Inventory: Total valuation on Inventory Valuation by Date utility not balancing with General Ledger Inventory Control account

There may be a host of reasons that could cause the above mentioned imbalance such as direct journals on the Inventory Control account, ignoring multiple Inv. Control accounts, allowing negative quantities etc.

However, please consider the following specific reason that may play a role here:

It may be that the Reset cumulative value when quantity is zero option has been selected as can be seen below

To explain this a bit further, consider the following scenario:

1. Create a new stock item: VALUATION

2. Process a GRV at a cost of R10 (excl.) for 1 unit on 2015/06/22

3. Process a GRV at a cost of R20 (excl.) for 1 unit on 2015/06/18

4. Process an Invoice for 1 unit on 2015/06/19

5. View the Inventory Enquiry | Valuation by date with the setting as below.

6. From the above, notice the following:

6.1 As no resetting of valuation calculation is supposed to take place here, the total valuation calculated is as follow:

GRV 1 valuation (R20 x 1) + GRV 2 valuation (R10 x 1) / total number of units on the

GRV’s

= 30/2

= R15.00

6.2 The R15.00 valuation above is therefore correct and fully corresponds with the Inventory Maintenance | Ave Cost value,

as well as the portion that is contributed on the GL Inventory Control account, so no problem here.

7. However, now select the Reset option below and run the report as below

8. From the above, notice the following:

• The total valuation is now displayed as R10.00 which is no longer corresponding with this item’s portion on the GL Inventory Control Account, which is still for R15.00
• Evolution calculated R10.00 as the new valuation by simply ignoring the GRV of 18/06/2015, since the quantity went to zero with the invoice of 19/6/2015.
• Therefore, only the new average cost of R10.00 on the second GRV now counts towards the new valuation above.

9. The above discussed scenario focus on a specific item but at least you now understand why the Valuation by Date Enquiry will differ with the Inventory Control Account when not filtering on any stock items.

Therefore, as a rule of thumb, when analysing the current, actual inventory valuation balance and making use of the Valuation by Date Enquiry screen, always ensure to unselect the above reset option.

However, also note the main reason for having the reset option in the first place:

It’s especially helpful when analysing:

• the valuation of a specific stock item and therefore filtering on it on the From and To fields above,
• for a specific historic date that you know its quantity fell to zero.
• Thus, selecting the Reset option on the specific date should result in a R0.00 valuation which would then make sense in such a case.