Stock General Ledger Sets
  • Jeff
    Stock General Ledger Sets

    by Jeff » Wed May 07, 2014 11:53 am

    a) I have created a general ledger set called GRNI.

    This is identical to the default set except the Stock on hand account is B.6920000 instead of B.6323020

    b) I have created a stock record and set the GLSet to GRNI hoping that it will post these transactions to B.6920000 instead of B.6323020.

    c) I have posted a stock receipt but as you can see from the transaction allocation screen it is being posted to account of B.6323020 instead of 6920000.

    What am I doing wrong.
  • COBS Tech Support
    Joined:Fri Sep 09, 2005 8:23 am

    by COBS Tech Support » Wed May 07, 2014 11:53 am

    Generally speaking there are two ways stock can be handled in the GL. One is the opening/closing stock method and the other is a direct cost of sales method. When a system is first established it's usual practice to implement opening/closing stock. More on the differences and consequences are fleshed out in the on-line help in the GL reference guide.

    If opening/closing stock is set-up - there would be at least one set of opening and closing stock accounts in your chart of accounts - then the system when invoicing or doing other stock related movements, will not debit or credit stock on hand or cost of goods sold. The GL set postings accounts are usually set-up in such a way that the debit balances the credit. No net impact on the GL accounts.

    Later, when the End Period Wizard is run, the Wizard will prompt for the closing stock balance, actual or estimated, and create and post a set of opening/closing stock journals automatically. Only at this time is the stock on hand account affected.

    If you're running opening/closing stock, changing things around can have some significant ramifications. For a direct stock costing system to work well, cost pricing has to be as accurate as possible, as does stock counts and timing issues have to be considered. This is because as soon as an invoice is raised, inventory will be adjusted (balance of account) and cost of goods sold will be adjusted. But often there are timing or accuracy issues involved, i.e., the wrong code might get invoiced. This can lead to negative stock situations which effect the accuracy of average costing. Perhaps goods are routinely invoiced before purchase orders get processed, so they get processed with the wrong (older) cost pricing, and so on. Direct cost is in a sense a simpler system but unless you have really good processes in place and these are practical to implement in your business (i.e., customers are prepared to wait until all the paperwork is updated before goods ship, etc.) then all the flaws in your processes are going to show up as inaccuracies filtering through to your GL. Typically as a divergence each month between cost of goods sold and the GL stock on hand versus the actual inventory stock on hand. Opening/Closing method is in some ways more complicated and in other ways simpler, but it does have the benefit that all the on-going timing and other errors tend to average out and get posted into cost of goods sold each month. The GL and inventory accounts always remain in sync.

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