Inventory valuation configuration

All of a company’s stock on-hand contributes to the valuation of its inventory. That value should be reflected in the company’s accounting records to accurately show the value of the company and all of its assets.

By default, Odoo uses a periodic inventory valuation (also known as manual inventory valuation). This method implies that the accounting team posts journal entries based on the physical inventory of the company, and that warehouse employees take the time to count the stock. In Odoo, this method is reflected inside each product category, where the Costing Method field will be set to Standard Price by default, and the Inventory Valuation field will be set to Manual.

The Inventory Valuation fields are located on the Product Categories form.

Alternatively, automated inventory valuation is an integrated valuation method that updates the inventory value in real-time by creating journal entries whenever there are stock moves initiated between locations in a company’s inventory.

Nota

Automated inventory valuation is a method recommended for expert accountants, given the extra steps involved in journal entry configuration. Even after the initial setup, the method will need to be periodically checked to ensure accuracy, and adjustments may be needed on an ongoing basis depending on the needs and priorities of the business.

Types of accounting

Accounting entries will depend on the accounting mode: Continental or Anglo-Saxon.

Suggerimento

Verify the accounting mode by activating the Modalità sviluppatore (modalità di debug) and navigating to Accounting app ‣ Configuration ‣ Settings.

Then, in the search bar, look for Anglo-Saxon Accounting, to see if the feature is enabled. If it is not enabled, Continental accounting mode is in use.

Show the Anglo-Saxon accounting mode feature.

In Anglo-Saxon accounting, the costs of goods sold (COGS) are reported when products are sold or delivered. This means that the cost of a good is only recorded as an expense when a customer is invoiced for a product. So for manual valuation method, set the Expense Account to Stock Valuation for the current asset type; for automatic valuation method, set the the Expense Account to an Expenses or a Cost of Revenue type (e.g. Cost of Production, Cost of Goods Sold, etc.).

In Continental accounting, the cost of a good is reported as soon as a product is received into stock. Because of this, the Expense Account can be set to either Expenses or a Cost of Revenue type, however, it is more commonly set to an Expenses account.

Configurazione

Make changes to inventory valuation options by navigating to Inventory app ‣ Configuration ‣ Product Categories. In the Inventory Valuation section, select the desired Costing Method and Inventory Valuation options.

Nota

It is possible to use different valuation settings for different product categories.

Show inventory valuation configuration options.

Costing method

From the product category’s configuration page, choose the desired Costing Method:

The default costing method in Odoo. The cost of the product is manually defined on the product form, and this cost is used to compute the valuation. Even if the purchase price on a purchase order differs, the valuation is the cost defined on the product form.

Operazione

Costo unitario

Qty On Hand

Incoming Value

Valore di magazzino

$10

0

$0

Receive 8 products for $10/unit

$10

8

8 * $10

80 €

Receive 4 products for $16/unit

$10

12

4 * $10

$120

Deliver 10 products

$10

2

-10 * $10

20 €

Receive 2 products for $9/unit

$10

4

2 * $10

$40

Avvertimento

Changing the costing method greatly impacts inventory valuation. It is highly recommended to consult an accountant first before making any adjustments here.

When the Costing Method is changed, products already in stock that were using the Standard costing method do not change value; rather, the existing units keep their value, and any product moves from then on affect the average cost, and the cost of the product will change. If the value in the Cost field on a product form is changed manually, Odoo will generate a corresponding record in the Inventory Valuation report.

Inventory valuation

Inventory valuation in Odoo can be set to be updated manually or automatically. While Expense accounts apply to both, the Stock Input and Stock Output accounts are only used for automated valuation.

Refer to the Expense and Stock input/output sections for details on configuring each account type.

Conto di costo

To configure the expense account, go to the Account Properties section of the intended product category (Inventory app ‣ Configuration ‣ Product Categories). Then, choose an existing account from the Expense Account drop-down menu.

To ensure the chosen account is the correct Type, click the (right arrow) icon to the right of the account. Then, set the account type based on the information below.

In Anglo-Saxon accounting for automated inventory valuation, set the Expense Account to the Expenses account. Then, click the (right arrow) icon to the right of the account.

In the pop-up window, choose Expenses or Cost of Revenue from the Type drop-down menu.

Show **Expense Account** field, and external link icon.

Stock input/output (automated only)

To configure the Stock Input Account and Stock Output Account, go to Inventory app ‣ Configuration ‣ Product Categories and select the desired product category.

In the Inventory Valuation field, select Automated. Doing so makes the Account Stock Properties section appear. These accounts are defined as follows:

  • Stock Valuation Account: when automated inventory valuation is enabled on a product, this account will hold the current value of the products.

  • Stock Journal: accounting journal where entries are automatically posted when a product’s inventory valuation changes.

  • Stock Input Account: counterpart journal items for all incoming stock moves will be posted in this account, unless there is a specific valuation account set on the source location. This is the default value for all products in a given category, and can also be set directly on each product.

  • Stock Output Account: counterpart journal items for all outgoing stock moves will be posted in this account, unless there is a specific valuation account set on the destination location. This is the default value for all products in a given category, and can also be set directly on each product.

In Anglo-Saxon accounting, the Stock Input Account and Stock Output Account are set to different Current Assets accounts. This way, delivering products and invoicing the customer balance the Stock Output account, while receiving products and billing vendors balance the Stock Input account.

To modify the account type, go to the click the (right arrow) icon to the right of the stock input/output account. In the pop-up window, choose Current Assets from the Type drop-down menu.

Display account setup page, highlighting the **Type** field.

The Stock Input account is set to Stock Interim (Received), a Current Asset account type.

Inventory valuation reporting

To start, go to Accounting ‣ Reporting ‣ Balance Sheet. At the top of the dashboard, change the As of field value to Today, and adjust the filtering Options to Unfold All in order to see all of the latest data displayed, all at once.

Under the parent Current Assets line item, look for the nested Stock Valuation Account line item, where the total valuation of all of the inventory on hand is displayed.

Access more specific information with the Stock Valuation Account drop-down menu, by selecting either the General Ledger to see an itemized view of all of the journal entries, or by selecting Journal Items to review all of the individualized journal entries that were submitted to the account. As well, annotations to the Balance Sheet can be added by choosing Annotate, filling in the text box, and clicking Save.

See the full inventory valuation breakdown in Odoo Accounting app.