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If you try to record a transaction that would result in a negative inventory balance (physical quantity or dollar value)zero units on hand, you will receive a negative inventory balance alert like these:

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To overcome this alert, you'll need to do an inventory adjustment for the items appearing in the negative.

Managing an inventory is an important part of your business. To get the most out of AccountRight's inventory management system, learn from an expert in our Inventory Management training course.

 

might receive the following error.

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This means that while your inventory quantity will be zero, the value of the items you're adjusting would not return to zero.

For example, if you tried to return 7 glasses at $10.00 each for a total value of $70.00 but AccountRight shows the 7 glasses to be worth $63.64 in total, you'll see this message.

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How did this happen? Even if your inventory and transactions were entered correctly, this discrepancy can still appear because of AccountRight's average cost method of calculating your inventory value.

How can I fix it?

Before you can record this transaction, you need to adjust your inventory value by the amount that it's unbalanced by. Follow the steps below to find the adjustment amount and record the inventory adjustment.

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title1. Find the out of balance transactionRun an inventory report

Run an inventory report

Run the Item List [Summary] report for the applicable items.

  1. Go to the Reports menu and choose Index to Reports.
  2. Click the Inventory tab.
  3. Click the Item List [Summary] report (under the Items sub-heading) then click Advanced.
  4. At the Items field, select the items you want included in the report.
  5. Select the option Include Zero Quantities.
  6. Click Run Report.
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title2. Compare your inventory the report with your transactionstransaction

Compare the

quantity and

report with your transaction

You'll now be able to compare the value of the item from the items on the Items List [Summary] report, with those of the transaction . You will see that the quantity and/or value of the item on the transaction will exceed that of the report. Or, the quantity will which is generating the error. The quantity should be the same, but the dollar value will be greater or less.

For instance, Clearwater Pty Ltd want to return some chipped glasses to their supplier. 50 glasses need to be returned at a cost of $0.25 (tax exclusive). When they try to record the purchase debit note (a negative purchase), a negative inventory alert is given.

Note: Item cost is always tax exclusive.

The example below shows the Items List [Summary] report filtered for the 100ml glasses.

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Comparing the purchase debit note (shown below) with the Items List [Summary] report, you can see that if the debit note was recorded, the quantity of glasses would drop to negative 3, and the Image Added

The list shows that the total value of the glasses is $63.64. If the return was recorded, the total value of the glasses would drop to negative $0.75. As both these values are less than zero, the software will prevent the purchase debit note from being recorded.

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From the comparison, the necessary adjustments can be calculated:

The quantity

below zero (-$6.36), even though the quantity would be zero.

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This comparison shows that the total value needs to be increased by

3 glasses, andThe total value

$6.36, so an inventory adjustment needs to be

increased by $0

done.

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title3. Make an Inventory Adjustment
An

Make an Inventory Adjustment

An inventory adjustment is used to increase the quantity/ dollar value of the items. The amounts will be that of the previous task.

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<h2><i class="fa fa-comments"></i>&nbsp;&nbsp;FAQs</h2><br>
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titleWhy did I get the negative inventory balance alert?

You will get the negative inventory balance alert because any of the following transactions have occurred:

  • An item type purchase debit note (negative purchase) which exceeds either or both the quantity/dollar value of an inventoried item.
  • Editing, reversing, or deleting a recorded item bill which exceeds either or both the quantity/dollar value of an inventoried item.
  • Editing, reversing or deleting an item type sale credit note (negative sale). This will remove items from inventory, and as such, the credit note must not remove more quantity/dollar value than is on hand.
  • An Inventory Adjustment that attempts to adjust an item's quantity/dollar value to less than zero.
  • An Inventory Transfer which attempts to adjust an item's quantity/dollar value to less than zero.
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titleWhy would the quantity of my inventory in AccountRight be lower than actual?

The value of your inventory may be lower than the actual for a few reasons.

One cause may be if the number of items per selling unit is incorrectly set-up. Open the item information screen and check the Number of Items Per Selling Unit values. If for example 2 is entered as the Number of Items Per Selling Unit, then, entering 1 in the Ship field of an item invoice, will remove two items from inventory.

Another reason your inventory may be lower than the actual is because AccountRight values inventory using the average costing method. The formula for calculating an item's average cost is:

  • Average Cost=Total Value of the item, divided by the Total Quantity of the items.

For example, a purchase of 10 items for $10.00 (tax exclusive) will result in an average cost of $10.00 per item. If the following day another 10 items were purchased for $12.00 (tax exclusive), then:

  • The total quantity of the items on hand=20 items.
  • The total value of the items=$220.00.
  • The average cost of the items=$11.00 ($220.00/20)

If after the second purchase, 10 items were sold, the 10 remaining items would retain their average cost of $11.00 ($110.00 Total Value). If the remaining 10 items were to be returned to the supplier at a price of $12.00 each ($120.00 Total Value), then the debit purchase note will result in a:

  • Zero quantity and
  • A less than zero dollar value

Because of the less than zero value, the negative inventory alert will be displayed. To correct this, an Inventory Adjustment will first be needed to increase the Total Value of the items. The inventory adjustment will show zero quantity, a zero unit cost and a positive $10.00 in the amount column.

Keep the quantity of the items at 0, because we don't want to add any more into the inventory. You can also ignore the unit cost because it will adjust automatically when you record the adjustment.

In the Amount column, enter the total value difference you found in the previous task. In our example, it was $6.36. If in your case you need to reduce the total value, enter the amount as a negative (minus).

Finally, you'd enter the account you want to assign the adjustment amount to. This account is usually a cost of sales or inventory adjustment account.

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Learn from the experts

Managing a full inventory can sometimes be tricky. The MYOB Inventory Training Course is an excellent resource to better understand AccountRight's inventory and its features - helping you stock smarter.

Learn more about this course for Australia or New Zealand.

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Error: Not enough items on hand to record this transaction

Inventory management in AccountRight

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