Inventory and adjustments
Inventory accounting in GoSoft: perpetual inventory, valuation methods (weighted average and FIFO), stock cards, batches and expiry dates, warehouse transfers, shortages, overages and shrinkage with their entries.
Inventory is often a retailer's largest asset and the hardest to control. GoSoft keeps a perpetual inventory: every purchase, sale, transfer or adjustment updates quantities and value instantly and generates its entry.
- Explain perpetual inventory and valuation methods.
- Read a stock card.
- Record transfers, shortages, overages and shrinkage with their entries.
- Reconcile physical inventory with the books.
Valuation: at what cost do goods leave?
| Method | How it works | Allowed under IFRS |
|---|---|---|
| Weighted average | Each receipt recomputes average cost; issues use that average | Yes |
| FIFO | First in, first out | Yes |
| LIFO | Last in, first out | No (US GAAP only) |
| Specific identification | Each unit carries its own cost (properties, vehicles) | Yes, for non-interchangeable goods |
GoSoft works with batches: each receipt keeps its cost and expiry date, allowing FIFO by batch and control of perishables.
The stock card
The stock card (kardex) is each product's record: receipts, issues and balance, in units and in money, by date.
Adjustments and their entries
Transfer between warehouses
Moving goods from one warehouse to another does not change total inventory, but it changes each warehouse's (and branch's) balance.
| Account | Debit | Credit |
|---|---|---|
| Inventory · Sucursal 17 warehouse | 91,612.11 | |
| Inventory · Sucursal 02 warehouse | 91,612.11 | |
| Equal totals | 91,612.11 | 91,612.11 |
Shortage in the physical count
| Account | Debit | Credit |
|---|---|---|
| Inventory shortage loss | 1,250.00 | |
| Merchandise inventory | 1,250.00 | |
| Equal totals | 1,250.00 | 1,250.00 |
Overage in the physical count
| Account | Debit | Credit |
|---|---|---|
| Merchandise inventory | 300.00 | |
| Other income · inventory overages | 300.00 | |
| Equal totals | 300.00 | 300.00 |
Shrinkage or expired goods written off
| Account | Debit | Credit |
|---|---|---|
| Inventory shrinkage and write-offs | 840.00 | |
| Merchandise inventory | 840.00 | |
| Equal totals | 840.00 | 840.00 |
In GoSoft, step by step
Open Stock to see current inventory by warehouse and batch, with alerts for products about to expire and low stock.
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Current stock by warehouse with expiry analysis For a transfer or adjustment open Inventory adjustments and click New. Choose the type (transfer, inbound adjustment, outbound adjustment), the source and destination warehouses and the products with their batch.
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Inventory adjustments list Finalize: GoSoft moves the quantities and generates the voucher with each warehouse's accounts.
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Detail of a transfer between warehouses Check any product's Stock card to see its full history.
GoSoft's total stock value must equal the inventory accounts' balance on the balance sheet. Do periodic physical counts (at least of the highest-value products) and record differences in the month they are found.
- Adjusting shortages "by eye" without a count or record.
- Recording transfers as a sale and purchase between branches.
- Not writing off expired products: inventory is overstated.
Which valuation method is not allowed under IFRS?
LIFO.
Does a transfer between warehouses change the company's total inventory?
No. It only changes each warehouse's balance.
The count shows merchandise missing for 500. What entry do you record?
Debit inventory shortage loss 500; credit merchandise inventory 500.