423 lines
13 KiB
ReStructuredText
423 lines
13 KiB
ReStructuredText
:code-column:
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=================================
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Inventory valuation configuration
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=================================
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Inventory valuation refers to how you value your stock. It’s a very
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important aspect of a business as the inventory can be the biggest asset
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of a company.
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Inventory valuation implies two main choices:
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- The cost method you use to value your goods (standard, fifo, avco)
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- The way you record this value into your accounting books (manually or automatically)
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Those two concepts are explained in the sections below.
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Costing Methods: Standard, FIFO, AVCO
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=====================================
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The costing method is defined in the product category. There are three
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options available. Each of them is explained in detail below.
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.. rst-class:: alternatives doc-aside
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Standard Price
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.. rst-class:: values-table
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.. list-table::
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:widths: 28 18 18 18 18
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:header-rows: 1
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:stub-columns: 1
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* - Operation
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- Unit Cost
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- Qty On Hand
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- Delta Value
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- Inventory Value
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* -
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- €10
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- 0
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-
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- €0
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* - Receive 8 Products at €10
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- €10
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- 8
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- +8*€10
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- €80
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* - Receive 4 Products at €16
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- €10
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- 12
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- +4*€10
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- €120
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* - Deliver 10 Products
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- €10
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- 2
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- | -10*€10
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- €20
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* - Receive 2 Products at €9
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- €10
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- 4
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- +2*€10
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- €40
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In **Standard Price**, any product will be valued at the cost that you defined
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manually on the product form. Usually, this cost is an estimation based
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on the material and labor needed to obtain the product. This cost must
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be reviewed periodically.
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Average Price
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.. rst-class:: values-table
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.. list-table::
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:widths: 28 18 18 18 18
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:header-rows: 1
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:stub-columns: 1
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* - Operation
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- Unit Cost
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- Qty On Hand
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- Delta Value
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- Inventory Value
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* -
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- €0
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- 0
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-
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- €0
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* - Receive 8 Products at €10
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- €10
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- 8
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- +8*€10
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- €80
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* - Receive 4 Products at €16
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- €12
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- 12
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- +4*€16
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- €144
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* - Deliver 10 Products
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- €12
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- 2
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- | -10*€12
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- €24
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* - Receive 2 Products at €6
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- €9
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- 4
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- +2*€6
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- €36
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In **AVCO (Average Cost)**, each product has the same value and this
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value is the average purchase cost of the product. With this costing method, the
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cost of the product is recomputed as each receipt.
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The average cost does not change when products leave the warehouse.
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FIFO
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.. rst-class:: values-table
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.. list-table::
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:widths: 28 18 18 18 18
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:header-rows: 1
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:stub-columns: 1
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* - Operation
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- Unit Cost
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- Qty On Hand
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- Delta Value
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- Inventory Value
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* -
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- €0
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- 0
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-
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- €0
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* - Receive 8 Products at €10
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- €10
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- 8
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- +8*€10
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- €80
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* - Receive 4 Products at €16
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- €12
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- 12
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- +4*€16
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- €144
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* - Deliver 10 Products
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- €16
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- 2
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- | -8*€10
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| -2*€16
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- €32
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* - Receive 2 Products at €6
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- €11
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- 4
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- +2*€6
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- €44
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In **FIFO (First In First Out)**, the products are valued at their
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purchase cost. When a product leaves the stock, that’s the “First in,
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first out” rule that applies.
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Pay attention, that this is a financial FIFO. The first value “in”
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is the first value “out”, no matter the storage location, warehouse
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or serial number.
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FIFO is advised if you manage all your workflows into Odoo (Sales,
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Purchases, Inventory). It suits any kind of users.
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Inventory Valuation: Manual or Automated
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========================================
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There are two ways to record your inventory valuation in your accounting
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books. As the costing method, this is defined in your product category.
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Those two methods are detailed below.
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It is important to also note that the accounting entries will depend on
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your accounting mode: it can be continental or anglo-saxon. In
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continental accounting, the cost of a good is taken into account as soon
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as the product is received in stock. In anglo-saxon accounting, the cost
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of a good is only recorded as an expense when this good is invoiced to a
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final customer. In the tables below, you can easily compare those two
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accounting modes.
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Usually, based on your country, the correct accounting mode will be
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chosen by default. If you want to verify your accounting mode, activate
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the :doc:`Developer mode <../../../general/developer_mode/activate>` and open your accounting
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settings.
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Manual Inventory Valuation
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--------------------------
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In this case, goods receipts and deliveries won’t have any direct impact
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on your accounting books. Periodically, you create a manual journal
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entry representing the value of what you have in stock. To know that
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value, go in :menuselection:`Inventory --> Reporting --> Inventory Valuation`.
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This is the default configuration in Odoo and it works
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out-of-the-box. Check following operations and find out how
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Odoo is managing the accounting postings.
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Continental Accounting
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~~~~~~~~~~~~~~~~~~~~~~
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.. rst-class:: alternatives doc-aside
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Vendor Bill
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.. rst-class:: values-table
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============================= ===== ======
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\ Debit Credit
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============================= ===== ======
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Assets: Inventory 50
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Assets: Deferred Tax Assets 4.68
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Liabilities: Accounts Payable 54.68
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============================= ===== ======
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Configuration:
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* Purchased Goods: defined on the product or on the internal category of related product (Expense Account field)
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* Deferred Tax Assets: defined on the tax used on the purchase order line
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* Accounts Payable: defined on the vendor related to the bill
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Goods Receptions
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No Journal Entry
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Customer Invoice
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.. rst-class:: values-table
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===================================== ===== ======
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\ Debit Credit
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===================================== ===== ======
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Revenues: Sold Goods 100
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Liabilities: Deferred Tax Liabilities 9
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Assets: Accounts Receivable 109
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===================================== ===== ======
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Configuration:
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* Revenues: defined on the product or on the internal category of related product (Income Account field)
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* Deferred Tax Liabilities: defined on the tax used on the invoice line
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* Accounts Receivable: defined on the customer (Receivable Account)
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The fiscal position used on the invoice may have a rule that replaces the
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Income Account or the tax defined on the product by another one.
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Customer Shipping
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No Journal Entry
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Manufacturing Orders
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No Journal Entry
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.. raw:: html
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<hr style="float: none; visibility: hidden; margin: 0;">
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At the end of the month/year, your company does a physical inventory
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or just relies on the inventory in Odoo to value the stock into your books.
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Create a journal entry to move the stock variation value from your
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Profit&Loss section to your assets.
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.. h:div:: doc-aside
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.. rst-class:: values-table
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===================================== ===== ======
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\ Debit Credit
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===================================== ===== ======
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Assets: Inventory X
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Expenses: Inventory Variations X
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===================================== ===== ======
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If the stock value decreased, the **Inventory** account is credited
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and te **Inventory Variations** debited.
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.. raw:: html
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<hr style="float: none; visibility: hidden; margin: 0;">
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Anglo-Saxon Accounting
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~~~~~~~~~~~~~~~~~~~~~~
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.. rst-class:: alternatives doc-aside
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Vendor Bill
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.. rst-class:: values-table
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============================= ===== ======
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\ Debit Credit
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============================= ===== ======
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Assets: Inventory 50
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Assets: Deferred Tax Assets 4.68
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Liabilities: Accounts Payable 54.68
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============================= ===== ======
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Configuration:
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* Purchased Goods: defined on the product or on the internal category of related product
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(Expense Account field)
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* Deferred Tax Assets: defined on the tax used on the purchase order line
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* Accounts Payable: defined on the vendor related to the bill
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Goods Receptions
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No Journal Entry
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Customer Invoice
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.. rst-class:: values-table
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===================================== ===== ======
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\ Debit Credit
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===================================== ===== ======
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Revenues: Sold Goods 100
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Liabilities: Deferred Tax Liabilities 9
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Assets: Accounts Receivable 109
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===================================== ===== ======
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Configuration:
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* Revenues: defined on the product or on the internal category of related
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product (Income Account field)
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* Deferred Tax Liabilities: defined on the tax used on the invoice line
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* Accounts Receivable: defined on the customer (Receivable Account)
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The fiscal position used on the invoice may have a rule that replaces the
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Income Account or the tax defined on the product by another one.
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Customer Shipping
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No Journal Entry
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Manufacturing Orders
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No Journal Entry
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.. raw:: html
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<hr style="float: none; visibility: hidden; margin: 0;">
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At the end of the month/year, your company does a physical inventory
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or just relies on the inventory in Odoo to value the stock into your books.
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Then you need to break down the purchase balance into both the inventory and
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the cost of goods sold using the following formula:
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Cost of goods sold (COGS) = Starting inventory value + Purchases – Closing inventory value
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To update the stock valuation in your books, record such an entry:
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.. h:div:: doc-aside
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.. rst-class:: values-table
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===================================== ===== ======
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\ Debit Credit
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===================================== ===== ======
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Assets: Inventory (closing value) X
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Expenses: Cost of Good Sold X
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Expenses: Purchased Goods X
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Assets: Inventory (starting value) X
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===================================== ===== ======
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Automated Inventory Valuation
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-----------------------------
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In that case, when a product enters or leaves your stock, an accounting
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entry will be automatically created. This means your accounting books
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are always up-to-date. This mode is dedicated to expert accountants and
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advanced users only. As opposed to periodic valuation, it requires some
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extra configuration & testing.
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First, you need to define the accounts that will be used for those
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accounting entries. This is done on the product category.
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Continental Accounting
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~~~~~~~~~~~~~~~~~~~~~~
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.. h:div:: valuation-chart-continental doc-aside
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.. placeholder
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.. raw:: html
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<hr style="float: none; visibility: hidden; margin: 0;">
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.. h:div:: doc-aside
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**Configuration:**
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- Accounts Receivable/Payable: defined on the partner (Accounting tab)
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- Deferred Tax Assets/Liabilities: defined on the tax used on the invoice line
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- Revenues/Expenses: defined by default on product's internal category; can be
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also set in product form (Accounting tab) as a replacement value.
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- Inventory Variations: to set as Stock Input/Output Account in product's internal
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category
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- Inventory: to set as Stock Valuation Account in product's internal category
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Anglo-Saxon Accounting
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~~~~~~~~~~~~~~~~~~~~~~
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.. h:div:: valuation-chart-anglo-saxon doc-aside
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.. placeholder
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.. raw:: html
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<hr style="float: none; visibility: hidden; margin: 0;">
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.. h:div:: doc-aside
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**Configuration:**
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- Accounts Receivable/Payable: defined on the partner (Accounting tab)
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- Deferred Tax Assets/Liabilities: defined on the tax used on the
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invoice line
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- Revenues: defined on the product category as a default, or specifically
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to a specific product.
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- Expenses: this is where you should set the "Cost of Goods Sold" account.
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Defined on the product category as a default value, or specifically on
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the product form.
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- Goods Received Not Purchased: to set as Stock Input Account in product's
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internal category
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- Goods Issued Not Invoiced: to set as Stock Output Account in product's
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internal category
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- Inventory: to set as Stock Valuation Account in product's internal category
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- Price Difference: to set in product's internal category or in product
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form as a specific replacement value
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