Inventory Adjustment Account in Navision 4.0 SP1

Beatrice

Hi,

One of our customer is facing great trouble with the above mentioned account.

The balance on this account keeps on increasing and they cannot understand why this balance is not getting cleared.

Transactions which are posted to this account are:
Item Journals (Positive and Negative Adjustments).
Stock Transfers

We have also noted that when system makes automatic cost adjustment, the GL Entries are posted to the Inventory Adjustment account.

Can someone please urgently help me to figure this issue out and help me to understand the purpose of this Inventory Adjustment account?

Thanks and Regards,
Beatrice.

andrewcoper

This is a confusing account for new users.
This account is used mainly for stock adjustments, including Bom journals.
You need to look at your General Posting setup to make sure this account is not mentioned in another field aswell as inventory adjustment.
If you use Bom journals and your finished good has a higher cost than that of the components then that will keep increasing the balance.
May be worth exporting all entries to excel and doing a sort and subtotal by doc no. to try and see what kind of entries are going through the account.

Andrew

darshanm

Whenever you do inventory adjustment (Positive, Negative),
and If automatic cost posting is selected, System passes an entry

between Inventory A/c and Inventory Adjustment A/c

depending upon increae or decrease in inventory value.

as many as times you adjust the inventory your balances in
Inv Adjustment A/c will go on increasing.

Beatrice

Hi,

Thanks very much for the reply.

Users post item journals as follows:

Negative Adj ITEM 001 1 100
Positive Adj ITEM002 1 100

The above item journal means that they are transferring the Quantity and Value of ITEM 001 to ITEM002.

But in case ITEM 001 is issued (meaning negative adjustment) before the final purchase cost has been posted, when users post purchase invoice for ITEM001, say at a final cost of 120, system makes automatic cost adjustments for the posted negative adjustments for difference in the cost of the item.

GL Entries for adjustments on the Posted Negative Item Journal are as follows:

DR Inventory Adjustment 20
CR Stock 20

Obviously no cost adjustment is made on ITEM 002. Thus leaving a balance of 20 in the Inventory Adjustment account.

Any suggestions please?

Thanks and Regards,
Beatrice.

cnicola

Hi Beatrice,

Obviously nothing is wrong with Navision.
They should have the answer depending on the legal accounting rules in your country.
Frankly just taking one of my items and deciding to call it something else at a cost I control would raise a lot of alarms with auditors in US I think.
So it depends on why they want to do that particular substitution.
If that item is say kitted maybe just setup Item2 as a BOM with a sole component Item1 and use BOM journal. Kind of a weird solution but it should follow through with the cost as far as I know.
Or leave it as it is and they move the difference periodically to an account that I am sure auditors will want to see and look into.

Alex_Chow

Have you drilled down to those accounts and analyze the transactions? My guess is that there are a few items that is causing the big increases in this account for you.

Try Navigating through a couple of transactions and see if they're going to the proper accounts.

ayhan06

Beatrice wrote:

Hi,

Thanks very much for the reply.

Users post item journals as follows:

Negative Adj ITEM 001 1 100
Positive Adj ITEM002 1 100

The above item journal means that they are transferring the Quantity and Value of ITEM 001 to ITEM002.

But in case ITEM 001 is issued (meaning negative adjustment) before the final purchase cost has been posted, when users post purchase invoice for ITEM001, say at a final cost of 120, system makes automatic cost adjustments for the posted negative adjustments for difference in the cost of the item.

GL Entries for adjustments on the Posted Negative Item Journal are as follows:

DR Inventory Adjustment 20
CR Stock 20

Obviously no cost adjustment is made on ITEM 002. Thus leaving a balance of 20 in the Inventory Adjustment account.

Any suggestions please?

Thanks and Regards,
Beatrice.

you should revaluate the positive adjmt entry of Item002 with 20.so invt. adjmt. account will be closed and inventory account will be 120 for ITEM002...

this is a problem with your accounting, not navision..

Beatrice

Hi,

The main reason why we are proceeding this way is that our client does not use the Manufacturing module.

We have created a workaround for the processing of these transactions.

In fact, these transactions relate to the assembly of different items to make up a single item which is the PC, that is why we are doing it through item journals by way of Negative and Positive Adjustments.

The problem is that at the time of making a Negative Adjustment, the items may have been received in stock but not yet invoiced. When the item is invoiced with additional charges system makes automatic cost adjustments to the posted negative adjustment entries to update the cost.

Thanks and Regards,
Beatrice.

ayhan06

Beatrice wrote:

Hi,

The main reason why we are proceeding this way is that our client does not use the Manufacturing module.

We have created a workaround for the processing of these transactions.

In fact, these transactions relate to the assembly of different items to make up a single item which is the PC, that is why we are doing it through item journals by way of Negative and Positive Adjustments.

The problem is that at the time of making a Negative Adjustment, the items may have been received in stock but not yet invoiced. When the item is invoiced with additional charges system makes automatic cost adjustments to the posted negative adjustment entries to update the cost.

Thanks and Regards,
Beatrice.

If you create manual negative and positive adjustment, i am afraid of that you can not keep your ınventory account accurate.. for one of my client, i modified BOM costing procedure to forward the cost of consumed ıtems to produced items.(in that solution, later changes in cost of consumed items is also forwarded to produced items. ) ask your NSC to solve this problem.

rranjanerp

Dear Sir,

Can you please solve my issue.

1.without posting purchase invoice, purchase value from GRN or purchase challan should be hit in
GL and P&L. Is it possible by any manner .If yes than how feasible or correct is this.Because Tax is concerned with Posted invoice amount not on GRN amount.also i would be thankful if u ccan plz eleborate on the Accounts which are hit after we post a GRN/MRN & PURCHASE INVOICE.

ssingla

rranjanerp wrote:

GL and P&L.

Partially correct and partially incorrect. It can post in G/L but it should never post in P&L (Income Statement). No expenses have been incurred by purchasing and proper accounting requires it be debited and credited in Balance Sheet Accounts. Search for "Expected Cost" on the forum and NAV Help (F1) and you will find lot of information. However it creates more problem than it solve. The use is recommended if Management requires MIS on hourly or at a max daily basis.

NAV IN version creates a excise entry in RG records on receipt of material based on the calculations of purchase order. Supplementary posting, if any, happens at the time of invoicing (Diff between actual excise value as per invoice and excise value aas per Purchase order). VAT/CST/Service Tax and charges are posted at the time of invoicing. This complies with the existing laws of India.

For accounts used, I recommend you to try some posting in the system and you will get all the information.

rranjanerp

Thank you sir...