Scenario
User receives inventory through accounts payable by entering items directly, without using purchase orders or three-way matching. Inventory adjustments are made via Inventory Worksheets with the Transaction Order set to "Last Transaction in Day." However, when AP enters invoices and updates the average cost, NetSuite revalues inventory and Cost of Goods Sold (COGS) in prior periods, which they want to avoid.
Solution
To prevent NetSuite from altering prior periods when entering invoices:
- Close Accounting Periods Monthly
- Currently, periods are only locked, not closed, allowing changes to old transactions. Closing periods monthly (Setup > Accounting > Manage Accounting Periods) will prevent backdated entries and modifications to past data.
- Adjust Inventory Costing Preferences
- The current hourly costing frequency (Setup > Accounting > Inventory Costing Preferences) triggers frequent recalculations. Consider reducing this frequency to minimize updates affecting prior periods.
- Resolve Report Discrepancies
- The Inventory Valuation Report may not match the Balance Sheet if transactions like Journal Entries, Bills, Checks, or Deposits directly use the Inventory account without linking to items. Ensure all inventory transactions are item-linked to align the Stock Ledger and Balance Sheet.
The Inventory Valuation Report total value may not match the Inventory Balance in the Balance Sheet due to the following reasons.
- Inventory Valuation/ Stock Ledger Report is based on transactions affecting the item and its value.
- Inventory amount in the balance sheet is driven by GL account balance.
- Transactions that are not linked to an item such as Journal Entries, Bills, Checks and Deposits directly using the Inventory account may cause the discrepancy.
- The said transactions are reflected in the Balance Sheet as it hits the General Ledger but it is not reflected in the Inventory Valuation Report.
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