It’s never too early to start thinking about tax season. The sooner you get ahead of your inventory accounting processes, the easier your month-end, quarter-end and year-end accounting becomes. We’ve been fielding many questions on inventory asset valuation reports and why this information is so valuable. Let’s answer some of them and show you how to generate an automated valuation report in Finale Inventory.
How Can I Generate an Asset Valuation Report in Finale Inventory?
To get an asset valuation report, please follow the steps below:
- Go to the “Reports” section and click on any “Stock Value By…” report located under the Reports > Accounting section.
2. Type in the ending date in the “Stock: Effective Date” field. For a year-end 2021 asset valuation report, enter “12/31/2021.” For a first quarter 2021 asset valuation report, enter “3/31/2021” in this field.
If the asset valuation report has products with zero valuation, it’s most likely because Finale Inventory doesn’t have an accounting cost set up for those products, which is easy to fix. The average products can be imported using a two column Excel file consisting of the product id and initial average product cost.
The average cost will continue to properly calculating by confirming there is a product cost entered in PO when receiving a purchase order shipment.
Please contact firstname.lastname@example.org if you have additional questions.
What Is Asset Valuation and How Is It Useful?
An inventory or asset valuation is a financial value equivalent to the goods or assets in a company’s possession at the end of an accounting period. It accounts for the costs incurred to acquire the stock and prepare it for sale, such as supplier and shipping costs alongside warehousing operations costs. Since inventory is a company’s biggest asset, valuation is critical. It allows businesses to record a number on their balance sheets tied to their most significant business cost.
While it has many uses, in accounting specifically, valuation lets you understand a lot about your company’s profitability. You’ll determine your stock turnover ratio and make better purchasing decisions with the help of inventory valuation. An accurate valuation report can inform useful insights such as:
- Cost of goods sold (COGS)
- Gross profit
- Net income
- Current value of unsold inventory
- Estimated shareholders’ or owner’s equity based on current business assets
- Accurate values for income statements
- Estimated profitability as supplier costs fluctuate
What Is an Inventory Valuation Report and What Goes Into One?
An inventory valuation report is a document that lists your total cost or value of inventory. It presents in-stock items line by line, with columns showing how many are in stock and the current value used for accounting purposes. Based on your quantity in stock and your accounting cost, the report calculates your current cost of unsold inventory for each SKU.
Your inventory valuation summary will also highlight all the changes made to your stock during the reporting period, including the amounts sold, transferred and replenished. Inventory valuation reports cover specific date ranges. Many businesses use them for quarterly and yearly accounting periods.
In Finale Inventory, you have the choice between standard accounting costs or average accounting costs to calculate total inventory value. Average accounting costs populate automatically based on the purchasing price in your purchase order records. Standard accounting costs are manual entries you can set and maintain values for depending on your business needs.
Streamline Inventory Accounting Processes With Finale Inventory
Finale Inventory has robust reports for inventory-based accounting. Besides summarized and detailed inventory value reports, our software generates a chart of accounts, general ledgers and other customizable financial documents. We also offer turnkey QuickBooks Desktop and QuickBooks Online integrations alongside custom accounting software integrations to give your accounting team accurate inventory data without the need for double entry. This feature can provide even more detailed accounting reports through the software your financial department already uses.
Outside of accounting reports, Finale Inventory offers full-featured warehouse inventory management solutions to help your business keep better track of merchandise, reduce costs and maximize sales opportunities. Our software helps growing e-commerce businesses, wholesalers and retailers contribute to business value creation through streamlined inventory management. To learn more about everything Finale Inventory has to offer, sign up for a live demo or create a free trial account today.