How sales receipts move stock: inventory exits

When you record a sales receipt that includes physical goods (not just services), Usystems automatically reduces your inventory quantity and posts the cost of those goods to your accounting records. This ensures your stock count stays accurate and your profit is calculated correctly.

How it works

When you create a sales receipt for a product:

1. Inventory Quantity Decreases — The quantity on hand for that product is reduced immediately. For example, if you had 100 units and sold 10, your inventory now shows 90.

2. Cost of Goods Sold (COGS) Is Calculated — Usystems looks up the cost of each unit you sold (using your configured valuation method, such as FIFO, LIFO, or average cost) and posts it as an expense.

3. Journal Entries Are Created:

   • Debit: Cost of Goods Sold (COGS) account — the total cost of goods you sold.
   • Credit: Inventory account — reduces the value of goods still on hand.

This method is called "perpetual inventory" — your stock levels are always up to date as soon as you record a sale.

Why it matters

• Accurate stock levels: Your inventory quantity is always current, so you know what to reorder.
• Correct profit: COGS is deducted from revenue to show your true profit on each sale.
• Financial reporting: Your balance sheet reflects the true value of goods on hand; your income statement shows the cost of goods sold.
• Physical count reconciliation: When you do a physical inventory count, you can compare it to your system records to spot discrepancies early.

Valuation methods

Usystems can use different methods to value the cost of goods sold:

• FIFO (First In, First Out): Oldest inventory is sold first.
• LIFO (Last In, First Out): Newest inventory is sold first.
• Weighted Average: Uses the average cost of all units in stock.

Your choice affects the COGS calculation and thus your reported profit. Ask your administrator or accountant which method is appropriate for your business.

Where to see it

To review the inventory movement from a sales receipt:

1. Open the Sales Receipts list. Open in Usystems

2. Find and click the receipt.

3. Look for an Inventory Movements or Stock Ledger section, or check the Transactions page for the associated COGS posting.

To view all inventory movements across all receipts and documents:

1. Go to Reports and search for Inventory Ledger or Stock Movement Report. Open in Usystems