[jira] [Commented] (OFBIZ-9500) Maintain accountingQuantity for all COGS valuation methods
[ https://issues.apache.org/jira/browse/OFBIZ-9500?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel=16213868#comment-16213868 ] Pierre Smits commented on OFBIZ-9500: - I agree. Without any other requirements/scenarios/use cases brought forward, this should be fixed rather sooner than later. Keep up the good work, Paul. > Maintain accountingQuantity for all COGS valuation methods > -- > > Key: OFBIZ-9500 > URL: https://issues.apache.org/jira/browse/OFBIZ-9500 > Project: OFBiz > Issue Type: Improvement > Components: accounting, order, product >Affects Versions: Trunk >Reporter: Paul Foxworthy >Assignee: Paul Foxworthy > Labels: accounting, inventory, stock, valuation > > From > http://ofbiz.135035.n4.nabble.com/AccountingQuantity-COGS-method-and-inventory-valuation-td4700867.html > *Why accounting quantity?* > When inventory is shipped, there's an accounting transaction that debits the > inventory on hand value and credits Cost of Goods Sold (COGS). > There's more than one way of deciding what value is added to COGS. > First and most obvious is the actual cost of the inventory item. But > companies may prefer other strategies. OFBiz has the option of three others: > average cost, first-in-first-out or last-in-first-out. There's a nice survey > of _why_ you might choose one of these at > http://www.dummies.com/business/operations-management/choosing-an-accounting-method-for-the-cost-of-goods-sold-expense/, > > http://www.dummies.com/business/accounting/the-fifo-method-for-cost-of-goods-sold/, > > http://www.dummies.com/business/accounting/the-lifo-method-for-cost-of-goods-sold/ > > Note that if you choose anything other than inventory item cost, the money > amount transferred to the COGS account may be *different* to the cost price > of the inventory items being shipped. When you choose FIFO or LIFO, the > amount may have originated from a different inventory item, received at a > different time. > *Current situation in OFBiz* > The cogsMethodId field in the PartyAcctgPreference entity is a enum with four > possible values: COGS_INV_COST, COGS_AVG_COST, COGS_FIFO, COGS_LIFO.. > The accountingQuantity field in the InventoryItem entity and > accountingQuantityDiff in the InventoryItemDetail entity track the quantity > of an item still "live" for the purpose of inventory valuation and COGS. > In the service createAcctgTransForShipmentReceipt implemented in > /applications/accounting/minilang/ledger/GeneralLedgerServices.xml > (http://svn.apache.org/viewvc/ofbiz/ofbiz-framework/trunk/applications/accounting/minilang/ledger/GeneralLedgerServices.xml?view=markup#l1306) > > the accountingQuantity is always set to the same value as the quantity > received (i.e. the same as the quantityOnHand) for a newly received inventory > item regardless of the COGS method. > When items are shipped, the service createAcctgTransForSalesShipmentIssuance > will only reduce the accounting quantity if the COGS method is FIFO or LIFO > (http://svn.apache.org/viewvc/ofbiz/ofbiz-framework/trunk/applications/accounting/minilang/ledger/GeneralLedgerServices.xml?view=markup#l1127). > With FIFO, when an item is shipped, inventory items for the product with a > non-zero accounting quantity are found sorted from earliest to latest > received. The quantity of the item shipped must be decremented from the > accounting quantities, starting with the earliest. Similarly, with LIFO, > items are sorted from latest to earliest, and the latest item or items are > decremented. > In other words, if you have chosen a COGS method of COGS_INV_COST or > COGS_AVG_COST, the accounting quantity is meaningless and in OFBiz as of > now, should be ignored. > And yet, the Inventory Valuation report uses accounting quantity, regardless > of the the COGS method > (http://svn.apache.org/viewvc/ofbiz/ofbiz-framework/trunk/applications/accounting/widget/ReportFinancialSummaryForms.xml?view=markup#l535). > In other words, the Inventory Valuation report is broken for COGS methods of > COGS_INV_COST or COGS_AVG_COST. > *What should happen* > The Inventory Valuation report, and anybody else who cares, should always be > able to trust the accounting quantity. For COGS_INV_COST and COGS_AVG_COST, > maintaining the accounting quantity is simple - > createAcctgTransForSalesShipmentIssuance should just adjust it to match the > remaining quantity on hand for the InventoryItem. > So shipping an InventoryItem may cause adjustments to accounting quantities > in other items for FIFO and LIFO, but when the COGS method is actual or > average cost, the adjustment is always in-place - the actual InventoryItem > being shipped. > No matter what the COGS method, the total accounting quantity for a product >
[jira] [Commented] (OFBIZ-9500) Maintain accountingQuantity for all COGS valuation methods
[ https://issues.apache.org/jira/browse/OFBIZ-9500?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel=16199945#comment-16199945 ] Jacopo Cappellato commented on OFBIZ-9500: -- I have voted for this issue! [~paul_foxworthy]'s description of the current situation and the proposed fix is perfect. On a side note, there are other processes (alternative use cases/corner cases) that may introduce some errors in the accounting quantity values; but we will analyze and fix them after the above changes have been introduced as suggested by Paul. > Maintain accountingQuantity for all COGS valuation methods > -- > > Key: OFBIZ-9500 > URL: https://issues.apache.org/jira/browse/OFBIZ-9500 > Project: OFBiz > Issue Type: Improvement > Components: accounting, order, product >Affects Versions: Trunk >Reporter: Paul Foxworthy >Assignee: Paul Foxworthy > Labels: accounting, inventory, stock, valuation > > From > http://ofbiz.135035.n4.nabble.com/AccountingQuantity-COGS-method-and-inventory-valuation-td4700867.html > *Why accounting quantity?* > When inventory is shipped, there's an accounting transaction that debits the > inventory on hand value and credits Cost of Goods Sold (COGS). > There's more than one way of deciding what value is added to COGS. > First and most obvious is the actual cost of the inventory item. But > companies may prefer other strategies. OFBiz has the option of three others: > average cost, first-in-first-out or last-in-first-out. There's a nice survey > of _why_ you might choose one of these at > http://www.dummies.com/business/operations-management/choosing-an-accounting-method-for-the-cost-of-goods-sold-expense/, > > http://www.dummies.com/business/accounting/the-fifo-method-for-cost-of-goods-sold/, > > http://www.dummies.com/business/accounting/the-lifo-method-for-cost-of-goods-sold/ > > Note that if you choose anything other than inventory item cost, the money > amount transferred to the COGS account may be *different* to the cost price > of the inventory items being shipped. When you choose FIFO or LIFO, the > amount may have originated from a different inventory item, received at a > different time. > *Current situation in OFBiz* > The cogsMethodId field in the PartyAcctgPreference entity is a enum with four > possible values: COGS_INV_COST, COGS_AVG_COST, COGS_FIFO, COGS_LIFO.. > The accountingQuantity field in the InventoryItem entity and > accountingQuantityDiff in the InventoryItemDetail entity track the quantity > of an item still "live" for the purpose of inventory valuation and COGS. > In the service createAcctgTransForShipmentReceipt implemented in > /applications/accounting/minilang/ledger/GeneralLedgerServices.xml > (http://svn.apache.org/viewvc/ofbiz/ofbiz-framework/trunk/applications/accounting/minilang/ledger/GeneralLedgerServices.xml?view=markup#l1306) > > the accountingQuantity is always set to the same value as the quantity > received (i.e. the same as the quantityOnHand) for a newly received inventory > item regardless of the COGS method. > When items are shipped, the service createAcctgTransForSalesShipmentIssuance > will only reduce the accounting quantity if the COGS method is FIFO or LIFO > (http://svn.apache.org/viewvc/ofbiz/ofbiz-framework/trunk/applications/accounting/minilang/ledger/GeneralLedgerServices.xml?view=markup#l1127). > With FIFO, when an item is shipped, inventory items for the product with a > non-zero accounting quantity are found sorted from earliest to latest > received. The quantity of the item shipped must be decremented from the > accounting quantities, starting with the earliest. Similarly, with LIFO, > items are sorted from latest to earliest, and the latest item or items are > decremented. > In other words, if you have chosen a COGS method of COGS_INV_COST or > COGS_AVG_COST, the accounting quantity is meaningless and in OFBiz as of > now, should be ignored. > And yet, the Inventory Valuation report uses accounting quantity, regardless > of the the COGS method > (http://svn.apache.org/viewvc/ofbiz/trunk/applications/accounting/widget/ReportFinancialSummaryForms.xml?view=markup#l535). > In other words, the Inventory Valuation report is broken for COGS methods of > COGS_INV_COST or COGS_AVG_COST. > *What should happen* > The Inventory Valuation report, and anybody else who cares, should always be > able to trust the accounting quantity. For COGS_INV_COST and COGS_AVG_COST, > maintaining the accounting quantity is simple - > createAcctgTransForSalesShipmentIssuanceit should just adjust it to match the > remaining quantity on hand. > No matter what the COGS method, the total accounting quantity for a product > across all inventory items should always be equal to the total
