Accounting Issue Related to Account Move created when using Anglo Saxon and Real Time Stock Valuation in products

Asked by hbto [Vauxoo] on 2011-12-20

I have come to this question regarding the first causes that raised the question that led to the existing of
Account Anglo Saxon,

Now that Account Anglo Saxon is an Official Module of OERP, but it seems it is still lacking some valitations

Whenever you try to approve a new picking coming or going to a internal stock, it tries to create a new
accounting move when when using Anglo Saxon and Real Time Stock Valuation in products,

AFAIK, this ones should be the accounting moves that should be created when using account_anglo_saxon

Supplier Invoice

Pay_account ------------------0,00------------X,XX

Customer Invoice

Rec_account -----------------X,XX-----------0,00

Account Move Created when using Real Time Valuation in Product.

Stock Account --------------X,XX-----------0,00

IMHO This should not be created,

I would like that someone with better accounting knownledge than me
could please make his/her point and make it clear for all those of us
who are not quite clear about it, or support this question to upgrade it
as a bug,

Thanks in advance

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Jesse (atlme) said : #1

This is first post to launchpad so I hope it is in an ok place. If not, someone more familiar with the layout, please help me re-post elsewhere.

We also have difficulty with this point and feel there is a significant bug still in anglo_saxon module both when using cost averaging and standard cost. I agree with hbto that the move created to the price_variation_account seems incorrect.

There are two points to make:
First, it does not seem correct to book a portion of the cost of product to an expense account at the time of receiving supplier invoice under anglo_saxon accounting when average costs basis is being used. I suggest how this can be improved below.

Second, the current behavior does not follow what is shown in the table in the documentation here (htbo, read this table to see why the moves you question are created):
and leaves an accumulating balance in the Stock_in account. We tested the anglo_saxon module (V6.03) with both “average” and “standard” cost basis settings and behavior is the same.

To follow example in documentation, we have a product that has standard or calculated average cost of $9. We place order for same product at $10 purchase cost. The following is what we observed

When product is received:
- Stock_in_account ---- CR $10 (actual price paid)
- Stock_valuation_account ------ DR $10 (actual price paid)
Note the DR/CR between Stock_valuation_account and Stock_in_account was based on the price paid, not the standard or average cost value as suggested in the documentation. This “bug” I feel is actually correct behavior however.

When invoice received for product:
- Stock_in_account ------- DR $9 (standard basis) or 9.50 (average basis)
- Acct_Payable: ------- CR $10 (actual price paid)
- Price_Variation_account: ------- DR $1 (standard basis) or $0.50 (average basis)

Note value of the DR and CR to the Stock_in_account DO NOT match so there is a non-zero balance remaining in the Stock_in_account. This is big problem.

It also creates erroneous values in the price_variation account when using average basis. Imagine I had one piece in inventory at $9 before purchasing a second at $10. Avg cost is $9.50. If I sell the two pieces $19 will hit COGS expense. But there will still be an additional $0.50 in the price variation expense. This is wrong since the company only spent $19 not $19.50. This is a big problem if prices vary a lot.

We propose a fix to the anglo_saxon module when invoices are created that we think improves things from accounting perspective (although I admit I am not a professional accountant):

Goods received:
- Stock_in_account ---- CR base on actual price paid
- Stock_valuation ------ DR based on actual price paid
(this is current action although documentation is wrong)

Invoice received:
- Stock_in_account ------- DR based on actual price **NEW**
- Acct_Payable: ------- CR based on actual price

**NEW** If cost basis is Average, take NO action because the new inventory value should be equal to the new cost basis so no “price variation” posting required
**NEW** If cost basis is Standard, post following balanced and traceable actions in the same move:
- Price_variation_account: ---- DR the difference between the standard cost and the actual price paid
- Stock_valuation_account: ---- CR the difference between the standard cost and the actual price paid

This has the following advantages:
-- fixes the imbalance in the stock_in_account
-- when goods are received but not invoiced, the valuation is what was paid (which would be the case if goods were returned before invoice received)
-- any entry to the price_variation_account has equivalent entry to stock_valuation_account (which helps traceability)
-- eliminates erroneous entries to price variation when average cost basis is used.

Can you help with this problem?

Provide an answer of your own, or ask hbto [Vauxoo] for more information if necessary.

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