STOCK VALUATION NOT TIED WITH GL STOCK A/C

A2000 ONLINE SUPPORT DEPARTMENT

KNOWLEDGE BASE

DESCRIPTION         Why is my Stock Valuation not tying with my GL Stock A/c?

1.  IS THIS A SMALL & IMMATERIAL DIFFERENCE? 

A2000ERP is designed with the GL and Stock Ledger data tables stored separately; and are used to counter-check each other. This design may result in rounding issues. While the GL is always updated at 2-decimals, the Stock Ledger calculates up to 7-decimal places. If the purchase is in foreign currency with exchange rate up to 4-decimals, the rounding issue may be exacerbated. Therefore such small differences may exist.

If there is a difference but it is small and immaterial, you could simply ignore this difference. Auditors will usually have no problem with such rounding differences.

2.   UNACCEPTABLE DIFFERENCES

There are instances where the differences go beyond acceptable limits like tens of dollars (and more).

NOTE: It is very IMPORTANT to ensure that the Stock Valuation report is tying with your Stock A/c in the GL. Auditors will not give your accounts a "clean bill" if these balances do not tie

3.  POSSIBLE CAUSES OF THESE DIFFERENCES

Such errors will happen if the user had done one or combination of the following:

1. Entering Stock-related Transactions Out-of-Sequence (this is the most common cause)
2. Passing a Journal Voucher (GJ transaction) into the GL Stock A/c.
3. Users Oversells Stock; going into a “negative stock” situation
4. Entering Back/Post-dated Stock Transactions

4.  WHY ENTERING OUT-OF-SEQUENCE IS BAD FOR COSTING?

Let’s illustrate using a sample product MOBILE PHONE MP-0001 (Weighted Average Cost type). The running Weighted Average Cost is represented by the [Avg Cost] in the Stock Ledger columns.

After the last sales transaction (on 15-1-2021) was completed, user then makes a purchase on 16-1-21 for 1 piece of MP-0001 at a price of $500 each. However he back-dated the purchase to 11-1-2021. The stock costing process thus go out of sequence, and the final calculated price becomes:

In this example, a transaction entered out of sequence is likely to cause the Stock Valuation to show $1600 in balance while the GL shows the Stock A/c  is only $1450 (out of sync with each other). User should note that if a stock item is sold into negative balances, this same issue will also prevail. 

5.  HOW TO RECTIFY?

5.1   TRANSACTION SEQUENCE OR NEGATVE STOCKS
 

This is usually the most common cause of untied situations. If this happens (as per example in Section 4), a simple recalculate the product cost and repost the transactions. If there are negative stocks, cover the deficit first and perform the same. 

It is not possible to sell/issue what you do not have in accounting. Therefore you MUST enter appropriate stocks to rectify the negative situation, either through a purchase or a Stock Adjustment. Note the goods receipt date must be at least the same or before the issue date.

Upon reposting the Stock Valuation and GL Stock should be in sync with each other. 

5.2   ACCOUNT BOOKS WITH INCOMPLETE SETUP
 

User may create new account book but forgotten to setup the auto-posting accounts properly. These will cause posting failure with error messages. If these are not corrected, postings will be in error and tying with control accounts is impossible.

It is important to check if you have Multiple Stock Control Accounts for both services and stock items. For example, a purchase for computer hardware should pass a debit to the Balance Sheet Stock A/c. If you purchase a service like freight, the same debit should not flow to the Stock A/c, but to the respective Expense A/c. 

If you are not sure how to setup, refer to the Accounting Posting Setting documentation.

 5.3   GL OPENING BALANCES NOT TIED WITH OPENING STOCKS
 

The sum of all opening stocks in the IO (Inventory Opening) transaction must tie with the opening GL Stock A /c. If not resolved, this difference will carry forward through the new transaction period. 

5.4   JOURNAL ENTRIES BOOKED INTO STOCK A/C
 

If you pass a manual entry via a Journal Voucher (GJ) or Cash Book (GC and GP) using the STOCK A/C, such entries would cause an unbalance. Check the transactions and clear away these postings by (a) reclassifying the GL accounts or (b) reversing these journals.

5.5   TRANSACTIONS NOT PROPERLY SAVED
 
 A new transaction could be created and the Saved button not triggered. It could be network disconnection whilst posting is in progress or the user simply forgot to click SAVE, especially when users close the web browsers. To resolve these, simply edit the transaction and SAVE again. 

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