Other Settings

In addition to the settings mentioned above, which decide the type of stock movement journals to be used, under the Price Processing tab for product settings, you can also define whether the Basis for entering stock value in balance sheet is to include purchase costs (in addition to purchase price), what the Basis for cost price should be and whether you would like to Use both types of Accounts update of stock value.

Basis for Cost Price

The Basis for cost price decides where the cost price used in the Sales Order module is taken from. When you start using Expense product to P/L when items are removed from stock it is recommended to use the Purch. price as your cost price basis, because the cost price will be taken from the purchase invoice, which is the cost price applied in the accounts update procedure.

Tip! If you decide to use the Purchase price as your Basis for cost price, you can also choose whether the cost price should include the Costs from the Product Card in addition to the Purchase Price. This setting can be found by going to View – Settings – Company – Settings per Module – Sales and Invoicing – Price/Discount tab. By default, this option is not selected. If you decide to include Costs from the Product Register you need to be aware that the Gross profit /Gross margin for sales orders and statistics will not match the costs posted in your accounts.

Costs

Under costs you will have the possibility to select whether:

Purchase cost should include freight and forwarding from the supplier’s invoice
Purchase cost should include costs entered for freight and duty invoices

If one, or both, of the settings is active, the cost price for stock movements will be updated with the costs of freight and forwarding from the supplier’s invoice and/or the costs for freight and duty invoices respectively.

If your Basis for cost price is set to Purch. Price, this will be included in the cost price shown in the Order module and have consequences for the gross profit/margin and statistics.

Basis for entering stock value in balance sheet is to Include purchase costs

If one, or both, of the settings under Expenses is activated, you can also select whether this should contribute to the basis for the stock value posted in your accounts.

If you decide that the Basis for entering stock value in balance sheet is to include purchase costs (in addition to purchase price), the stock movement journal which updates the stock value will include these costs on the same line as the connected stock movement. This will be created when posting freight and forwarding from the supplier’s invoice and/or freight and duty invoices.

Post Adjustments to Stock Levels to your Accounts

Activating this setting will lead to stock level changes being posted to your profit/loss accounts in addition to being posted in the balance sheet, both for goods coming in and going out. It will also lead to two extra journal lines being added to the stock movement journals. Please note that this setting requires that you have selected the option for Expense product to P/L when items are removed from stock.

Advantages with expensing products to P/L when items are removed from stock:

It is possible to view changes to your stock from the Profit/Loss sheet

Disadvantages with expensing products to P/L when items are removed from stock:

It will lead to many journal lines in your accounts
There might be postings that could be considered unnecessary
Normal practice in the UK is to not use this option