Inventory costing
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Accounting - United Arab Emirates values your stock at cost. Every stock move, such as a receipt, a sale or a write-off, posts its value to the books. The costing method decides which cost each unit carries. You set it per product category.
Costing methods#
| Method | How stock is valued |
|---|---|
| Standard price | Every unit is valued at the cost price you set. Gaps between that cost and the purchase price go to the price difference account. |
| Average cost (AVCO) | The cost price follows the average of everything you received. Kartlo updates it on every receipt. |
| First in, first out (FIFO) | Units leave in the order they arrived, each at the cost it was received at. Extra units found in a stock count or added by an adjustment are valued at the latest cost: the last purchase cost (the product cost), or the most recent receipt when the product has no cost. |
New categories use Standard price unless you pick another method.
Product categories#
Go to AccountingConfigurationProduct categories. Each category has a Costing method and the accounts its products post to. One category is marked Default: it covers every product without a category and cannot be archived.
To add a category:
- Click Add category.
- Enter a Name and optionally pick a Parent category.
- Pick the Costing method.
- Optionally pick the accounts. Empty accounts follow the parent category, then the posting accounts.
- Click Save category.
Category accounts#
| Field | Used for |
|---|---|
| Income account | Sales of these products. |
| Expense account | Cost of goods sold. |
| Stock valuation account | Value of stock on hand. |
| Stock input account | Received, not yet billed. |
| Stock output account | Delivered, not yet invoiced. |
| Price difference account | Optional. Gaps between standard price and purchase price. |
Change a category method#
When you change the costing method or the stock valuation account of a category that already has stock, Kartlo revalues those products. A message tells you how many products were revalued, and the change shows as Method change out and Method change in layers.
Assign a category to a product#
Open a product in Products. In the pricing area, pick its Accounting category. It sets how the product's stock is valued and which accounts it posts to. Leave it on Store default to use the default category.
See Add products.
Cost prices#
Stock is valued at its cost, so while Accounting is on, every product needs a Cost per Item. Gift cards are the exception.
If a product has no cost:
- The Overview tab shows how many products have no cost price. Click Enter costs to fill them in one list.
- Stock moves for that product wait under Needs a cost on the Auto-posting tab. Enter the cost there and click Save and retry. Waiting moves post again by themselves.
Valuation layers#
Each time stock comes in or goes out, Kartlo records a valuation layer with its quantity, unit cost and the quantity and value still left. To see them, open AccountingReportsStock valuation and click a product.
Layer kinds: Opening stock, In, Out, Cost correction, Revaluation, Method change out and Method change in.
If you sell stock before its receipt is recorded, Kartlo adds a Cost correction layer when the stock arrives, so the cost of goods sold matches the real cost.
Check stock against the books#
The Stock valuation report ends with Check against the books. It compares the value from the valuation layers with the balance of your stock accounts. When they agree it shows Difference: none, the books match. A difference usually means a manual entry was posted to a stock account.