I was trying to understand the company option “Enable Perpetual Inventory” and its link with the item option “Maintain Stock”. Basically the inventory account will only be debited if both are enabled (option 1). It seems that if you want to do monthly/yearly Periodic Inventory entries (the good old manual days before AI) as described in Accounting Of Inventory Stock it is no longer possible. Can someone from Frappe ERPNext team confirm this.
| Description |
Option 1 |
Option 2 |
Option 3 |
Option 4 |
| Item Type |
Stock |
Stock |
Services |
Services |
| Maintain Stock |
Yes |
Yes |
No |
No |
| Perpetual Inventory |
Yes |
No |
Yes |
No |
| Purchase Invoice (Debit) |
Inventory |
COGS (default) or Expense (defined) |
COGS (default) or Expense (defined) |
COGS (default) or Expense (defined) |
| Purchase Invoice (Credit) |
Creditors |
Creditors |
Creditors |
Creditors |
| Sales Invoice (Debit) |
COGS (default) or Expense (defined) |
X |
X |
X |
| Sales Invoice (Credit) |
Inventory |
X |
X |
X |
| Sales Invoice (Debit) |
Debtors |
Debtors |
Debtors |
Debtors |
| Sales Invoice (Credit) |
Sales |
Sales |
Sales |
Sales |
Add to this complication whereby each invoice (sales and purchase) has a seperate tick for updating stock. This is used to control stock received but not billed, the corresponding Purchase Receipt/Delivery Note and the updating of the stock ledger
Let me know if there are any corrections
Hi @asieftejani
The inventory mechanism depends upon the nature or need of the business and mainly it either records accounting impact for all store transaction (perpetual) or otherwise manual month end closing for stores (periodic).
The bottom line is to report all stock value in accounting books at the same time of recording store transaction under a valuation process automatically.
The table may help you grasp more as following;
| Feature |
Perpetual |
Periodic |
| Inventory updates |
Continuous |
End of period |
| COGS calculation |
At each sale |
At period end |
| Accuracy |
High |
Lower |
| Software need |
Usually required |
Can be manual |
| Best for |
Medium to large businesses |
Small businesses |
Maintain Stock check is working with both cases where you want items to be declared as stock able and must go through store and valuation process first before being used, consumed or issued.
Both Inventory system works with stock items only and in periodic case stock item value does not hit GLs unless accounting staff has to do it manually weekly or monthly. That is why it is called periodic.
Further Both type of Invoices have update stock checkbox to jump all those separate store docttypes. This is serving speedy recording where small business may not be having separate human resource to record PO + GRN and then Invoice separately.