diff --git a/inventory/management/reporting/inventory_valuation_config.rst b/inventory/management/reporting/inventory_valuation_config.rst index 0d05a8b1d..d43357158 100644 --- a/inventory/management/reporting/inventory_valuation_config.rst +++ b/inventory/management/reporting/inventory_valuation_config.rst @@ -63,10 +63,10 @@ Standard Price - +2*€10 - €40 - **Standard Price** means you estimate the cost price based - on direct materials, direct labor and manufacturing overhead - at the end of a specific period (usually once a year). You - enter this cost price in the product form. + In **Standard Price**, any product will be valued at the cost that you defined + manually on the product form. Usually, this cost is an estimation based + on the material and labor needed to obtain the product. This cost must + be reviewed periodically. Average Price .. rst-class:: values-table @@ -108,21 +108,12 @@ Average Price - +2*€6 - €36 - The **Average Price** method recomputes the cost price as a receipt order - has been processed, based on prices defined in tied purchase orders: - FORMULA (see here attached) + In **AVCO (Average Cost)**, each product has the same value and this + value is the average purchase cost of the product. With this costing method, the + cost of the product is recomputed as each receipt. The average cost does not change when products leave the warehouse. - From an accounting point of view, this method is mainly justified in - case of huge purchase price variations and is quite unusual due to its - operational complexity. Your actually need a software like Odoo to - easily keep this cost up-to-date. - - This method is dedicated to advanced users. It requires well established - business processes because the order in which you process receipt orders - matters in the cost computation. - FIFO .. rst-class:: values-table @@ -163,51 +154,17 @@ FIFO - +2*€6 - €44 - For **Real Price** (FIFO, LIFO, FEFO, etc), the costing is further - refined by the removal strategy set on the warehouse location - or product's internal category. The default strategy is FIFO. With - such method, your inventory value is computed from the real cost - of your stored products (cfr. Quantitative Valuation) and not from - the cost price shown in the product form. Whenever you ship items, - the cost price is reset to the cost of the last item(s) shipped. - This cost price is used to value any product not received from a - purchase order (e.g. inventory adjustments). + In **FIFO (First In First Out)**, the products are valued at their + purchase cost. When a product leaves the stock, that’s the “First in, + first out” rule that applies. + + Pay attention, that this is a financial FIFO. The first value “in” + is the first value “out”, no matter the storage location, warehouse + or serial number. - FIFO is advised if you manage all your workflow into Odoo (Sales, + FIFO is advised if you manage all your workflows into Odoo (Sales, Purchases, Inventory). It suits any kind of users. -Standard Price --------------- - -In Standard Price, any product will be valued at a cost that you defined -manually on the product form. Usually, this cost is an estimation based -on the material and labor needed to obtain the product. This cost must -be reviewed periodically. - -First In First Out (FIFO) -------------------------- - -In FIFO, the products are valued at their purchase cost. When a product -leaves the stock, that’s the “First in, first out” rule that applies. -Let’s take an example: I first purchase a t-shirt for $10 and, later, -one for $20. The first t-shirt that will go out of my stock will be -valued at $10 and the next one at $20. - -.. tip:: - Pay attention, that this is a financial FIFO. This means that the - locations where the products are stored don’t impact the valuation. The - first value “in” is the first value “out”, no matter the storage - location. - -Average Cost (AVCO) -------------------- - -In AVCO, each product has the same value and this value is the average -purchase cost of the product. Let’s take an example: I first purchase a -t-shirt for $10 and, later, one for $20. Each t-shirt will be valued at -$15, the average weighted purchase cost. With this costing method, the -cost of the product is recomputed as each receipt. - Inventory Valuation: Manual or Automated ======================================== @@ -215,6 +172,18 @@ There are two ways to record your inventory valuation in your accounting books. As the costing method, this is defined in your product category. Those two methods are detailed below. +It is important to also note that the accounting entries will depend on +your accounting mode: it can be continental or anglo-saxon. In +continental accounting, the cost of a good is taken into account as soon +as the product is received in stock. In anglo-saxon accounting, the cost +of a good is only recorded as an expense when this good is invoiced to a +final customer. In the tables below, you can easily compare those two +accounting modes. + +Usually, based on your country, the correct accounting mode will be +chosen by default. If you want to verify your accounting mode, activate +the developer mode and open your accounting settings. + Manual Inventory Valuation -------------------------- @@ -223,29 +192,13 @@ 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. -+----------------------------------+---------+----------+ -| | Debit | Credit | -+==================================+=========+==========+ -| Assets: Inventory | X | | -+----------------------------------+---------+----------+ -| Expenses: Inventory Variations | | X | -+----------------------------------+---------+----------+ - -.. tip:: - If the stock value has decreased, the assets account will be credited. - -Continental Accounting -~~~~~~~~~~~~~~~~~~~~~~ - -In a periodic inventory valuation, goods reception and -outgoing shipments have no direct impact in the accounting. -At the end of the month or year, the accountant posts one -journal entry representing the value of the physical inventory. - This is the default configuration in Odoo and it works out-of-the-box. Check following operations and find out how Odoo is managing the accounting postings. +Continental Accounting +~~~~~~~~~~~~~~~~~~~~~~ + .. rst-class:: alternatives doc-aside Vendor Bill @@ -379,20 +332,6 @@ extra configuration & testing. First, you need to define the accounts that will be used for those accounting entries. This is done on the product category. -.. image:: media/inventory_valuation_config_02.png - :align: center - -Note that the accounting entries that will be recorded will depend on -your accounting mode: it can be continental or anglo-saxon. In -continental accounting, the cost of a good is taken into account as soon -as the product is received in stock. In anglo-saxon accounting, the cost -of a good is only recorded as an expense when this good is invoiced to a -final customer. - -Usually, based on your country, the correct accounting mode will be -chosen by default. If you want to verify your accounting mode, activate -the developer mode and open your accounting settings. - Continental Accounting ~~~~~~~~~~~~~~~~~~~~~~