In Jiwa products can be flagged as either Physical or Non Physical items.
In this article we take a look at the difference and the impact on your General Ledger.
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.
NOTE: From Jiwa release 7.00.175 non physical items now use the account attached to Cost of Sales.
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 Created from 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 NOTE: From v7.00.175 the Cost of Sales account is used |
|
DR |
GST Inwards |
GST applicable per creditor invoice |
|
CR |
Trade Creditors |
Purchase invoice value incl. GST |
Shipment Invoices - (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 NOTE: From v7.00.175 the Cost of Sales account is used |
|
DR |
GST Inwards |
GST applicable per creditor invoice (Local suppliers only) |
|
CR |
Trade Creditors |
Purchase invoice value incl. GST |