[GNC] Stock Levels

Fri Oct 2 16:21:14 EDT 2020

Hi Frederick & others -- It has often been said in this email forum that
GnuCash doesn't support inventory, but I think that's basically wrong.
What I mean is that while GnuCash has no separate inventory module as are
available in some versions of Quickbooks, say, one can use GnuCash + a
supporting spreadsheet (in Excel or freeware LibreOffice Calc which both
have some database features) perfectly well for accounting for a business
with inventory.  A few demonstrations/examples are needed to provide for
arriving potential users though.

A simple approach which might work especially if there are not too many
transactions could work as follows:

*When purchasing inventory, perhaps of a few different types*:
a) enter transaction into GnuCash as increasing one big Inventory account
and decreasing cash without any detail about numbers of units of what
types, just reference the invoice or sales receipt which you file into a
Vendor file.
b) in the spreadsheet create rows as needed for each the different types of
inventory (say Barnevelder chickens and Chantecler chickens) and in three
new columns for the purchases record the numbers and prices paid and total
dollars paid for each
Repeat as new transactions happen, adding 3 columns each time.
Keep one column carrying the sum of all purchases as an estimate of current
value of each type, with a sum at bottom reporting the total value of
inventory.

*At the end of a month or other accounting period*, do an inventory
inspection and record in a new set of 3 columns the number of each type
which you count, a price per unit (perhaps use the original or the last
purchase price, or a new estimate of your own based on what you see and
know), and a calculated current total dollars value.  Perhaps some units
will have been lost or some new chicks have been hatched and some prices
will have changed, so the sum of value of current inventory will be lower
or higher.  Then update your financial value in Quickbooks to reflect the
amount of that change:  increase or decrease "Inventory" value and
recognize a gain (say "Gain from Inventory growth") as income or a loss
(say "Loss from Inventory decline") as expense.

Also *whenever you sell any units*, add three columns for the numbers sold,
the price per unit, the dollars yielded.  In GnuCash enter an increase in
cash and recognize "Revenue from sale of chickens" or whatever.

In your business, you will also record expenses for operating costs, and
any revenues from sales of eggs say, and in the Income Statement for a
given period you will see whether you have made a profit or loss on the
period.  In this approach, with your counting and revaluing your inventory
to roughly a current market value each period, profit can be shown due to
gains in value even if there have not been any sales.  As suggested here,
the spreadsheet would tend to expand to the right.  But perhaps that is
fine, as after all there is no shortage of empty columns available in any
spreadsheet nowadays.

Note there are many possible different implementations.  One could have
GnuCash inventories for each type of chicken, so values for each type would
appear in your Balance Sheet, though at cost of requiring many more GnuCash
transaction entries.  One could use "inventory valuation" approaches other
than the current market value estimation approach suggested above,
variations that may be legally allowed in financial accounting (e.g. First
In First Out (FIFO), LIFO, Average Cost, Specific Identification), but are
probably not worth bothering with.  These variations might allow for some
gaming to advance or defer taxes due, or to manipulate reported earnings of
your firm sooner or later, but such gaming is generally not worthwhile.
Also a more database-oriented approach to organizing the information might
be possible, say with columns for each type of chicken and one row for each
transaction or re-valuation or new total value.  Perhaps that would allow
for some different types of reports using DCOUNT and DSUM type formulas.

But perhaps the above approach would work for you?  Maybe you could
explain a bit more about what you want to do?

In my opinion, Quickbooks' inventory feature is cumbersome, requiring one
to go through multiple screens to create a new inventory type, and
requiring application of just one type of valuation (I think requiring
every unit to be valued at same price per unit always, i.e. this is suited
only to situations where suppliers are unrealistically required to sell to
you at the same price forever).  It does not allow one to choose other
valuation approaches.  It probably fails to provide reports that you want
suited to your application.  It fails to support useful calculations that
are often wanted (such as for when inventory of each type should next be
purchased and what order quantity should be used, based on "Economic Order
Quantity" theory or similar).  I know of manufacturing firms which use
Quickbooks for accounting but absolutely would never use it for inventory;
they instead use a separate spreadsheet for inventory that works for them.

Note in past discussions, as mentioned, sometimes users have been directed
to try to adapt GnuCash's feature for tracking shares of investment trading
securities (which looks up current stock prices online, and handles stock
splits, and so on), but stocks are fundamentally different and it never
works for a user to take that approach.  By the way I am in favor of
several other features being added to GnuCash to make it more widely
usable, but not for an inventory module.

Frederick, does this help?

Don Cram

On Fri, Oct 2, 2020 at 5:36 AM Derek Atkins <derek at ihtfp.com> wrote:

> Gnucash does not have inventory support.
>
> If you only need to track a few items you can probably hack something
> together using a Stock account, but it is not a true inventory.
>
> -derek
> Sent using my mobile device. Please excuse any typos.
> On October 2, 2020 5:17:09 AM Duikerbos <duikerbos at gmail.com> wrote:
>
> > Morning
> >
> > I am starting a small Broiler project and using GnuCash to track
> > transactions
> >
> > Is it possible to track stock levels, birds purchased less birds sold?
> >
> >
> > Frederick
> >
> >
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