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Average Perpetual Inventory

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Irish_GP_User View Drop Down Member Member

Joined: October 12 2009
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    Posted: October 12 2009 at 9:58am
Hi all,
I am using version 8 GP. We use the average perpetual valuation.
I have just come into the organisation & believe journals are not flowing as they should be.
Could someone please explain how the opening & closing stock accounts on the P&L should be managed on a monthly basis.
Right now we are crediting the BS stock account and DR Opening PL stock account at the beginning of each month and then DR BS stock account and CR Closing PL stock account at the end of the month. I don't believe this is correct.
If someone could set out what the flow of transactions should be that would be extremely helpful.
Many thanks in advance.
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Ahmad View Drop Down Member Member

Joined: October 09 2008
Location: Dubai
Status: Offline
Points: 44
Post Options Post Options   Thanks (0) Thanks(0)   Quote Ahmad Quote  Post ReplyReply Direct Link To This Post Posted: November 24 2009 at 4:07am
Hello Irish,
The stock account is a BS account by nature in all world standards! Which means, yes, they are not doing it the right way. I understood that you are doing the following:
@ Month start
 DR Opening PL stock account
 CR BS stock account
@month end
 DR BS stock account
 CR Closing PL stock account
The BS stock account might be going fine, but you can't get any report during the month, you will have to wait till you close the month to get your eport, which is too much for an ERP user!
I suppose you are doing monthly inventory adjustments, in this case, the best practice is to create a BS inventory offset account that will be DR/CR with each adjustment while the Inventory (stock) will be the other leg of the transaction.
In a seperate entry, the value in the inventory offset account should be cleared in a COGS account, variance account, expense account or something similar as per each transaction nature.
At the end of the fiscal year, you will be closing the year, so an entry will go to the retained earnings account having the net total of Opening PL stock account and Closing Opening PL stock account which is a financial disaster!
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