Reconciling inventory values with the general ledger inventory asset accounts
The Inventory Lots module tells us exactly how much inventory we have on hand. The total "Inventory Value" in Inventory Lots should match the total value for inventory in the general ledger (GL).
Is reflected in the general ledger:
If this value does not match the value in the GL, you can audit the values by category by selecting the "Inventory Lot / GL Reconciliation" report from the inventory lots list's report selector:
Scan this report to see if there are any categories that do not reconcile with the general ledger. Please note that the system makes small assumptions about the unit cost of accrued inventory, so occasionally there will be slight errors of a few cents.
If everything in the report reconciles within an acceptable margin of error, then there is most likely:
A) Activity in the GL that occurred outside of the system's inventory processes, or
B) Purchased but unreceived inventory.
Try searching for general ledger activity in the inventory accounts that is not assigned to a category. This may highlight activity that occurred outside of the inventory processes. Also look for inventory that you have purchased but not received. Purchased but unreceived inventory will show a value for the inventory in the GL but will not show a value for the inventory in Inventory Lots.
Reconciling inventory with COGS: Unallocated Inventory
Inventory Usage will tell us how much inventory we've "used" but which is unallocated, meaning the COGS process cannot find a corresponding inventory lot to pull from. This is usually the principal source of errors during a new go-live. Errors typically result from incorrect beginning balance entries. Having unallocated inventory will exaggerate your profit margin since you will have an entry for the revenue from the invoice but no entry for the cost.
To review a report on total unallocated inventory, select "Unallocated Inventory by Type, Category" from the Categories module's report selector.
You may also review the "OPEN" records in the Inventory Usage module. Records with a value for "Unallocated" have unallocated inventory.
Reconciling the estimated value of inventory versus the actual value of inventory
Each category stores the estimated unit cost of the item. Comparing the expected value of inventory (quantity on hand * estimated unit cost) with the actual value of inventory in the GL can highlight beginning balance errors and/or errors in the imported or manually populated Estimated Unit Cost field.
Select the "Actual Inventory Value" report from the Categories report selector. Keep in mind that this report is based on the records in your list.