FIFO negative balances: zero cost and inflated profit

Trade automation expert at Torgsoft

Selling a product that is not in stock («into the negative») breaks the supply chain. This leads to zero cost of goods sold and incorrect profit calculation under the FIFO method.

This instruction involves checking and correcting warehouse documents that affect cost, profit, and stock balances, so it should be followed carefully and only if you understand the sequence of goods movement in inventory accounting. Independently editing receipts, sales, internal transfers, or recalculating cost without understanding the cause of the issue may lead to new discrepancies in reports and distort the financial result. Before making changes, we recommend creating an up-to-date backup of the database. If you are not sure which document is breaking the FIFO chain, it is better not to correct the data at random and to contact technical support.

Purchase a Service Agreement

How to understand that profit is overstated due to negative stock

In reports where profit is displayed, the cost of goods sold = 0.00.
The profit on a posted sale equals the sale amount.
In «Warehouse Status» the product has a negative stock balance (for example, -5).

What can be checked first

If this is an isolated case, try:

Warehouse — Warehouse Status — action Recalculate Cost.

If that does not help, proceed with diagnostics.

How to find the cause of zero cost

A. Sale before receipt (chronology violation)

Cause: the product was sold in the morning (10:00), and the goods receipt note was created in the evening (18:00) on the same date or later with a future date. FIFO does not see the batch at the time of sale.

Solution:

Go to Settings — Parameters — Service.
Click «Adjust sales creation time».
Go to Warehouse — Warehouse Status.
Click «Recalculate Cost» and choose the required option.

B. The receipt of goods is missing in Torgsoft

Cause: the product was sold, but the goods receipt note was not created, or it was deleted.

Solution: find and post the goods receipt note. Then go to Warehouse — Warehouse Status, click «Recalculate Cost»

C. Unaccepted transfers

Cause: the product was transferred from another store using an internal transfer document, but at the point of sale they did not click «Accept invoice».

Solution: go to Warehouse — Goods in transit, find the transfer and click «Accept invoice». After that — recalculate the cost.

How to verify that the cost was recalculated correctly

Open the required profit analysis that you used.
Find the problematic product.
Make sure the «Cost» column is filled in and the profit is realistic.

How to prevent negative stock sales in the future

Set the restriction: Settings — Parameters — Accounting — «Prohibit negative stock sales».
Prohibit backdated document editing for program users.

What to prepare for technical support

The name of the form (report/analysis) where the overstated profit issue occurs.
A screenshot of the «Inventory Card» or «Goods Movement» for the problematic item.
The version of the Torgsoft program.

Програма обліку товару для інтернет-магазинів, крамниць, торгових точок, складів та виробництва

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