G Inventory Transactions

This appendix contains these topics:

G.1 Generally Accepted Accounting Practices in the U.S. and France

Based on generally accepted accounting principles (GAAP) in the United States, the expense due to the purchase of an inventory item is recognized only at the time of sale (the balance of the cost of sales account). The U.S. GAAP and the J.D. Edwards standard solution imply an accounting principle of permanent inventory. That is, each inventory transaction generates an accounting entry.

In France, the purchase must be recognized in a purchase account. It is customary to periodically identify the difference between the initial inventory and the final inventory and post an offset entry to a stock variation account.

G.2 Accounting Schemes

G.2.1 Final Stock Mode

Figure G-1 Final Stock Mode Journal Entry

Description of Figure G-1 follows
Description of "Figure G-1 Final Stock Mode Journal Entry"

*The entry can be inverted if the final stock is lower than the initial stock.

G.2.2 Permanent Inventory

Figure G-2 Permanent Inventory Journal Entry

Description of Figure G-2 follows
Description of "Figure G-2 Permanent Inventory Journal Entry"

Note the following about the final stock mode and permanent inventory schemes:

  • The entry for final stock in the Final Stock Mode scheme does not exist in the Permanent Inventory scheme.

  • The offsetting entry for the stock account is always the stock variation account.

  • The cost of sales (U.S. GAAP) is equal to purchase plus or minus the stock variation (French GAAP).

G.3 J.D. Edwards Solution

When goods are received, the system uses automatic accounting instructions (AAIs) to generate a single entry in the appropriate account. The French GAAP requires an additional entry.

You can use two tools within J.D. Edwards standard solution to generate the second entry:

  • FASTR

  • Allocations

The purchase of stock for a given period corresponds to the inventory entries of the same period. For clients working with a standard price, J.D. Edwards recommends using the Chart of Accounts to distinguish between the purchase at standard price and the variation. You can use the business unit or the object to achieve this distinction.

G.3.1 Example: Chart of Accounts

Description U.S. Account French Account Level of Detail
Stock 1400   5
Raw materials 1410 3110 7
Finished goods 1420 3550 7
Accounts Payable 4100   5
A/P trade 4110 4011 7
Received not vouchered 4115 4081 7
Gross Margin 5000   4
Total sales 5001   5
Gross sales 5010 7011 7
Discount 5020 7091 7
Cost of Sales 6000   5
Purchases at standard price 6010 6011 7
Variation of standard price 6011 6011 7
Variation of stock (raw materials) 6012 6031 7
Variation of stock (finished goods) 6013 7135 7

G.3.2 Automatic Accounting Instructions (AAIs)

G.3.2.1 Stock Entries

These entries are reserved for stock transactions that are not related to a purchase or a sale, such as inventory issues, transfers, and adjustments.

AAI Description Object Description
TRI/4122 Adjustments 1410 Stock
TRO/4124 Adjustments 6031 Stock variation
PINV/4152 Inventory 1410 Stock
PEXP/4154 Inventory 6031 Stock variation

G.3.2.2 Purchase Entries

AAI Description Object Description
OPI/4310 Reception of stocked raw materials 6010 Purchase
OPN/4315 Reception of non-stocked items xxxx Purchase of non-stocked Items
OPR/4320 Reception 4115 Received not vouchered*
OPV/4330 Variation of standard price 6011 Variation of standard price
OPP/4335 Variation of standard price 6011 Variation of standard price
OPX/4340 Variation of currency xxxx Variation of currency

*The offsetting entry for this account is generated through the AAI PCxxxx.

G.3.2.3 Sales Entries

AAI Description Object Description
SOC/4220 Sales 6013 Stock variation finished goods
SOS/4230 Sales 5010 Sales*
SOI/4240 Sales 1420 Stock
SOT/4250 Sales xxxx Taxes*

*The offsetting entry for the A/R Trade account is generated by the AAI RCxxxx.

G.3.2.4 Indexed Allocations (G0923)

Use allocations to generate accounting entries for the entry of stock based on the purchase account at standard price.

Set up your allocations as follows:

Allocation Code
Recurring Frequency MO
Method U
Using MTD/YTD M
Offsetting Entries 6031 Stock valuation
FROM 6010 Purchase
Ledger Type AA
Index or Rate 1
TO 1410 Stock
Ledger Type AA

You can minimize the setup required for allocations by using a transit account. For example, if you have several accounting branches, you can use the following alternative:

Allocation Code
Offsetting Entries Transit Account
FROM 6010 Purchase
Ledger Type AA
Index or Rate 1
TO 1410 Stock
Ledger Type AA
FROM 6010 Purchase
Ledger Type AA
Index or Rate -1
TO 6031 Stock variation
Ledger Type AA