Voided invoices showing increases/decreases


P

PhilB

I'm not much of an accountant, but I'm seeing something that I don't
understand in some of our SBA 2006 inventory account ledgers, and it kinda
scares me...!

For example, I have a ledger account called "Software Inventory". The
balance seems to be quite a bit high. Upon investigating, I am seeing voided
invoices with values in the Increase and Reduce columns, mostly Increase.
Other voided invoices have nothing in these columns.

Is there a reason that there are values in these voided invoice columns? If
not, I'm thinking that something might be corrupted somewhere...and I might
need to add a GL entry to balance these off...

Thanks for any suggestions/help!
 
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S

SumCPA

That's FIFO accounting in action. If an invoice with inventory items gets
voided, the cost of those items goes back into inventory. Any sales that
took place between when the voided invoice was created and when it was voided
will have a restated cost coming out of inventory. This is because the items
on the voided invoice become available for sale, so they replace the next
sold items, which in turn move to the next invoice and so forth. The result
is that there could be a lot of entries in the inventory account.

Does that help?
 

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