Important Information about Stock Settings in Mamut

Mamut uses two methods to account for stock in the accounts. These methods are:

A. Recognising any purchase of stock as an expense straight away on the Profit and Loss.

B. Recording stock as an asset on the balance sheet.

Each of the two methods used to account for stock are explained below.

A. Record Stock as an Expense straight upon purchase

This is the default setting in Mamut and is the method used unless you change your settings. This method records the stock as an expense in the accounts at the time of inputting the purchase invoice. Using this method no amount is recorded on the Balance Sheet for stock. The amount is only posted to Materials purchased expense.

This alternative is most appropriate for businesses with a small warehouse and who are able to post changes to their stock as part of regular stock counts. This method will not give a value of your stock in the balance sheet. To record the value of stock in the balance sheet you would need to make a manual entry after each stock count.

B. Record stock as an asset on the balance sheet

This method is the most common way to account for stock in the UK and is available in Mamut E5. To use this method you will need to change your settings in the software for the option Expense product to P/L when items are removed from stock. It is also important to note that you will need to change these settings before you enter your stock amounts into the system.

Method (b) ensures all stock items are recorded in the stock account on the balance sheet when purchases are entered. When stock is sold the amount of stock sold is expensed on the profit and loss. This is a common way of recording 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.

The setting to change to allow this method (b) is found in View – Settings – Company – Settings per Module – Product – Price processing under the Accounts update of stock value heading. Under the Type drop-down list you will find three choices, select Expense product to P/L when items are removed from stock.

Note! It is not advised that you tick the option Post adjustments to stock levels to your accounts. Activating this setting will mean both methods explained above are used. This will lead to two extra journal lines being added to the stock movement journals that may not be needed. This will also 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. This setting is not commonly used in the UK.

Important! It is also important to note that you will need to change these settings before you enter your stock amounts into the system.