Hello everybody!
I am evaluating ERPNext as a possible solution for our company. First of all, I am super impressed by how polished and feature rich ERPNext is.
While tinkering about, I have hit the first roadblock:
Apparently, stock adjustment is done differently in our countries accounting practice than expected by ERPNext:
We have an account “changes in stock” which is of root type Income.
Meanwhile, ERPNext expects the stock adjustment account to be of type Expense.
I am guessing that the way stock adjustments are handled is exactly inverted to how we are expected to do it.
To clarify: Stock adjustment, to me, primarily means manufacturing products to go into storage/stock, rather than directly selling on (so your stock increases).
My two questions:
Am I understanding this function correctly? Or am I missing an important point?
Could this functionality be easily adjusted to work how I expect it to?
I am very new to ERPNext, so please be gentle. I am reading and learning as much as I can, but it is just a lot to wrap my head around.
Thank you for your time!
The Stock Adjustment is a Direct Expense account in your COA and mainly captures cost incurred during stock reconciliation and manufacturing type of stock entries where either over applied or under applied overheads are born.
Crediting Stock Adjustment”** especially in the manufacturing process context.
In the Manufacturing Process
ERPNext makes stock and accounting entries automatically (if enabled Perpetual Setup), typically like this:
1. Raw Materials Consumption
Raw materials are removed from inventory
ERPNext does this:
Credit: Stock-in-Hand (for raw materials)
Debit: Work-in-Progress (WIP) account or Stock Adjustment (based on setup)
If the Manufacturing Setting uses “Allow Continous Material Consumption ” as the intermediary cost-capturing account:
You are essentially crediting inventory (raw materials out) and debiting stock adjustment (to record the value going into production).
So here, Stock Adjustment is debited — it’s capturing the cost of consumed materials.
2. Finished Goods Creation
Finished items are added to stock
ERPNext does this:
Debit: Stock-in-Hand (for finished goods)
Credit: WIP account or Stock Adjustment (depending on setup)
So in this case, Stock Adjustment is credited — it’s reducing the WIP or cost being carried, since the goods are now completed and held as inventory.
What Does “Crediting Stock Adjustment” Mean?
It means:
ERPNext is removing cost from the Stock Adjustment account and putting it into inventory (finished goods).
In accounting language:
You’re saying: “The value held temporarily in Stock Adjustment (or WIP) has now turned into real inventory (finished goods).”The crediting stock adjustment expense account also act like as if income account is booked.
In the Manufacturing Process
What Does “Crediting Stock Adjustment” Mean?