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Navigator > Setup > Inventory Control > Settings > Integration tab
You can set Integration Basis to Perpetual to integrate Inventory to General Ledger on a Perpetual rather than Periodic basis for Cost of Sales that compares directly with sales in the same period.
The Inventory Control module is inherently perpetual with stock levels and values updated in real time as transactions are posted. Periodic versus Perpetual integration to GL determines the timing and calculation of Cost of Sales in the General Ledger, regardless of integration basis. Transfers to GL are done on demand, as often (or infrequently) as you wish. The GL Accounts used when the journals are transferred and some rules around analysis of Stock Purchased on Purchase Orders and Shipments will differ between Perpetual and Periodic basis.
Perpetual Integration
With Perpetual Integration, Stock Purchases go into Stock on Hand, and when Stock is sold the cost value of the stock is journaled between Stock on Hand and Cost of Sales to give an accurate Cost of Sales for direct comparison with Sales.
Where a Purchase Expense transfers from Accounts Payable and the Stock Receipts from Inventory Control, Accredo uses a clearing account for AP Purchases of diminishing stock items, and IC transactions and revaluations journal between a Stock on Hand Account in the Balance Sheet and a variety of other accounts according to their transaction type.
Accredo Saturn Only: Additionally, for Cost of Sales journals, the Stock on Hand journal is against the Stock Location, Branch and Department, while the Cost of Sales journal is against the Branch and Department for the Sale, which is the Branch and Department from the Invoice Line, so it will match to the Sales journal from AR.
This is a more complex model to operate and reconcile, but provides accurate Cost of Sales which will match to Cost values reported out of Sales Analysis.
Periodic Integration
With Periodic Integration, the Cost of Sales in your financial reports is calculated as Opening Stock plus Stock Purchases less Closing Stock. This effectively assumes that AP Stock Purchases and IC Receipts will approximately balance out leaving the remaining change in stock value as Cost of Sales.
All IC transactions and revaluations journal between a Stock on Hand Account in the Balance Sheet and a Closing Stock Account in Cost of Sales, and Stock Purchases In are transferred via an AP Expense Code to a Stock Purchases Account in Cost of Sales.
This is a simple model to operate and reconcile, but Cost of Sales may vary considerably from the actual cost value of goods sold in the period if you do not tend to purchase and on-sell stock promptly.
Switching from Periodic to Perpetual Integration
If you wish to change to Perpetual Basis we recommend you do it in consultation with your QSP and Accountant, and it is probably a change best implemented across a Year End.
Changing from Periodic to Perpetual Integration involves some restructuring of the GL Chart, so financial reports may need modifying.
Ensure all IC is fully transferred and posted to GL up to the year end, including any revaluations.
Journal between Opening and Closing Stock in the Adjustment Period to clear these to zero for the new year, then inactivate these accounts.
Add the required GL Accounts and change IC Integration Basis and the necessary settings.
Integration Accounts
Navigator > Maintain > Inventory Control > Stock Groups
For Perpetual Basis the following GL accounts are required in addition to the Stock on Hand Account. Default accounts are entered in the Integration Settings and may be set per Stock Group.
Purchase Order and Shipments
If IC is integrated to GL using the Perpetual Basis then all Shipment Lines for Diminishing Products will have the GL Account Code set to the GL Stock Purchases Account Code for the Stock Group of the Product, this overrides the GL Account Code for the Expense Code.
If Shipments have been Posted but not yet transferred to GL, their AP transaction will not be set to use the GL Stock Purchases Account Code. The GL Account Code is set at time of posting the Invoice transaction, not at the time of transfer to GL.
Additional Cost Invoices
For Perpetual Basis, invoices for expenses which will be treated as Additional Costs on Shipments and hence factored into Stock on Hand must also be analysed to the GL Stock Purchases Account, use an AP Expense Code mapped to the GL Stock Purchases Account for these expenses.
Job Costing
Closing Work in Progress with Perpetual Integration
If IC is integrated to GL using the Perpetual Basis, and JC is integrated to GL for Work in Progress, the following applies.
Work in Progress is a timing adjustment to Cost of Sales. It can be either left with an Opening / Closing Work in Progress loop, or changed to just use a Cost of Work in Progress Account which adds to Total Cost of Sales. The effect is to reduce Cost of Sales by work in progress until the work in progress is backed off.
Accredo Saturn Only: Job Costing Usages will use the Job Branch and Department for Cost of Sales journal, not the IC Location Branch and Department.
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