Inventory Closing

The month-end costing run. For one financial period it recalculates, day by day, the weighted average cost of every item and values every issue of the period at it. The differences are posted as settlement documents with the closing journal, and the period is closed so no stock document can be dated in it any more.

Where

Inventory Closing. It is not on the delivered Inventory menu

Who uses it

The cost accountant

When

Once per period, after every receipt, issue, return and landed cost of the period is in

Needs first

The Closing Journal on the Inventory Control Setting; no parked vendor invoice whose cost elements reach inventory

What it is for

During the month, issues leave at the average cost known on their date. Later receipts, landed costs and returns change that average after the fact. The closing puts it right: each item's cost is worked out again by date over the whole period, every issue line is valued at the cost of its own date, and the difference is booked.

How the cost is worked out (weighted average by date): for each item, at the level it is valued (company, site or warehouse), take the quantity and value on hand before the date, add the day's receipts at their value, and divide. Issues of that date take that rate. A same-day sale return is taken out before the average is struck. Stock that falls to nothing takes the receipt's own rate, or keeps the last known one.

The one rule people get wrong: while a closing is processing, no stock document can be saved at all ("Inventory Closing is Processing..."), and once the period is closed no stock document can be dated in it ("Inventory is Closed of this Period"). A closing that Stopped blocks stock documents the same way until it is reprocessed to Completed. Run it when the warehouse is quiet.

How it runs

1. New, pick the Financial Year, the Financial Period (Date From and Date To follow) and the Type, then Save.
2. The process starts by itself. Stage, State, Response, Start Time and End Time show its progress.
3. If it stops, Response says why. Fix the cause and press Reprocess.
4. When the State is Completed, the period's inventory status is Closed (for the type Inventory Closing).

Every field in plain words

Field	What it means	What to put
Transaction	The closing's number	Given on Create
Financial Year, Financial Period	The period closed	An operating period whose inventory is still open
Date From, Date To	The period's dates	Read only
Type	Inventory Closing, or a costing run that leaves the period open	Picked from the list. Only Inventory Closing closes the period
Item No, Item Group	Criteria for a costing run	Must be empty for an Inventory Closing
State, Stage, Response, Start Time, End Time	Progress	Read only

Toolbar

• Reprocess - restarts a closing that Stopped.
• Reverse closing - on a Completed closing: deletes the settlement documents and their vouchers, puts every adjustment back, reopens the period, and marks the closing Reversed. Only the newest closing can be reversed.

What posts

The settlement documents (one per posting date) carry the cost differences on the issue lines, between the accounts those lines originally posted to. A line that went out at zero cost and posted nothing takes the accounts of the same movement from the same warehouse with the same special indicator. A purchase return valued at the receipt's cost posts its difference to the Cost of Purchase Return Difference account. See What posts in Inventory.

What it is connected to

• Inventory Control Setting - the Closing Journal.
• Every stock document - checks the period's status on Save and on Reverse.
• Vendor Invoice - parked invoices with inventory cost elements block the run.
• Financial Year - the financial year and periods.
• Month-end close - the month-end process this closing is part of.

If something looks wrong

• "Inventory Closing Journal is not defined" - fill the Closing Journal on the Inventory Control Setting.
• "Inventory Closing can only run without Criteria" - clear Item No and Item Group.
• "Vendor Invoice ... is in Park and its cost element impacts Inventory. Inventory Closing cannot run until it is Posted or Cancelled."
• "Please define Account of Cost of Purchase Return Difference"
• "... was posted at zero cost without accounts, and no other ... line from warehouse ... with special indicator '...' in the period has accounts to post its cost to"
• "Financial Period is already Closed" / "Cannot Process Inventory Closing" - the period is closed, or the closing is not in a state that can run.
• "Only a Completed Inventory Closing can be reversed", "Inventory Closing is already Reversed", "Inventory Closing ... was processed after this one. Reverse it first."
• "Inventory Closing ... was processed by an older version that did not record its adjustment amounts, so they cannot be restored. This closing cannot be reversed automatically."