Managing stock

If you buy and sell products, you need to make sure that you have enough stock available to meet demand. However, you don't want to hold too much stock as this can be costly and affect cash flow.

You can manage your stock levels to make sure you always have the right quantities available.

To do this you need to create Stock type product records. When you buy and sell these items, the number in stock is increased or reduced and the value is recorded.

About stock items

When entering a stock item, you provide details about it in these sections:

Item Information	Assign a code or enter a short name for the item and provide a description. Optionally, select a category for the item if you have set up categories.
I Sell This Item​	Enter the price at which you sell this item and any other additional prices such as Wholesale or Trade. To change the default price types or to add more, set up pricing for your products and services. In this section, you must also select the general ledger account to which you want to post sales and if applicable, the tax rate.
I Buy This Item	This section is where you enter purchase details for the item. Select the vendor you usually purchase the it from, enter a short name or code for the vendor, a description, and the cost price. Select the general ledger account to which you want to post purchases and you can also enter a reorder level and quantity in this section.
Opening Balance	Use this section to enter the quantity of this item you currently have on-hand and the cost price at which you purchased it.
Additional Information	Enter optional information about the item such as where the storage location, bar code, weight, customer group, or notes.

For additional information about the sections described above, see Add and edit products (stock and non-stock) and services.

Stock movements

Information about your stock item levels and values are updated when stock items are added to invoices and credit notes. Your stock is tracked by recording stock movements each time stock is bought and sold. Each stock movement has a transaction type, which records whether stock was added or removed.

Go to Products & Services and then click a stock item to see its stock movement transactions on the Activity tab.

Transaction Type	Movement Type	Details
Sales invoice	Goods Out	The stock level is decreased. Note: You cannot add a stock item to an invoice if you do not have enough in stock.
Sales credit note	Negative Goods Out	The stock level is increased as goods have been returned. Note: If you want to enter a credit for a price change only and not impact stock levels, you should reverse the original invoice in full via a credit note, then create a new invoice for the correct price
Vendor bill	Goods In	The stock level is increased, and the last cost price and average cost price on the stock item are updated.
Vendor Credit Note	Negative Goods In	The stock level is decreased as you have returned the goods to the vendor. The last cost price and average cost are also updated. Note: If you want to enter a credit for a price change only and not impact stock levels, you should reverse the original invoice in full via a credit note, then create a new invoice for the correct price.
Add stock via an adjustment	Adjustments In	The stock level is increased. The cost price entered on the adjustment is used to work out the value of the stock movement. This transaction is not posted to your general ledger accounts.
Remove stock via an adjustment	Adjustments Out	The stock level is decreased. The cost of the adjustment is worked out from the cost price set on the stock record multiplied by the quantity of the adjustment. This transaction is not posted to your general ledger accounts.

What are stock adjustments?

Stock adjustments occur when you manually adjust your stock levels to change the number of items you have in stock. You would generally use this to write-off damaged stock, or to adjust quantities after a stock audit.

Stock value

As well as keeping track of the number of items you have stock, it is also important to record the value of your stock.

The value of the stock you hold is usually shown as an asset to your business on the Balance Sheet. When stock is sold it becomes a cost and should be represented on your Profit and Loss as a cost of sale. This ensures that the Balance Sheet only reflects the value of stock you still have.

To record this, we recommend that:

• The purchase of stock items is recorded against an Asset general ledger account. To do this, set a default ledger account for each stock item to ensure accurate posting.
• When you sell stock, create a journal entry to transfer the value of your sold stock from the Balance Sheet to the Profit and Loss report. If necessary, contact your accountant for advice as to which accounts you should use for this procedure.

How to enter existing stock

When you first start using stock, you should enter the quantity and totals for any stock that you have on-hand. Doing so will ensure the accuracy of your inventory and reports.

You can enter existing quantities for:

• New stock items, by selecting I have existing stock on hand and then entering the details in the Opening Balance section of the Create Item window when you enter a new stock item.
• Existing stock items, by clicking the item on the Products & Services list and then clicking Adjust Stock Level, to create a stock level adjustment.

To make sure your stock total is correct, create a journal to show the value of stock as an Asset on your Balance Sheet (debit) and balance with a credit to a holding account. This will increase your stock assets; however, at year-end, ask your accountant where the amount in the holding account should be moved. Doing so will prevent double-accounting of your stock value.