Shortage, surplus and reassortment: how to read inventory results

During inventory, Torgsoft compares the actual quantity of goods with the recorded stock balances and shows discrepancies for each item. This mode is used to record the actual stock on hand, identify the causes of discrepancies, and, after closing the statement, bring warehouse balances in line with the counting results. Business owners most often ask specialists why the shortage amount does not match the write-off act, why the printed report shows a different amount, how Torgsoft calculates misgrading, why the shortage amount is zero even when goods have been written off, at what price surplus goods are recorded, and how stocktaking results affect profit.

What indicators are included in the inventory statement

In the inventory form, it is important to distinguish between the quantitative result, value totals, and the documents that the program will create after closing.

The discrepancy is calculated as follows: Discrepancy = Quantity in stock − Warehouse quantity. A positive value means a surplus, a negative value means a shortage. Zero means that the actual and recorded quantities match. This logic is described in the current Torgsoft stocktaking instructions.

Product shortage

A shortage occurs when the actual quantity is lower than the recorded quantity. For example, the program shows five units of a product, but only three are found during counting: 3 − 5 = −2.

Therefore, the quantitative shortage is two units.

This does not yet prove that the product was stolen or permanently lost. Possible causes include:

• a sale without recording the transaction;

• incorrect scanning of another product;

• an incorrect product card selected in the receipt;

• an unrecorded transfer;

• a return to the supplier without a document;

• an error during goods receipt;

• a sale before the goods were recorded as received;

• incorrect packaging or disassembly;

• goods physically located in another area or another warehouse;

• an error in the count itself.

Therefore, a decision on an employee’s financial liability should not be made solely on the basis of a negative value in the «Discrepancy» column. First, the goods should be recounted and their movement checked.

Product surplus

A surplus occurs when the actual quantity is greater than the recorded quantity. For example, the program shows five units, but seven are found: 7 − 5 = +2.

Possible causes of a surplus:

• the supplier actually delivered more goods than were recorded in the receipt;

• the goods receipt was not entered or was entered only partially;

• the customer physically returned the goods, but the return was not recorded in Torgsoft;

• a similar product card was selected during the sale;

• the goods were incorrectly written off or transferred;

• one product is duplicated in several product cards;

• a package was split into individual units without the corresponding operation;

• the recorded product is assigned to another accounting center;

• opening stock balances were entered incorrectly.

A surplus should not automatically be treated as income either. It means that the physical stock was not correctly reflected in the records. Before closing the statement, it is necessary to determine where the goods came from and whether they are related to a shortage of another item.

What Torgsoft calls misgrading

Actual misgrading is the simultaneous shortage of one product variant and surplus of another related variant. Most often, these are products of the same model that differ in color, size, packaging, or another characteristic.

For example, black socks were sold in a store, but brown socks with the same price were added to the receipt. After inventory, the program will show:

• black socks — shortage;

• brown socks — surplus.

For accounting purposes, these are different products even if the salesperson considers them equivalent.

At the same time, the «Misgrading amount» indicator in Torgsoft is a value-based calculation: Misgrading amount = the smaller of the receipt and write-off amounts.

The calculation is performed if both amounts are greater than zero. The formula is confirmed in the Torgsoft algorithm description.

An important management consideration: a non-zero «Misgrading amount» does not by itself prove that actual misgrading occurred between specific products. The indicator is determined from the total surplus and write-off amounts in the statement. The causal relationship between items must be established separately — by model, characteristics, quantity, price, barcodes, and movement history.

How the final shortage amount is calculated

Torgsoft uses the formula: Shortage amount = Write-off amount − Misgrading amount.

Since the misgrading amount is equal to the smaller of the receipt and write-off amounts, the formula can also be written as: Shortage amount = max(Write-off amount − Receipt amount, 0).

The value cannot be negative.

Example 1. There is only a shortage

According to the records, there should be five pairs of black socks with a cost price of UAH 12. Only three are actually found.

• write-off: 2 × 12 = UAH 24;

• receipt: UAH 0;

• misgrading: UAH 0;

• shortage amount: UAH 24.

Example 2. The shortage is partially offset by a surplus

According to the records, there should be:

• five pairs of black socks with a cost price of UAH 12;

• five pairs of brown socks with a cost price of UAH 10.

Actually found:

• three pairs of black socks — a shortage of two pairs;

• seven pairs of brown socks — a surplus of two pairs.

Result:

• write-off amount: 2 × 12 = UAH 24;

• receipt amount: 2 × 10 = UAH 20;

• misgrading amount: UAH 20;

• shortage amount: 24 − 20 = UAH 4.

After closing, Torgsoft will write off two pairs of black socks and record two pairs of brown socks as received. The value-based shortage result will be UAH 4.

Example 3. The shortage amount is zero, but there is a write-off

The write-off amount is UAH 20, while the surplus amount is UAH 30.

• misgrading amount: UAH 20;

• shortage amount: UAH 0.

The program will still create a write-off document for the missing goods and a receipt document for the surplus. Zero in the «Shortage amount» column only means that the value of the write-offs is fully offset by the value of the surpluses. It does not mean that no write-off occurred or that the causes of the discrepancies do not need to be investigated.

Example 4. Simultaneous discrepancies are not actual misgrading

The statement shows:

• a coffee shortage of UAH 200;

• a surplus of cups worth UAH 180.

According to the Torgsoft formula:

• misgrading amount: UAH 180;

• shortage amount: UAH 20.

However, coffee and cups are not different characteristics of the same model. Therefore, from a management perspective, these are two separate discrepancies whose causes must be investigated independently. Value offsetting does not confirm product misgrading.

Why the amount in the write-off act does not match the shortage amount

After the statement is closed, the write-off act contains all items for which the actual quantity is lower than the recorded quantity. The «Shortage amount» in the list of statements shows the final value-based result after write-offs have been offset by surpluses.

For example:

• write-off act — UAH 24;

• surplus receipt — UAH 20;

• misgrading amount — UAH 20;

• shortage amount — UAH 4.

Therefore, it is incorrect to compare the write-off act amount directly with the shortage amount. The act answers the question of which goods were written off. The «Shortage amount» column shows the part of the write-off value remaining after offsetting.

Why the statement and the printed report show different amounts

In the «Inventory Statement» form, totals are calculated at cost price. The standard printed report «Inventory Results» calculates amounts at retail prices.

Therefore, the same shortage may have different valuations:

• at cost price — the value of the lost stock;

• at retail price — the potential sales value of these goods;

• at wholesale price — valuation according to the corresponding price list.

These values are not expected to match because they answer different questions. For a correct comparison, the same price type must be used. If necessary, the report template can be configured in FastReport to calculate at cost or wholesale price. This is explained in more detail in the material about differences between the statement, act, and reports.

Why the write-off act and the statement may differ even at cost price

The statement uses the current cost price of the product from the warehouse status. The write-off act is calculated according to the cost calculation method specified in the accounting parameters.

If batch accounting is used, expense documents are linked to goods receipt documents according to the FIFO principle: the batch that arrived first is written off first. If batches had different purchase prices, the cost of the written-off units may differ from the current average cost of the remaining stock.

For example, the product was received in two batches:

• 10 units at UAH 30;

• 20 units at UAH 40.

The average cost of the remaining stock may be UAH 36.67. But if units from the first batch are written off, they will be valued at UAH 30 in the act. Therefore, even comparing two indicators «at cost price» does not always produce the same amount.

Before comparing, check which cost calculation method is set in Settings → Parameters → Accounting and perform the necessary recalculation.

Why zeros appear in the totals

A zero value may have several different causes.

 The shortage is offset by the surplus

If the receipt amount is equal to or greater than the write-off amount, the «Shortage amount» will be zero. A write-off act may still exist.

 The statement totals have not been calculated

In current versions of Torgsoft, final amounts may be calculated during cost recalculation. If an indicator next to the statement shows that calculation is required, select the document and click Recalculate Amounts.

This action recalculates:

• the receipt amount;

• the write-off amount;

• the misgrading amount;

• the shortage amount.

A general recalculation can be started in Warehouse → Warehouse Status → Recalculate Cost.

 Closing or recalculation was interrupted

If the computer was turned off, the program stopped working, or the connection to the server was interrupted while closing the statement, the documents may have been created while the final amounts remained uncalculated. After restarting, check the statement status and perform a recalculation. If the document remains in the «Statement is closing» status for a long time, contact technical support.

 Goods receipt documents do not contain a purchase price

If goods were recorded as received without a purchase price, the program has no value for a correct calculation. Zero amounts may appear in the write-off or inventory totals. First, check the goods receipt documents, restore the correct purchase price, and then recalculate the cost and statement amounts.

What happens after the statement is closed

After clicking the Close Statement button, Torgsoft:

1. compares the actual and recorded quantities;

2. creates a goods receipt document for surpluses;

3. creates a write-off document, or liquidation act, for shortages;

4. adjusts warehouse balances to match the actual quantity.

The created documents can be found here:

• surpluses — Warehouse → Receipt List;

• shortages — Warehouse → Expense List;

• the number and date of the write-off act — in the list of inventory statements.

For surplus receipt, the price is determined as the latest purchase cost: purchase price plus additional product cost. If this cost is incorrect or has not been calculated, the error will affect the valuation of stock balances and future profit calculation.

Closing the statement adjusts the product quantity. It does not correct incorrect barcodes, duplicate product cards, missing receipts, incorrect transfers, or violations of the sales process.

How inventory results affect profit

In «Period Analysis» mode, Torgsoft takes into account the final «Inventory Shortage» value calculated after offsetting surpluses. This is the amount that reduces product profit.

The automatically generated write-off act from inventory should not also be included as an ordinary write-off, otherwise the same loss would be deducted twice. If the recalculation process was completed incorrectly, the document may temporarily be included in general write-offs. In this case, use the Recalculate Amounts button. The separate procedure for accounting for shortages in the analysis is described in the material about write-off amounts in Torgsoft reports.

A surplus receipt is not itself a sale and does not generate revenue. It increases the recorded quantity and value of the stock balance. If the goods are later sold, the sales profit will be determined as the difference between revenue and the cost established for the inventory receipt.

How to determine the cause of a discrepancy

For each suspicious item in the statement, you can open Product Movement and check receipts, sales, returns, write-offs, and transfers. The Log button shows who scanned the product or changed its actual quantity and when.

What to check before closing the statement

1. Accounting center. Make sure the count was performed for the correct store or warehouse.

2. Third-level warehouses. Check whether reserves and goods in subordinate storage locations need to be included.

3. Statement completeness. An empty statement filled only by scanning will not identify a shortage of goods that are physically absent. For a complete stocktake, the initial list must contain all recorded items in the relevant group.

4. Counting statuses. Find products with the «Not Counted» and «Counting Started» statuses. They should not remain unchecked.

5. Recount. Separately recount expensive products, zero actual quantities, large discrepancies, and recurring misgrading. It is advisable to assign this to another employee who does not have access to the expected stock balance.

6. Product movement. Check documents from the previous control date up to the time of counting.

7. Related items. Compare shortages and surpluses by model, size, color, packaging, price, and quantity.

8. Action log. Check manual changes, repeated scans, and the work of several users with the same statement.

9. Price type. Do not compare the cost price in the statement with retail amounts in the printed report.

10. Amount calculation. If the statement is already closed, check whether recalculation is required and use the «Recalculate Amounts» button.

Can inventory be performed while sales continue

A complete ban on sales is not mandatory. Torgsoft supports several blocking modes:

• Block product when added to the statement — used when the store or department is closed during stocktaking;

• Block product after the first scan — the recommended option if the store continues operating;

• Do not block product — requires precise control of the counting and sale timing;

• Block product for manual inventory — used for a prepared manual check.

While the store is operating, it is advisable to count goods in small groups and block an item after the first scan. Sales become a source of false discrepancies when the blocking mode or counting status is used incorrectly, not simply because the store remains open.

How to reduce result manipulation

In Settings → Parameters → Access, you can enable the Restrict the inventory statement for inventory performed by a salesperson option.

After that, the salesperson:

• cannot see the recorded quantity;

• cannot see the wholesale price;

• cannot print documents with inventory results.

For a specific role, you can additionally enable the Hide warehouse quantity for products under inventory option. In the mobile application, manual quantity entry can be restricted separately. This approach makes it possible to separate physical counting from discrepancy analysis.

What to do with negative stock balances

Negative stock balances should be analyzed before evaluating the results, but they should not be mechanically removed using arbitrary receipt documents. First, determine the cause:

• the product was sold before the receipt was entered;

• an old invoice was deleted or changed;

• the wrong product card was used;

• an internal transfer was not completed;

• the document chronology was disrupted.

If the actual quantity has been determined correctly, a negative stock balance can be included in the inventory statement. After closing, Torgsoft will create a receipt for the amount of the discrepancy. However, this will correct the quantity, not restore the correct batch history. If the goods were actually received but the receipt was not entered, it is better to restore the real goods receipt document and movement chronology, and then recalculate the cost.

What to do if an error is found after closing

If there have been no sales, returns, or transfers for the relevant products after closing, you can select the statement and click Cancel Closing. Torgsoft will delete the automatically created receipt and write-off documents. You can then correct the actual quantity and close the statement again.

If product movement has already occurred after closing, the old results must not be cancelled. Create a new statement only for the incorrect items, enter the current actual quantity, and close it. The program will create new adjustment documents without disrupting the accounting chronology.

Rules for interpreting the results

• A negative discrepancy confirms a quantitative mismatch but does not establish its cause.

• A positive discrepancy is not automatically business income.

• «Misgrading amount» is a calculated offsetting indicator, not proof of actual misgrading between specific products.

• A zero «Shortage amount» does not mean that no goods were written off.

• The amount in the write-off act does not have to equal the shortage amount after offsetting.

• The cost price in the statement should not be directly compared with the retail amounts in the standard printed report.

• Closing the statement corrects stock balances but does not eliminate the cause of the error.

• Decisions regarding employee responsibility should be made after recounting, checking product movement, reviewing the action log, and examining related product items.