accounting shows=what computer shows?

[tjsmith]

Is there a certain percentage, according to your inventory $ize, as to which your in house computer system shows in inventory compared to your accounting side?? I know it is almost impossible to be dollar for dollar, accounting equaling ADP, but there should be a common ground somewhere. Right?

[Farfinator]

TJ,
I have been told that the variance should be kept to less than 5%.
Sloppy accounting can really screw you up. So, my recommendation is to set up a monthly or quarterly review depending on rate of the diparity to identify, reconcile the descrepanies before they get out of hand.
Discrepancies can be the result of:
*Posting errors.
*Incorrect warranty accounting.(i.e. chargebacks, wrong markup via labor code, improper core expense processing etc.)
*Untimely, accounting.
*Mishandling sublet accounting.
*Improperly bookinh freight, handling and sales tax charges to inventory.
*Purchase discounts.
*Misunderstood and applied appreciation and depreciation.
*etc.
You and your finacial officer should set cut off dates on which to compare ledgers.
Your will need your Parts Manager's report to identify:
1.Your total inventory value.
2.Core values.
3.You need to maintain an account of outstanding part and core return receivables. You can do this by hand or set up an accounting journal to ensure "they" are aware and tracking these receivables.
4.You will need to account for dirty cores on the shelf.(warranty and cust pay)
5.You need to account for any incomplete posting and show record of and invoices not yet processed by accounting.
6.You need to account for damage.
This may sound like alot of work at first, but once you establish the routine and make a form for the info, it is actually quite easy to prepare. You are also likely find and fix alot of errors you did'nt even know existed! Not to mention those "accidently on purpose" kind of creative booking problems that often exist.
Within your control is ,of course, accurate and timely posting and MOST CRITICAL: PERPETUAL INVENTORY! If you are not already doing it, start NOW!

[tedstehr]

Farfinator, you really know your stuff!

As an ADP trainer for eight years, I have been asked about this numerous times.

By nature, the accounting side shows the historical or acquisition cost of your inventory, where the parts side shows
replacement cost. Several steps must be taken to reconcile these numbers. Daily timing issues, for example will affect this difference. The parts side is affected at time of sale, but accting does not get updated until the evening job stack. Other timing issues include receipting; parts update immediately, but accting does not get updated until the invoice arrives. Dirty cores are an issue as well.
Another major issue is appreciation/depreciation from parts masters.
I recommend the manager keeps a copy of RAD for each month. Therefore, if accting does not post the apprec/deprec through the year to the inventory acct or an offset, you have yourself covered if there is net depreciation over the year.