About the inventory offset account
Note: This functionality is available only if you have the Inventory Add-On Module.
There are several special circumstances that require posting to a special account to keep the balance of the inventory account in agreement with the actual value of inventory in stock.
You must set up an offset account for your company in order to use the inventory functionality.
The offset account must fall in the overhead account range. At year-end, the account activity rolls up with the other overhead accounts.
The offset account accumulates any differences recorded in the system when the item’s invoice price is compared to the item’s value based on your accounting valuation method during the following actions:
- Processing an accounts payable credit (negative quantity) in the 4-2 Payable Invoices/Credits window.
- Processing a purchase order receipt (negative quantity) in the 12-4 Purchase Order Receipts window.
- The inventory offset account accumulates dollar amounts that represent differences between the original cost of an item and the item’s cost at the time of one of the following actions:
- Adjusting valuation through an inventory audit in the 12-5 Inventory Audit window.
- Adjustment inventory removal from a previous accounting year (period 0).