Manual Inventory Valuation

In this case, goods receipts and deliveries won’t have any direct impact on your accounting books. Periodically, you create a manual journal entry representing the value of what you have in stock. To know that value, go in Inventory ‣ Reporting ‣ Inventory Valuation.This is the default configuration in PerfectWORK and it works out-of-the-box. Check following operations and find out how PerfectWORK is managing the accounting postings.

Continental Accounting

Vendor Bill

Selling product for $50 with 7% GST Tax

	Debit	Credit
Assets: Inventory	50
Assets: Deferred Tax Assets	3.50
Liabilities: Accounts Payable		53.50

Note

Configuration:
- Purchased Goods: defined on the product or on the internal category of related product (Expense Account field)
- Deferred Tax Assets: defined on the tax used on the purchase order line
- Accounts Payable: defined on the vendor related to the bill

Goods Receptions

Note

There is no journal entry generated

At the end of the month/year, your company does a physical inventory or just relies on the inventory in PerfectWORK to value the stock into your books. Create a journal entry to move the stock variation value from your Profit & Loss section to your assets.

	Debit	Credit
Assets: Inventory	X
Expenses: Inventory Variation		X
If the stock value decreased, the Inventory account is credited and the Inventory Variations debited.

Customer Invoice

Selling product for $100 with 7% GST Tax

	Debit	Credit
Revenue: Sold Goods		100
Liabilities: Deferred Tax Liabilities		9
Assets: Accounts Receivable	109

Note

Configuration:

- Revenues: defined on the product or on the internal category of related product (Income Account field)
- Deferred Tax Liabilities: defined on the tax used on the invoice line
- Accounts Receivable: defined on the customer (Receivable Account)

The fiscal position used on the invoice may have a rule that replaces the Income Account or the tax defined on the product by another one.

Customer Shipping

Note

There is no journal entry generated

At the end of the month/year, your company does a physical inventory or just relies on the inventory in PerfectWORK to value the stock into your books. Create a journal entry to move the stock variation value from your Profit & Loss section to your assets.

	Debit	Credit
Assets: Inventory	X
Expenses: Inventory Variation		X
If the stock value decreased, the Inventory account is credited and the Inventory Variations debited.

Manufacturing Orders

Note

There is no journal entry generated

At the end of the month/year, your company does a physical inventory or just relies on the inventory in PerfectWORK to value the stock into your books. Create a journal entry to move the stock variation value from your Profit & Loss section to your assets.

	Debit	Credit
Assets: Inventory	X
Expenses: Inventory Variation		X
If the stock value decreased, the Inventory account is credited and the Inventory Variations debited.

Anglo-Saxon Accounting

Vendor Bill

Selling product for $50 with 7% GST Tax

	Debit	Credit
Assets: Inventory	50
Assets: Deferred Tax Assets	3.50
Liabilities: Accounts Payable		53.50

Note

Configuration:
- Purchased Goods: defined on the product or on the internal category of related product (Expense Account field)
- Deferred Tax Assets: defined on the tax used on the purchase order line
- Accounts Payable: defined on the vendor related to the bill

Goods Receptions

Note

There is no journal entry generated

At the end of the month/year, your company does a physical inventory or just relies on the inventory in PerfectWORK to value the stock into your books.

Then you need to break down the purchase balance into both the inventory and the cost of goods sold using the following formula: Cost of goods sold (COGS) = Starting inventory value + Purchases – Closing inventory value

To update the stock valuation in your books, record such an entry:

	Debit	Credit
Assets: Inventory (closing value)	X
Expenses: Cost of Good Sold	X
Expenses: Purchased Goods		X
Assets: Inventory (starting value)		X

Customer Invoice

Selling product for $50 with 7% GST Tax

	Debit	Credit
Revenue: Sold Goods		100
Liabilities: Deferred Tax Liabilities		9
Assets: Accounts Receivable	109

Note

Configuration:

- Revenues: defined on the product or on the internal category of related product (Income Account field)
- Deferred Tax Liabilities: defined on the tax used on the invoice line
- Accounts Receivable: defined on the customer (Receivable Account)

The fiscal position used on the invoice may have a rule that replaces the Income Account or the tax defined on the product by another one.

Customer Shipping

Note

There is no journal entry generated

At the end of the month/year, your company does a physical inventory or just relies on the inventory in PerfectWORK to value the stock into your books.

Then you need to break down the purchase balance into both the inventory and the cost of goods sold using the following formula: Cost of goods sold (COGS) = Starting inventory value + Purchases – Closing inventory value

To update the stock valuation in your books, record such an entry:

	Debit	Credit
Assets: Inventory (closing value)	X
Expenses: Cost of Good Sold	X
Expenses: Purchased Goods		X
Assets: Inventory (starting value)		X

Manufacturing Orders

Note

There is no journal entry generated

At the end of the month/year, your company does a physical inventory or just relies on the inventory in PerfectWORK to value the stock into your books.

Then you need to break down the purchase balance into both the inventory and the cost of goods sold using the following formula: Cost of goods sold (COGS) = Starting inventory value + Purchases – Closing inventory value

To update the stock valuation in your books, record such an entry:

	Debit	Credit
Assets: Inventory (closing value)	X
Expenses: Cost of Good Sold	X
Expenses: Purchased Goods		X
Assets: Inventory (starting value)		X