Physical Adjustments are used to bring in Opening Inventory quantities and manage inventory levels after that in Free Accounting. Physical adjustment is not a proper way of handling shrinkage and overage. When physical quantities do not match the Quantity On Hand, the first thing that should be done is to follow an established company procedure to determine why the inventory is off and correct any errors. Only as a last action inventory should be physically adjusted.
Use the following steps to make Physical Adjustments in Free Accounting:
- Select Items / Physical Adjustment from the Free Accounting main menu.
- In the Item column use the drop-down list to select an item or manually type in the item number you want to adjust.
To add a new item, go to the New Item window, by selecting Add New
from the Item drop-down.
- Enter the new quantity of the item. There are two ways of making physical adjustment:
- Enter the total count into the New Quantity column. The Quantities are in Stock and Smallest Units. Put the total Stock Count in
the New Quantity column (blue color). If there are any broken units, enter that count in the Smallest column.
- Enter the difference between the Count and the Current Quantity in the Quantity difference column (yellow color). The Quantities are in Stock and Smallest Units. Put the total Stock Count in the Qty Difference column. If there are any broken units enter that count in the Smallest column.
- Change the cost of the item in the Cost column if necessary.
- Press the Apply button to process physical adjustment.
- If you want to physically adjust more than one item at a time you should press the down arrow on the keyboard to make a new line and repeat steps 1 though 4 until all items are listed.
- Or you can right click and select Add.
- If you want to delete a line you should right click and select Delete.
When the transaction of the Free Accounting Physical Adjustment is performed, it is displayed in the Master Transaction Ledger, and the new quantity of the item is changed in the records of this item (Quantity on Hand).
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