Overview

This article explains how non-stock items are handled in iVendNext, the accounting entries involved, and best practices for managing them effectively.

To be able to use the Perpetual Inventory feature, you must enable the feature first by navigating to: Home > Accounting > Company > Enable Perpetual Inventory

Note: Once enabled, iVendNext will automatically generate General Ledger (GL) entries for every stock transaction, ensuring real-time sync between stock and account balances.

1. What are Non-Stock Items?

Non-stock items are products or services that are not tracked as inventory. These items are typically expensed immediately upon purchase and do not contribute to the stock-in-hand value. Examples include:

• Services: Consulting, maintenance, or repair services.

• Consumables: Office supplies, cleaning materials, or other items used internally.

• Expenses: Shipping charges, customs duties, or other costs that are not part of inventory.

2. How Non-Stock Items are Treated in Perpetual Inventory

Unlike stock items, non-stock items do not follow the same accounting flow in the Perpetual Inventory System. Here’s how they are handled:

2.1 No Inventory Tracking

• Non-stock items are not tracked in the Stock Ledger or included in the Stock-in-Hand Account.

• They do not affect the physical stock balance or inventory valuation.

2.2 Immediate Expense Booking

• When a non-stock item is purchased, its cost is immediately expensed in the General Ledger (GL).

• The expense is booked to the relevant account (e.g., Office Supplies, Shipping Charges) as soon as the Purchase Invoice is submitted.

2.3 No Stock Valuation

• Since non-stock items are not part of inventory, they are not subject to valuation methods like FIFO or Moving Average.

• Their cost is not included in the Cost of Goods Sold (COGS) calculation.

3. Accounting Entries for Non-Stock Items

The accounting treatment for non-stock items differs from that of stock items. Here’s a breakdown of the GL entries for non-stock items:

3.1 Purchase Invoice for Non-Stock Items

When you create a Purchase Invoice for a non-stock item, the system generates the following GL entries:

• Debit: Expense Account (e.g., Office Supplies, Shipping Charges).

• Credit: Creditors Account (or Bank Account, if paid immediately).

Example:

• You purchase office supplies worth $500.

• The GL entry will be:

• Debit: Office Supplies Account - $500.

• Credit: Creditors Account - $500.

3.2 No Impact on Stock Accounts

• Non-stock items do not affect the Stock-in-Hand Account or the Stock Received But Not Billed Account.

• They are not included in inventory valuation or stock adjustments.

4. Best Practices for Managing Non-Stock Items

To effectively manage non-stock items in iVendNext, follow these best practices:

4.1 Use Separate Expense Accounts

• Create separate expense accounts for different types of non-stock items (e.g., Office Supplies, Shipping Charges, Maintenance Services).

• This allows for better tracking and reporting of expenses.

4.2 Clearly Define Non-Stock Items

• Ensure that non-stock items are clearly defined in your item master.

• Use appropriate item groups or categories to distinguish non-stock items from stock items.

4.3 Regularly Review Expense Accounts

• Periodically review the expense accounts used for non-stock items to ensure accurate financial reporting.

• Reconcile these accounts with actual expenses to identify any discrepancies.

5. Common Scenarios and Troubleshooting

5.1 Misclassification of Items

• Issue: A stock item is mistakenly classified as a non-stock item (or vice versa).

• Solution: Review the item master and reclassify the item correctly. Adjust any affected transactions if necessary.

5.2 Incorrect Expense Booking

• Issue: Non-stock item expenses are booked to the wrong account.

• Solution: Create a Journal Entry to correct the expense allocation. Ensure that future transactions are booked to the correct account.

5.3 Missing Expense Accounts

• Issue: The required expense account for a non-stock item is missing.

• Solution: Create the necessary expense account in the Chart of Accounts and update the item master accordingly.