Introduction
As a business user, keeping track of your inventory is crucial to your organization’s financial health. Empress offers two primary methods for inventory accounting: Auto/Perpetual Inventory and Periodic Inventory. This guide will guide you on how to use these features to streamline your inventory accounting process.
Introduction
Accounting for inventory is essential in generating accurate financial statements. Empress provides two methods for inventory accounting, each with its unique advantages. The method you choose will depend on your business’s needs and available resources.
Auto/Perpetual Inventory
The Auto/Perpetual Inventory system in Empress is a dynamic inventory tracking feature that automatically adjusts accounting entries for every stock transaction. This ensures that your Stock Ledger always matches the relevant account balance, providing an accurate reflection of your company’s assets and expenses.
How it Works
When you purchase and receive items, these are recorded as your company’s assets. If you sell and deliver these items, the system automatically records an equivalent expense (Cost of Goods Sold). This keeps your Stock Ledger and account balances synchronized, ensuring the accuracy of your Balance Sheet and Profit and Loss statement.
Advantages
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Accuracy: The Auto/Perpetual Inventory system keeps your stock balances in sync with relevant account balances, eliminating the need for manual entries.
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Dynamic Updates: If there are any new back-dated stock transactions, or modification/cancellation of an existing transaction, the system recalculates all future Stock Ledger and General Ledger entries for all items involved.
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Efficiency: The Auto/Perpetual Inventory system is enabled by default in Empress for new accounts, making it easier for businesses to get started.
Periodic Inventory
The Periodic Inventory system in Empress requires manual creation of accounting entries to match the stock balance and the relevant account balance, offering more control and oversight.
How it Works
During an accounting period, when you purchase and receive items, an expense is booked. When you sell these items, they are deducted from your inventory. At the end of the accounting period, the value of unsold items is recorded as the company’s assets. Any difference between the value of remaining items and the previous period’s stock-in-hand value is adjusted in the expenses and assets.
Transitioning from Periodic to Auto/Perpetual Inventory
If you’re currently using the Periodic Inventory system and wish to switch to Auto/Perpetual Inventory, Empress provides an easy transition process.
Conclusion
Choosing the right method of inventory accounting can greatly enhance your business operations. Empress offers both Auto/Perpetual and Periodic Inventory systems to cater to your specific needs, providing accurate financial reporting and efficient inventory management. For further assistance, consult the Empress support resources or reach out to the Empress support team.