The settings needed for starting to use the expensing functionality for product costs at the time of removing an item from stock can be found by selecting View – Settings – Company – Settings per Module – Product – Price processing tab - then go to the Accounts update of stock value heading.
Under the Type drop-down list you will find three choices, and as discussed in the introduction we will go through the settings that apply to expense accounting at the time of sale, i.e. the last two choices.
Expense product upon purchase
Expense product to P/L when items are removed from stock
Individual rule for updating stock value in the accounts for each product
Expense Product to P/L when items are removed from Stock
Selecting this option will lead to all stock items being expensed when they are taken out from stock. Journal entries for all movements in and out of the warehouse will be posted in your ledgers automatically. The stock value of a product will also automatically be added to the Balance Sheet based on the product’s purchase price reported in the stock movement and any reported purchase costs that might affect the posted stock value. This option gives you the opportunity to print a report for the Reconciliation of stock value.
You cannot apply Expense product to P/L when items are removed from stock to products, which are not stock items. If these items are also handled via Purchase, they will be expensed when the purchase is posted, in the same manner as for the Expense product upon purchase option. More information regarding the account settings can be found here.
Individual rule for updating stock value in the accounts for each product
If you decide to use this type of accounts update of the stock value, you can go and select individually per product whether the product cost should be expensed when entering purchase or when they are taken out of the warehouse.
Once this setting is active, you need to go into the product card for each product and select which type of accounts update for the stock value you want to use for that product. This is done under the Settings tab, where you select one of the two options mentioned above.
It is not possible to make settings for stock movement journals for products that are not stock items.
Read more about:
How to implement an Expensing Method