Please watch the recent video from Odoo Experience:

https://www.youtube.com/watch?v=jqMwAkv1f3g

Then review the following resources:

https://www.odoo.com/documentation/19.0/applications/inventory_and_mrp/inventory/inventory_valuation/cheat_sheet.html

https://www.odoo.com/forum/help-1/odoo-v19-is-there-a-gaap-compliant-solution-for-inventory-cogs-when-vendor-bills-are-delayed-290062

https://www.odoo.com/forum/help-1/how-can-i-access-the-details-of-the-inventory-variation-posted-at-month-end-in-odoo-19-290771

https://www.odoo.com/forum/help-1/odoo-190-load-initial-opening-inventory-how-does-it-work-now-287636

Hi,

In Odoo 19, a Variation Account and an Expense Account work together primarily in inventory valuation using standard costing. The Expense Account, typically Cost of Goods Sold (COGS), records the cost of goods when sold. The Variation Account captures the difference between the standard cost (used for inventory valuation) and the actual cost when purchasing or manufacturing items.

For example, when purchasing inventory at a price higher than the set standard cost, the Inventory Account is debited at the standard cost, Accounts Payable is credited at the actual cost, and the Variation Account is debited for the difference. This system simplifies inventory valuation and provides insights into purchasing performance, helping identify discrepancies between planned and actual costs.

Hope it helps

Hi,

A practical scenario in Odoo 19 is when you buy a product at a price different from its standard or expected cost.

Example:

• Standard cost of a product = $100 (recorded in expense account)

• Vendor invoice price = $110

When you validate the invoice:

• $100 goes to the expense account

• $10 difference goes to the variation account

This way, Odoo tracks both the planned expense and the cost difference, keeping your accounting accurate.

This also applies in manufacturing or stock valuation when actual costs differ from standard costs.

I hope this helps!