Inventory in batch accounting (F1-F2): how the sum of shortage and surplus is formed

How Torgsoft calculates shortages and surpluses during inventory: misgrading, FIFO, and F1 warehouse adjustment

After the physical count of goods, Torgsoft compares the actual quantity with the recorded stock balance and creates documents to align the warehouse balance. Entrepreneurs most often ask why the shortage amount may equal zero even when a write-off exists, why the figures in the inventory statement, write-off act, and printed report differ, where zero amounts come from, and how to separately correct the quantity of goods in the F1 warehouse. For a correct explanation, three mechanisms must be distinguished: inventory results, cost calculation, and F1–F2 warehouse accounting.

What documents are created after closing the inventory

When the inventory statement is closed, Torgsoft automatically creates:

• a goods receipt document — for goods whose actual quantity exceeds the recorded quantity;

• a write-off document — for goods whose actual quantity is lower;

• totals for receipts, write-offs, misgrading, and shortages.

After this, the total warehouse stock balance is brought into line with the quantity actually counted.

The surplus in the goods receipt document is valued at the latest purchase cost of the product. It includes the purchase price and additional cost allocated to the product. Creating an inventory statement

The cost in the write-off document depends on the method set in Settings → Parameters → Accounting → Product cost calculation method.

If the «By supply batches» method or one of its variants is used, Torgsoft applies FIFO: it first writes off the quantity from the oldest unexhausted batch, then from the next one. If goods from several batches are included in one document, their cost is formed from the cost of those batches. The «Latest purchase price» method uses a different logic. Accounting settings

Therefore, the statement that both inventory documents are always created according to FIFO is incorrect: FIFO applies to write-offs only when the corresponding cost method is used, while surplus goods are received at the latest purchase cost.

How misgrading is calculated

In Torgsoft, misgrading means offsetting shortages against surpluses. A typical case is one product model with different grades, colors, or sizes: there is less of one variation and more of another.

In the inventory statement totals, the misgrading amount is defined as the smaller of the two values:

Misgrading amount = min(write-off amount; goods receipt amount)

For example:

• goods were written off for UAH 24,000;

• surplus goods were received for UAH 20,000;

• the misgrading amount is UAH 20,000;

• the shortage amount is UAH 4,000.

The write-off act will still contain all physically missing goods worth UAH 24,000. Misgrading affects the final financial result but does not remove items from adjustment documents.

How the shortage amount is calculated

The Torgsoft inventory statement uses the following formula:

Shortage amount = write-off amount − misgrading amount

The result cannot be less than zero. Since the misgrading amount equals the smaller of the goods receipt and write-off amounts, the formula can also be expressed as follows:

Shortage amount = max(write-off amount − goods receipt amount; 0)

Therefore, a write-off may exist while the shortage amount equals zero. This happens when the value of the detected surplus fully covers the value of the written-off goods.

For example:

• write-off — UAH 10,000;

• surplus receipt — UAH 12,000;

• misgrading — UAH 10,000;

• shortage amount — 0 UAH.9

This does not mean there was no physical shortage. It is recorded in the write-off act. Zero means that after offsetting, there is no shortage amount left in the inventory statement that reduces the product profit. Inventory using a computer

Why the write-off act and inventory statement show different amounts

The same indicators must be compared:

• the write-off act contains the full cost of all written-off goods;

• the shortage amount in the inventory statement shows the write-off after misgrading has been taken into account;

• the goods receipt amount reflects the value of received surplus goods.

For example, if goods worth UAH 20,000 are written off and surplus goods worth the same amount are received, the write-off act will show UAH 20,000, but the shortage amount in the inventory statement will be zero.

An additional difference may arise because of the cost calculation method. Under the batch method, the write-off act values goods by FIFO batches, while the final on-screen forms may use the cost of the current warehouse state.

Why the inventory statement and the «Inventory Results» report do not match

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

Because different valuation bases are used, the figures are not expected to match:

If you need a printed report based on cost or wholesale prices, you must configure the corresponding FastReport template.

Why inventory totals may equal zero

A zero amount most often occurs for two reasons.

There is no purchase price

If the goods were received with a zero purchase price and have not yet been sold, the software has no value at which to assess the write-off or another total. There will be a quantity discrepancy, but its monetary value may equal zero.

In this case, you need to check the goods receipt invoices and enter the correct purchase prices.

The amounts were not recalculated

The totals may remain outdated if the cost calculation was interrupted while closing the inventory statement or if related data changed after it was closed.

In the inventory statement form, click «Recalculate amounts». The software will recalculate:

• the goods receipt amount;

• the write-off amount;

• misgrading;

• the shortage amount.

If necessary, a general cost recalculation for the corresponding period is also performed. Why the shortage amount does not match the write-off act

How inventory is related to the F1–F2 warehouse

Warehouse accounting in the F1–F2 format — is a separate additional function. It does not determine the cost calculation method and does not change the FIFO algorithm.

When creating a goods receipt invoice, the user specifies its accounting type:

• F1 — official supply;

• F2 — another internal accounting format, which Torgsoft documentation identifies as an unofficial supply.

In the general «Warehouse Status» form, goods from F1 and F2 invoices are shown together. The «F1 Warehouse Status» form displays a separate calculated F1 balance:

F1 quantity = quantity according to F1 goods receipt invoices − quantity sold through the fiscal registrar

F1–F2 is an internal analytical mechanism. It does not replace primary documents, fiscalization, excise stamp accounting, or legal verification of the origin of goods.

Why a regular inventory does not correct the F1 warehouse

Closing the inventory statement aligns the general warehouse balance. The separate calculated F1 quantity may remain unchanged or incorrect because it depends on the type of goods receipt invoices and fiscalized sales.

The F1 attribute is not transferred through a standard internal transfer document between accounting centers: it can only be set for a goods receipt invoice.

According to the current documentation, F1 totals may also become distorted:

• after internal transfers of goods between accounting centers;

• in the «Sales with invoice issuance» mode if a fiscal receipt was not printed for the delivery note;

• when issuing a customer order or a product order if the sale was not fiscalized.

How to adjust the quantity of goods in the F1 warehouse

First, you need to check F1 goods receipt invoices, fiscal sales, and internal transfers. Manual adjustment without identifying the cause may hide an error in the documents.

If the correct F1 reference value has been determined:

1. Open Warehouse → F1 Warehouse Status.

2. Select the required product.

3. Switch to the English keyboard layout.

4. Press Ctrl + Shift + Alt + E.

5. In the «Change product quantity in F1 warehouse» window, enter the correct value in the «Quantity in warehouse» field.

6. Click «Save».

The «Adjustments» tab stores the date and time of the change, the product, the quantity before and after the adjustment, the amount of the change, and the user who made it. This is a separate operation for the F1 status; it does not replace closing the inventory statement or aligning the general warehouse balance. Warehouse accounting in the F1–F2 format