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Transaction Value with negative inventory

simonsimonian
Participant
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Dear Experts, I need some help understanding why negative quantity inventory can result in a huge transaction value for an inventory item. Let me give an example.

We do allow negative inventory. We manage inventory by item group and we use FIFO.

We have an inventory item, let's call it ABC with a purchase price of $27.50 So far that item had only very few inventory transactions. In one of the transactions the inventory went negative (-1). Next day the problem was fixed through a stock posting which brought the inventory balance back to zero.

The result of that last stock posting was that the transaction value was 262.28 and the cumulative value on the Inventory Audit report shows 234.78! I have no idea why all of a sudden the transaction value is so much higher than the actual purchase price of the item.

Any ideas?

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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The calculation will be determined by many factors in your system configuration. First check your GL determination of Negative Inventory Adjustment Acct. The missing value could be found there.

My previous reply has a typo. It shall be: negative inventory should NOT be allowed.

Answers (1)

Answers (1)

Former Member
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When you allow negative inventory, the normal logic for inventory value calculation will be broken. In this poor case, system will have no way to follow the original logic. The value you got so high is because the negative value has to be ignored and switched to the remaining inventory.

In my previous experience, inventory should be allow negative. Only if you give up, or you don't care, you can let it go.

Thanks,

Gordon

simonsimonian
Participant
0 Kudos

Gordon, thanks for your quick response. Can you please explain what you mean by this:

"The value you got so high is because the negative value has to be ignored and switched to the remaining inventory."

I want to understand if it's negative, then how is transaction value calculated?