In retail and wholesale trade, inventory counting (stocktaking) is a key feature for stock control. It is designed for periodic checks during which the actual quantity of goods is compared with the quantity recorded in the computer-based inventory system.
The purpose of this process is to identify discrepancies caused by errors or theft and eliminate them by bringing the recorded stock levels in line with the actual stock levels. After the count is completed, the inventory statement is closed, and the software automatically creates adjustment documents: a goods receipt for the items found in excess and a write-off act for the missing items.
When analysing the stocktaking results, the following questions may arise:
"Why does the amount in the generated write-off act not match the shortage amount in the inventory statement itself?",
"Why do I see one amount on the inventory statement screen, while the printed 'Inventory Results' report shows a completely different amount?",
"Why does the 'Shortage Amount' column show zero even though goods were actually written off?" and
"How do stock mix-ups affect the overall financial result of the shortage?".
The answers to these questions lie in the algorithms used to offset goods against each other and in the differences between the price types used in the software.
Below is a detailed explanation of the reasons why these discrepancies occur.
1. Mutual offsetting and stock mix-ups: why the shortage may equal zero
When you close the statement, a Write-off Act is generated. It records all goods that are physically missing from the warehouse. However, the "Shortage Amount" column in the inventory statement itself reflects your actual financial loss.
According to the software's logic, the total inventory shortage is calculated using the following formula:
Inventory write-off total minus Inventory receipt total.
The shortage amount becomes positive only when the total write-off amount exceeds the value of the excess goods found. If the resulting figure is below zero, meaning that the value of the goods found exceeds the value of the goods lost, the financial inventory shortage equals zero.
The amount is also affected by a Stock Mix-up — a situation where there is simultaneously an excess and a shortage of the same product model but of different variants, such as a different colour or size.
Example: according to the warehouse records, there should be 5 pairs of black socks and 5 pairs of brown socks, all costing UAH 10 per pair. During the inventory count, 3 pairs of black socks and 7 pairs of brown socks were found. In the write-off act, the software records a shortage of 2 pairs of black socks amounting to UAH 20. In the goods receipt, it records an excess of 2 pairs of brown socks amounting to UAH 20. However, these amounts offset each other in the inventory statement: the shortage of socks of one colour is covered by the excess of another colour. The software performs a mutual offset, and the financial shortage amount is UAH 0. This is why the amount in the write-off act, UAH 20, differs from the amount in the "Shortage Amount" column, UAH 0.
2. Difference between price types: Cost versus Retail Price
Another common question concerns discrepancies between the figures displayed on the computer screen and those shown in the printed report. When you view the "Inventory Statement" form or analyse the results for a particular period, the amounts are displayed at cost.
However, when you click "Print Inventory Reports" and select the "Inventory Results" report, the software generates it using retail prices. Naturally, the retail price is usually higher than the cost because it includes the markup, so the shortage amount in the printed report will be significantly higher. To make these figures match, you can change the settings: the printed report template can be modified, for example using FastReport, so that it calculates totals at cost or at wholesale prices.
3. Cost calculation algorithms: current warehouse status versus FIFO
Even when comparing only the cost in both documents, a discrepancy may occur between the write-off act and the shortage report. This happens because the data is obtained from different sources:
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The report and the inventory statement use the cost based on the current warehouse status at the time the report is generated.
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The document itself, the write-off act, records the actual cost according to the FIFO principle (first in — first out) or according to the cost calculation method specified in your settings, such as "Latest Purchase Price" or "By Delivery Batches Including Internal Transfers".
In other words, the write-off act links the written-off goods to a specific receipt batch and its purchase price. If goods are written off from several batches with different purchase prices, the amount in the document is calculated using the actual prices of those batches. The on-screen form may use an average or the latest price from the current warehouse status, which results in mathematical discrepancies.
What should you do if the figures appear incorrect?
If you see zeros instead of the cost or suspect a discrepancy, make sure that a purchase price was specified for the goods when they were received.
If the goods receipt documents were created without purchase prices and the goods were not sold, zeros will be displayed in the inventory results when those goods are written off.
To update the financial data in the statement, use the "Recalculate Amounts" button in the inventory statement form. This will recalculate the shortage, stock mix-up, write-off and receipt amounts. It is also advisable to regularly perform a global cost recalculation in the software.
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