Inventory Accounting Services
Balance the Inventory sub ledger to the General Ledger
This process is used to verify that the difference between the beginning and ending inventory valuation for a period of time (usually a day) approves with the total of the transactions that were recorded for the items. This step is achieved proceeding to balancing the Inventory sub-ledgers to the general ledger control accounts.
1. Confirm that all Inventory, WIP and Pending activity for the current date has been finished and that no other transactions distressing these sub ledgers will be posted until after the reconciliation process has been finished and/or the date has been changed.
2. Record the last inventory transaction number used in the Inventory Activity file (File 91). This number can be used to confirm the validity of the cutoff on the Inventory report which is used to reconcile the day’s activity. Note: The current version of the Inventory, WIP, and Pending sub ledger reports mechanically record the last transaction number used when the reports are run and print a mistake message if the number changes during processing.
3. Produce an effective ending Inventory Sub ledger report. This can be proficient by running the Inventory Valuation report for all inventory locations in the division being reconciled. Comprise all items with capacities (including items with negative quantities). Non stock items will not be involved in the report total (these items are not included in the Inventory, WIP or Pending sub ledger totals). Note: The ending Inventory sub ledger report is a point in time report (a “snapshot” of the item capacities and prices at a particular point in time). The ending sub ledger report should contain all activity through the end of the day being balanced and no activity after that date. An effective report can only be produced if it is run at the proper time. This is typically skillful by running the report after hours as part of the nighttime procedure. The report can be managed automatically by the system at night and the system date can be changed proximately before or after running the report to confirm that the next day’s transactions will be posted using the proper date. This creates a report with an effective cutoff.
4. Confirm that the sub ledger was in balance at the end of the prior day. The only method to prove that the beginning balance being used during this procedure is valid is to have already balanced the sub ledger for the prior day’s activity. This verifies that the sub ledger beginning balance has a valid cutoff (that it includes all activity thru the end of the prior days handling and no activity from the current days handling). If the prior days activity is not in balance, then you should either balance it first (discover and resolve the cause), or balance the activity for the entire period subsequently the last time that the sub ledger was confirmed to be in balance.
This Accounting System contains a general ledger system which posts journal entry transactions to an exact year and period in a particular division and department. All journal entries recognize the period, year, division and department that they will be posted to and this information recognizes the account period records that must be updated as each journal entry line is posted. The date fields in each journal entry are not used at all when defining the period and year in which each journal entry must be recorded. Journal entries can be made to prior, current and future periods at any time and the date entered into a journal entry do not determine where or if the journal entry will be managed by the system.
Subsequently the general ledger system works by year and period, the system always uses the current totals for each account/sub account in each period/year/division and department when presenting or reporting the balance for each general ledger account. Since of this logic, the general ledger system also lets you to rebuild the account period balances for an account based on journal entry detail for the account.
This Accounting System also contains other modules or systems such as Accounts Payable, Accounts Receivable and the Inventory or Warehouse Management System. All of these modules use what are called “sub-ledgers” to track the open balances in each of the systems. Sub-ledgers comprise the detail that supports the balances in exact general ledger balance sheet accounts such as Accounts Payable, Accounts Receivable, and the Inventory Control Account. Sub-ledgers can comprise open document detail (such as vendor accounts payable invoice balances or customer accounts receivable invoice balances) or they can encompass current capacity and price.
Sub-ledger balances are determined through running reports. These reports detail the individual open invoices or protracted item values at the time that each report is produced. Some of the sub-ledger reports are referred to as Agings (Accounts Receivable Aging, Accounts Payable Aging), or Open reports (Open Accounts Payable Report) and others are discussed to as valuation reports (Inventory, WIP, Pending Valuations). Sub-ledger report balances and detail are modernized proximately as transactions are processed based on the time that each transaction is saved. Sub-ledger reports are therefore discussed to as snapshots or point in time reports, as they change from moment to moment as transactions are managed.
Sub-ledger transaction handling results in changes to both sub-ledger report balances (which are changed at the point in time that the transaction activity is processed), and changes to general ledger balances.
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