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Jiwa Inventory - Physical Item vs Non Physical Item

In this article we will look at the key differences between Physical and Non Physical inventory items.

 

Physical Items

Physical items are those inventory items where stock on hand quantities are tracked.

Jiwa identifies an item as a physical item when the Physical Item check box on the Inventory Maintenance form is checked.

Physical items also have the Inventory Value control account set against the item to the Stock on Hand or Inventory Value control account in the Balance Sheet.

Journal Entries

The following journal entries are created during the purchasing cycle for Physical inventory items.

 

Purchase Order Status Set to Sent

DR Expected Asset Purchase order value excl. GST
CR Expected Liability Purchase order value excl. GST

 

Stock received via GRN (when activated)

CR Expected Liability Reversal of PO value for quantity received
DR Expected Liability Reversal of PO value for quantity received
DR Delivered Asset Value of stock received per GRN excl. GST
CR Delivered Liability Value of stock received per GRN excl. GST

 

Stock received via Shipment BookIn (when activated)

CR Expected Liability Reversal of PO value for quantity received
DR Expected Liability Reversal of PO value for quantity received
DR Delivered Asset Landed cost value of stock received excl. GST
CR Delivered Liability Supplier cost value of stock received excl. GST
CR Import Cost Clearing Import cost value of stock received excl. GST

 

Purchase Invoice (when activated)

CR Delivered Asset Reversal of GRN entry
DR Delivered Liability Reversal of GRN entry
DR Inventory Value Value of stock received per purchase invoice excl. GST
DR GST Inwards GST applicable per creditor invoice
CR Trade Creditors Purchase invoice value incl. GST

 

Shipment Invoices (when invoiced)

CR Delivered Asset Reversal of Shipment Bookin value (landed cost)
DR Delivered Liability Reversal of Shipment Supplier value
DR Inventory Value Stock landed cost value
DR GST Inwards GST applicable per creditor invoice (Local suppliers only)
CR Trade Creditors Purchase invoice value incl. GST

 

Import Cost Invoices (when invoiced)

DR Import Cost Clearing Reversal of Shipment import cost
DR GST Inwards GST if applicable per creditor invoice
CR Trade Creditors Purchase invoice value incl. GST

 

 

Non Physical Items

Non Physical items are items where stock on hand quantities are not tracked, these are also referred to as non-stock or lookup items.  

When creating a non physical item the Physical Item check box on the Inventory Maintenance form is un-checked.

 

Non physical items also have the Inventory Value control account set to an expense account and not the Stock on Hand account as this control account is used to post the expense.

 

 

Classifications

Classifications typically set the control accounts on an inventory item when it is created or when the classification is updated on the item.

Control accounts can be changed manually on individual inventory items if required however it is recommended that you consult with your Jiwa consultant before doing so.

To eliminate the need for having to manually set the Inventory Control account on non physical items it is recommended that classifications are created specifically for each distinct group of non physical items.

 

Journal Entries

The following journal entries are created during the purchasing cycle for Non Physical inventory items.

 

Purchase Invoice (GRN Process) - when activated

DR Inventory Value Value of item received per purchase invoice excl. GST - the Inventory value control account would be linked to the appropriate expense account
DR GST Inwards GST applicable per creditor invoice
CR Trade Creditors Purchase invoice value incl. GST

 

Shipment Invoices (Landed Costing) - when invoiced

DR Inventory Value Landed cost value of non physical item - the Inventory Value control account would be linked to the appropriate expense account
DR GST Inwards GST applicable per creditor invoice (Local suppliers only)
CR Trade Creditors Purchase invoice value incl. GST
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