{ "_label": "Perpetual Inventory" }

In perpetual accounting, system creates accounting entries for each stock transactions. Hence, stock balance are always remains same as relevant account balance.

Activation

  1. Setup the following default accounts for each Company

    • Stock Received But Not Billed
    • Stock Adjustment Account
    • Expenses Included In Valuation
    • Cost Center

  2. Go to Setup > Accounts Settings > check "Make Accounting Entry For Every Stock Entry" Activation

  3. Enter Asset / Expense account for each warehouse depending upon type of warehouse (Stores, Fixed Asset Warehouse etc)

Migration from Periodic Inventory

Migration from Periodic Inventory is not a one click settings, it involves some speacial steps. As Perpetual Inventory always maintain a sync between stock and account balance, it is not possible to enable it with existing Warehouse setup. You have to create a whole new set of Warehouses, each linked to relevant account.

Steps to be followed:

  • Nullify current stock-in-hand / fixed-asset account balance through Journal Voucher.
  • Create new warehouse for each existing warehouse.
  • Assign Asset / Expense account while creating new warehouse.
  • Follow Activation Step 1 & 2
  • Create Stock Entry (Material Transfer) to transfer available stock from existing warehouse to new warehouse

Note: System will not post any accounting entries for existing stock transactions submitted prior to the activation of Perpetual Inventory as those old warehouses will not be linked to account.

Example

Consider following Chart of Accounts and Warehouse setup for your company:

Chart of Accounts

  • Assets (Dr)
  • Current Assets
    • Accounts Receivable
      • Jane Doe
    • Stock Assets
      • Stock In Hand
    • Tax Assets
      • VAT
  • Fixed Assets
    • Office Equipments
  • Liabilities (Cr)
  • Current Liabilities
    • Accounts Payable
      • East Wind Inc.
    • Stock Liabilities
      • Stock Received But Not Billed
    • Tax Liabilities
      • Service Tax
  • Income (Cr)
  • Direct Income
    • Sales Account
  • Expenses (Dr)
  • Direct Expenses
    • Stock Expenses
      • Cost of Goods Sold
      • Expenses Included In Valuation
      • Stock Adjustment
      • Shipping Charges
      • Customs Duty

Warehouse - Account Configuration

  • Stores - Stock In Hand
  • Work In Progress - Stock In Hand
  • Finished Goods - Stock In Hand
  • Fixed Asset Warehouse - Office Equipments

Purchase Receipt

Suppose you have purchased 10 quantity of item "RM0001" at $200 and 5 quantity of item "Desktop" at $100 from supplier "East Wind Inc". Following are the details of Purchase Receipt:

Supplier: East Wind Inc.

Items:

Taxes:

Stock Ledger

pr_stock_ledger

General Ledger

pr_general_ledger

As stock balance increases through Purchase Receipt, "Stock In Hand" account has been debited and a temporary account "Stock Receipt But Not Billed" account has been credited, to maintain double entry accounting system.

Purchase Invoice

On receiving Bill from supplier, for the above Purchase Receipt, you will make Purchase Invoice for the same. The general ledger entries are as follows:

General Ledger

pi_general_ledger

Here "Stock Received But Not Billed" account has been debited and nullified the effect of Purchase Receipt. "Expenses Included In Valuation" account has been credited which ensures the valuation expense accounts are not booked (debited) twice (in Purchase Invoice and Delivery Note).

Delivery Note

Lets say, you have an order from "Jane Doe" to deliver 5 qty of item "RM0001" at $300. Following is the details of Delivery Note:

Customer: Jane Doe

Items:

Taxes:

Stock Ledger

dn_stock_ledger

General Ledger

dn_general_ledger

As item has delivered from "Stores" warehouse, "Stock In Hand" account has been credited and equal amount will be debited to the expense account "Cost of Goods Sold". The debit/credit amount is equal to the total buying cost of the selling items. And buying cost is calculated based on valuation method (FIFO / Moving Average) or serial no cost for serialized items.

In this eample, Buying cost of RM0001 = (2200/10)*5 = 1100

Sales Invoice with Update Stock

Suppose you do not want to make Delivery Note against the above order, you can make Sales Invoice directly with "Update Stock" options. The details of the Sales Invoice are same as above Delivery Note.

Stock Ledger

si_stock_ledger

General Ledger

si_general_ledger

Here apart from normal account entries for invoice, "Stock In Hand" and "Cost of Goods Sold" accounts are also affected based on buying cost.

Stock Entry (Material Receipt)

Items:

Stock Ledger

mr_stock_ledger

General Ledger

mr_stock_ledger

Stock Entry (Material Issue)

Items:

Stock Ledger

mi_stock_ledger

General Ledger

mi_stock_ledger

Stock Entry (Material Transfer)

Items:

Stock Ledger

mtn_stock_ledger

General Ledger

No General Ledger Entry

Stock Entry (Sales Return - Sales Invoice booked)

Items:

Stock Ledger

sret_stock_ledger

General Ledger

sret_general_ledger

Stock Entry (Purchase Return)

Items:

Stock Ledger

pret_stock_ledger

General Ledger

pret_general_ledger