account every unit. Every time you receive a piece of inventory, the system increase the value in this sub-account for the product.. Every time you sell the inventory, the system deducts the inventory value off this sub-account.
The system determine the unit cost of inventory items by looking at total balance of the sub-account account and then divided it by quantity on hand.
To check which inventory costing mode you are in, go to Setup Menu, Feature Settings, General Ledger, Inventory Costing Method. This setting cannot be changed once it is set and you have inventory.
To start a new adjustment, you would need to Products from the main menu, then New Adjustment under Inventory Tools.
On the new adjustment page, first specify the effective date for the adjustment. Then you need to enter the part number of the product. Type in a few letters to see a list of matching products. Once the correct product is selected, choose the correct UOM (EA for example).
A list of inventory records is shown. If you have multiple facilities defined in VersAccounts, this view only shows inventory for the current facility(Use the facility list at the top of the page to choose the correct facility).
If you are using average costing method for inventory costing, you will likely only see one record under Matching Inventory . Click on the pencil mark to adjust an inventory record.
If you are using FIFO costing method for inventory costing, you will likely see more than one records with various costs. Click on the pencil mark to adjust an inventory record .
A list of adjustment fields would appear, enter the physical quantity you have (the system would adjust inventory to match this number). Choose a variance reason. For balancing account, you would need to select an existing GL account to offset the increase of inventory value or decrease of inventory value. Consult your accountant for the correct account to use. Many business have a special account called Inventory Adjustment to record such adjustments. Go to General Ledger menu, Charts of accounts ,All to create a new account if needed.
Click on Post Variance to finish the adjustment. After this adjustment is posted, the quantity on hand recorded in the system would match the Actual Quantity specified.
Creating your own Variance ReasonsVersAccounts provides you with some default inventory Variance Reasons. These include:
- Shrinkage, and
- Unknown Variance
- If you are not already on the User Screen, click on the 'User Screen' hyperlink on the top navigation bar.
- Click on the 'Parts' hyperlink on the side navigation bar under the heading 'Inventory'.
- Click the 'Physical Inventory Tools' hyperlink on the 'Item Management' screen.
- Click the 'Inventory Variance Reasons' hyperlink on the 'Physical Inventory Tools' screen.
- Enter your desired Variance Reason in the field provided.
- Click the 'Create New Variance Reason' button. Done.