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Perpetual Inventory

As per the perpetual inventory system, accounting entry is done for every stock transaction. Otherwise, it's done in larger intervals for example monthly or quarterly. Each warehouse is linked with a corresponding account head.

On receipt of items in a particular warehouse, the balance in the Warehouse Account will increase. Similarly, when items are delivered from the Warehouse, an expense will be booked, and the balance in the Warehouse Account will reduce.

note

In a new ABNERP site, Perpetual Accounting is enabled by default.

1. Activate perpetual inventory​

  1. Go to: Home \u003e Accounting \u003e Company \u003e Enable Perpetual Inventory* Perpetual Inventory
    Note that if you disable perpetual inventory, users will have to create manual entry to update actual stock balance in the Stock in hand account (or ledger).
  2. Set up the following default accounts for each Company if not set. These accounts are created automatically in the new ABNERP accounts. Default Inventory Account (Asset)
    Stock Received But Not Billed (Liability)
    Stock Adjustment Account (Expense)
    Expenses Included In Valuation (Expense)
    Cost Center
  3. If the user wants to set an individual account for each warehouse, create account head for each account. Go to: Accounts \u003e Chart of Accounts \u003e Company \u003e Application of Funds (Assets) \u003e Current Asset \u003e Stock Assets \u003e Create a new account with same name as Warehouse* Now, go to a warehouse and link this account to the warehouse. This helps in filtering and viewing statements warehouse-wise.
  4. For stock transactions, general ledger entries made against the Account Head set on the warehouse, if the user had not set the account for the warehouse then the system gets the account head from the parent warehouse. If Account was not set for parent warehouse then the system gets the account(Default Inventory Account) from the company master.

2. Example​

Consider the following Chart of Accounts and Warehouse setup for your company:

Chart of Accounts:

  • Assets (Dr)
    • Current Assets
      • Accounts Receivable
        • Debtors
    • Stock Assets
      • Stores
      • Finished Goods
      • Work In Progress
    • Tax Assets
      • VAT
  • Liabilities (Cr)
    • Current Liabilities
      • Accounts Payable
        • Creditors
    • Stock Liabilities
      • Stock Received But Not Billed
    • Tax Liabilities
    • Service Tax
      • Income (Cr)
  • Direct Income
    • Sales Account
  • Expenses (Dr)
    • Direct Expenses
      • Stock Expenses
      • Cost of Goods Sold
      • Expenses Included In Valuation
      • Stock Adjustment
  • Indirect Expenses
    • Shipping Charges
    • Customs Duty

2.1 Warehouse - Account Configuration​

  • Stores
  • Work In Progress
  • Finished Goods

2.2 Purchase Receipt​

Suppose you have purchased 10 nos of item \