Stock Adjustment: Overview
Changes in inventory levels don’t always come from sales. Sometimes, it’s necessary to modify inventory levels to reflect changes in your actual inventory count that might not be in your records. Inventory adjustments are increases or decreases made in inventory to account for theft, loss, breakages, and errors in the amount or number of items received.
Why should I do Inventory Adjustments ?
Inventory fluctuations can cause chaos on more than just your stockroom. When recorded inventory levels are lower than actual inventory counts, the cost of goods sold rises artificially. Conversely, when actual inventory levels are lower than those recorded, the inverse occurs, and COGS is artificially lowered.
In both cases, the adjusting entries necessary to reflect the true state of business can have a significant impact on your gross and net profits, your income statements, and as a result your company’s competitive advantage, financial agility, and overall health. Decision making, reporting, auditing, and budgeting can all be twisted to disastrous levels if your team is operating with incomplete or inaccurate information.
As a result, inventory adjustments are absolutely crucial for responsible and doable accounting practices.
How to Make Inventory Adjustments:
To adjust stock:
• Go to Inventory > Inventory > Stock Adjustments.
• Click the + New Adjustment button on the top-right corner of the page.
In the New Adjustment page:
• Select the voucher configuration if you have set multiple configurations.
• Select the mode of adjustment. In this case, choose + sign to add the stock quantity and
select – sign to remove the stock quantity.
• Fill in the mandatory fields such as the date of adjustment and reason for adjusting etc.
• Scan the items whose stock needs to be adjusted under item code. If you are manually writing
the code please press enter or tab after writing the code to populate the item details.
• You will see the current stock of the items in the populated details.
• Enter the adjusted quantity.
• Click Save to successfully adjust stock. This will be reflected in the respective items’ page and
reports.