Title:

Inventory Stock Valuations

Products: Paramo Pro, WRC
Last Updated: 1 October 2014
Related Links: Stock takes

Stock Valuation 

A FIFO or Rolling Inventory Stock valuation can be generated at any time, for any selected date. You can also filter the valuation by inventory category or material codes. All inventory items are included in the stock valuation, except for items designated Service. A list of service items can be viewed from Home- Inventory - Setup - Reports - Lists.

Stock is valued according to the Rolling Average or FIFO (First In First Out) methods. Another way of describing FIFO is the oldest items are sold first. 

Inventory Accounting

Inventory accounting is handled by two methods. 

Cost of Sales

This method automatically makes a journal entry every time an inventory item is shipped or returned.  In addition to shipping, every inventory transaction in or out of the company requires an accounting entry. This method requires each inventory item to be linked with an GL account number and generates a large number of transactions in the general ledger  This method is not used.

Periodic Accounting (used in Paramo Pro)

Ledger entries are not made every time the inventory changes, instead a summary journal entry is made on a periodic basis.

Opening Stock Valuation - Start of Business

If opening stock exists, it must be valued.  Inventory items must be assigned stock locations and credited with the stock quantity, and unit value of each item. For more information, see importing records

The application comes with a pre-loaded opening stock GL account. This (plus the work in progress opening stock account)  are the only stock accounts. 

Using the General Journal :

If there is work In progress stock, it should be recorded in a similar manner in the General Journal, with a work In progress opening stock account .

Profit and Loss Statement

When a profit and loss preview is viewed, opening stock and closing stock entries are displayed. The closing stock entry contains the inventory stock valuation, determined by the default method of calculation. You can manually update this entry if necessary. When balances are transferred to the profit and loss account, the closing stock value  becomes the opening stock value for the next profit and loss statement. This may be monthly, or at the end of the year.

A similar set of entries are made for manufacturing work in progress (WIP) opening stock and closing stock. WIP closing stock is not calculated and an estimate needs to be entered. 

In Summary:

the equation is:

COST OF GOODS SOLD = OPENING STOCK (if any) + PURCHASES - CLOSING STOCK VALUE


Inventory Stock Valuation

stock valuation