About Cost Accounting and Accounts Update of Stock Value

If you purchase goods for re-sale, you should consider whether to use the functionality in Mamut Business Software regarding keeping products in stock. If you would like to use this functionality, you will need to activate this function through the Company Settings for Product under the Customisation of functions tab. If you activate the option that your Company keeps products in stock, you can operate with products which Update stock (warehoused stock) and products which do not. If the product should update the stock you must select this from the product card via the Warehouse tab.

If you stock products you must also select whether to post the Stock value and how this is to be done. The program can automatically do this, as long as you maintain and register the purchase prices and the purchasing costs correctly. You can also select not to post stock values automatically. The settings for your selection are located in Company Settings for Product in the Price processing tab. Through Accounts update of stock value you select whether to post the stock value or not. If you select to enter product cost upon purchase it means that there will be no automatic posting of stock value.

No posting of stock value on balance sheet

If you do not want to post stock in the accounts you can select Enter on purchase. You then post the purchase of the goods as a cost, while creating the supplier invoice from the purchase. No balance will be accumulated on the balance sheet account for stock and changes in the stock will not show in the Profit and Loss accounts. This method is best suited for companies that have little amounts of stock or companies that can post stock changes as part of their regular stocktaking. We recommend that you check with your accountant/auditor before deciding whether or not to use this method.

Posting stock value on balance sheet

If you stock products, the total value of all stocked products is reflected in the balance of the accounts. To be able to stock products you will have to mark the selection for it within Module settings for product and via the Customisation of functions tab. Should you want to post stock in the accounts, you will have to activate this function through company settings for product under the Price processing tab and select Accounts update of stock value. If you select Expense product when goods are taken out of the warehouse the stock will be posted in the accounts.

Cost accounting thus occurs for all products when goods are taken out of the warehouse. Other stock movements will be posted so that the stock changes.

In the Price tab in the Product card you can select the check box for Override cost price in sales module. You cannot select this alternative if you cost account at the time of the sale. If so, this could lead to differences between reports in the accounts and in the Sales/Warehousing reports.

Note! Journals will be automatically posted in the accounts for in and outward stock movements. The journals will be posted as a separate journal type.

You can also select the Individual rule for updating stock value in the accounts for each product. If you select this alternative, settings for this will become available in the Product register under the Settings tab, where you can apply Settings for posting for each product.

The selections are the same as the general selections mentioned above:

Expense on purchase
Expense product when goods are taken out of the warehouse: You should not activate Override cost price in sales module in the Price tab in the Product register if you use To be expensed when invoicing customer as this could lead to differences between reports in the accounts and in the Sales/Warehousing reports.

You can also select whether the Basis for entering stock value in the balance sheet is to include purchase costs (in addition to purchase price).

The basis for the automatic journals is the cost price for the stock movement. In order for the accounts update of stock value to match with the actual value, it is imperative that the cost price is correct.

Accounts update of stock value is updated with every new stock movement and when prices and costs are changed on existing movements. This way the accounts will always contain the updated and correct stock value.

Through company settings for product via the Price processing tab you can also select the Basis for cost price. If you selected the product register as the basis for gross profit, the gross margin on the sales order and the statistics will not correlate with the entered cost. This is because the entries for the accounts retrieve this information from stock movement, while the sales order, in this instance, retrieves its information from the product register. It is therefore recommended that you use the Purchase price as the Basis for cost price when you stock products.

Posting

The system is preset with Control accounts where accounts for Stock, Stock change, Invoices not received, Goods not received, Manual stock change, Standard purchase account, Freight charge, Duty/Handling etc are set up. Products of the type Stock item will initially use these accounts in the automatic journal entry of stock movements.

If you want different balance sheet accounts for various products, you can override this account for each product individually. You do this through the Product register under the settings tab. You can also override Stock change accounts and Cost account for product cost.

No variations are supposed to occur between the value of stock in the accounts and in the logistics module. This is why the balance sheet accounts are updated at the same time as the goods are registered in and out of the warehouse. The posts are therefore entered on:

Registration of receipt of goods
Registration of a supplier invoice
Delivery of goods to the customer
Registration of an invoice to a customer

An invoice can update the stock in relation to your routines. You decide whether it will update when you print the invoice - When printing invoice or when printing Delivery note or Picking list. The setting for this is Update stock and is located in the Warehouse handling tab in company settings for product

The Profit and Loss accounts will only be influenced once an invoice is printed to a customer. Automatic entries that occur in Profit and Loss accounts will not have any net effect on the result.

You can select whether any stock changes will be visible in the Profit and Loss accounts. If so, two extra journal lines will be posted on the receipt and delivery of goods. When creating a new database, this function is turned off by default. It will however be set to active if you have updated from version 9 or an earlier version. Select the check box for Use both types of Accounts update of stock value, through the Price processing tab in company settings for product to activate this function.

The Profit and Loss accounts will also be influenced during stock taking and manual stock movements. If you do not want these movements to automatically influence the result, then you can change the Control account for this to a balance sheet account. You must then reconcile this account manually.