Physical Inventory provides for the systematic selection of items, creation of physical inventory documents, count input, review and posting. The procedure features a “ten-key” data entry procedure and data entry verifying procedure to reduce keying errors dramatically. Many sorts are available to facilitate counting specifically for your site. Items may be counted by item number, categories, product codes, programs, customers, item type, and location.
Physical Inventory Menu Overview
Create A Physical Inventory File
Only run this option after all billing and receiving are complete and just before the intended count. This file must be created immediately before the count. The file will contain one Tag record for each inventory item. Tag records hold on hand balance and cost for an item at the time the file was created. A physical inventory may be done on items by choosing All, Selected or a Range of several fields along with an optional data entry verification. You may also choose to generate a file containing a random sample of items. The random sample option would be used to gauge inventory’s accuracy without doing a full physical inventory (Cycle counts). The random sample option does not have the data entry verification.
Produce Count Report
The system produces a double-spaced count sheet for recording counts. The items that will print on this report will be based on how the Physical Inventory File was created. If part of the count has been entered, the report may be printed for only uncounted items.
Enter Inventory Count
After the inventory has been counted, this option is used to record the per item quantity counted. Use the same sort options that were used when producing the count report. This option is designed for multiple pack counts and rapid entry of loose counts. The system will require the entry of the count once and specify “C” for complete or “I” for incomplete. If the data entry verification feature was selected, the system will require the count to be entered twice. The first count entered will mark all items with an “I” for incomplete. When the verifier’s count is entered, the system will mark the items “C” complete, but only if the count matches the first count entered. If the items are not marked “C”, print the Physical Inventory Edit Report using the option Data Entry/Verify.
Physical Inventory Edit Report
This option provides the ability to compare the book value of each item to the physical inventory count for determining validity and recount requirements.
Post Count to Inventory
Only run the Post Count option when the counting, verifying and editing of the data has been completed. This option will update inventory records with the correct adjustment amounts. A history record is posted to LIFO/FIFO history with a PI (Physical Inventory) source code. The PI is used for inventory tracking purposes. The General Ledger is updated automatically when the count is posted. The PI impact may be verified by printing the General Ledger Detail Report in the Inventory Reports Menu.
Note: The Physical file will be retained for inquiry purposes until you create a new physical inventory file, at which time it will be deleted.
Suggested Procedure
Note: The following is the suggested procedure for running a physical inventory, using the Tree View Menu. This may not be suitable or practical for some companies to follow. When doing a physical inventory, there are five main steps and one optional step.
The optional step is Physical Inventory Maintenance.
Create a physical inventory file
Find this option under Inventory (on the main menu), Transactions, Physical Inventory, Create A Physical Inventory file.
Note: Sort by location if your item masters include a location ID. This option allows you to count based on your warehouse layout.
Create A Physical Inventory File
Decide what type of file to create and how many items and/or what items to include in this file. In this example do not check Generate Random Count, Reenter Counts for Data Verification, or Include Base Items.
Note: When doing a full inventory count, do not choose random. The options displayed are described as follows:
This is accomplished by single clicking on the correct radio button. When the selections are complete, click Run. The system is creating the physical inventory file based on the selections. Once the processing is complete, a screen stating the number of records that have been created will appear. Click OK.
Produce Count Report
Located below Create A Physical Inventory File, find Produce Count Report. Select this option. The Produce Count Report options are displayed. On this screen there are two tabs. The first tab is labeled Sort. The second tab is labeled Select. The following are explanations of the tabs and how they work.
Enter Inventory Count
After the inventory has been counted, the quantities will need to entered it into the software. This is done though the Enter Inventory Count option located below Physical Inventory Maintenance. This screen has two tabs. The first tab is Sort. The Sort tab will arrange the data entry count screen. For optimal efficiency the Sort tab should be arranged the same as the Count Report. The second tab is “Other Options.” This is where the data entry person will enter their initials and Counter ID. If verify count was selected in Create A Physical Inventory File, the operator will have the ability to select which “Count Type” is being entered, either “Enter Counts” or “Verify Data.” This screen also allows a choice of whether or not to allow multiple tag records. Multiple tags are created if you store this item in different size packs and count is entered for each pack. If this option is selected new tag records may be added for an item already listed on the screen.
Once the selections are complete, click OK. The system will then display the data entry count screen.
Enter Inventory Counts
To enter the counted quantities highlight the item and click edit. The cursor will be in the count field. Enter the quantity and tab to the I/C field. This field stands for “Incomplete” or “Complete.” If the count entered is greater then zero and data verification wasn’t chosen the system will automatically place a “C” in the field. If the count is zero, then system will automatically place “I” in the field. If zero is correct change the “I” to “C.” Press Enter to move to the next item. Once all the counts have been entered, click Cancel. If the operator needs to exit out of the Enter Inventory Count screen, click Cancel. Then click Close. All information entered to this point will be saved except for the line that was cancelled. This feature will allows exiting for the day and finishing the next day. Items entered with an incorrect count can be corrected, if they have not been posted.
Note: Multiple tags are useful when inventory is found in multiple locations in the warehouse. If a recount is required, the validation of each location is easier.
Physical Inventory Edit Report
This option is located below Entering Inventory Count.
This screen contains three tabs: Sort, Select, and Print Options. Sort and Select are the same as in Step Two, Produce Inventory Count Report. Print this report the same as the count report. The Print Options tab allows printing items with deviations greater then either a dollar amount or certain percentage, Customer owned only, House owned only, Both Customer and House owned inventory, as well as Excluding Uncounted Zero On Hand items. Select a report type: Summary, Detail, or Data Entry/Verify. This report can be ran multiple times before the Items have been posted.
Optional Step
Physical Inventory Maintenance: This option is used only to add new tag records for items which were not included in the creation of the physical inventory file, and to correct counts which have not been posted.
Note: If you use the Physical Inventory Maintenance option the Physical Inventory Edit Report should be run again.
Post Count to Inventory
This option is found under the Physical Inventory Edit Report. The post count option can be run more then once during the physical inventory. This option will only post items, which are marked “C” in the physical inventory file. This allows posting counts as they are entered and reviewed, instead of having to wait until all item counts have been entered, reviewed, and/or corrected. This screen allows sorting of the post count journal eight different ways.
Choose the sort option which will make the most sense six months from now. This makes researching of the items easier if there are any problems. Once the report has been printed, the inventory will be adjusted accordingly. LIFO/FIFO records will be increased/decreased depending on the LIFO/FIFO records on hand quantity. A journal entry will also post to the Inventory and Inventory Adjustment accounts for the difference. (See your Company Information Screens for standard default General ledger Account numbers.
Note: Only run this Option if the Physical Inventory Edit report has been run and you are sure the counts are correct. To adjust any quantities after the counts have been posted, an inventory adjustment must be done.
Physical Inventory Menu Overview
Create A Physical Inventory File
Only run this option after all billing and receiving are complete and just before the intended count. This file must be created immediately before the count. The file will contain one Tag record for each inventory item. Tag records hold on hand balance and cost for an item at the time the file was created. A physical inventory may be done on items by choosing All, Selected or a Range of several fields along with an optional data entry verification. You may also choose to generate a file containing a random sample of items. The random sample option would be used to gauge inventory’s accuracy without doing a full physical inventory (Cycle counts). The random sample option does not have the data entry verification.
Produce Count Report
The system produces a double-spaced count sheet for recording counts. The items that will print on this report will be based on how the Physical Inventory File was created. If part of the count has been entered, the report may be printed for only uncounted items.
Enter Inventory Count
After the inventory has been counted, this option is used to record the per item quantity counted. Use the same sort options that were used when producing the count report. This option is designed for multiple pack counts and rapid entry of loose counts. The system will require the entry of the count once and specify “C” for complete or “I” for incomplete. If the data entry verification feature was selected, the system will require the count to be entered twice. The first count entered will mark all items with an “I” for incomplete. When the verifier’s count is entered, the system will mark the items “C” complete, but only if the count matches the first count entered. If the items are not marked “C”, print the Physical Inventory Edit Report using the option Data Entry/Verify.
Physical Inventory Edit Report
This option provides the ability to compare the book value of each item to the physical inventory count for determining validity and recount requirements.
Post Count to Inventory
Only run the Post Count option when the counting, verifying and editing of the data has been completed. This option will update inventory records with the correct adjustment amounts. A history record is posted to LIFO/FIFO history with a PI (Physical Inventory) source code. The PI is used for inventory tracking purposes. The General Ledger is updated automatically when the count is posted. The PI impact may be verified by printing the General Ledger Detail Report in the Inventory Reports Menu.
Note: The Physical file will be retained for inquiry purposes until you create a new physical inventory file, at which time it will be deleted.
Suggested Procedure
Note: The following is the suggested procedure for running a physical inventory, using the Tree View Menu. This may not be suitable or practical for some companies to follow. When doing a physical inventory, there are five main steps and one optional step.
- Create A Physical Inventory File
- Produce Count Report
- Enter Inventory Count
- Physical Inventory Edit Report
- Post Count To Inventory
The optional step is Physical Inventory Maintenance.
Create a physical inventory file
Find this option under Inventory (on the main menu), Transactions, Physical Inventory, Create A Physical Inventory file.
Note: Sort by location if your item masters include a location ID. This option allows you to count based on your warehouse layout.
Create A Physical Inventory File
Decide what type of file to create and how many items and/or what items to include in this file. In this example do not check Generate Random Count, Reenter Counts for Data Verification, or Include Base Items.
Note: When doing a full inventory count, do not choose random. The options displayed are described as follows:
- Generate Random Count
- Sample Size
- Reenter Counts for Data Verification
- Include Base Items
This is accomplished by single clicking on the correct radio button. When the selections are complete, click Run. The system is creating the physical inventory file based on the selections. Once the processing is complete, a screen stating the number of records that have been created will appear. Click OK.
Produce Count Report
Located below Create A Physical Inventory File, find Produce Count Report. Select this option. The Produce Count Report options are displayed. On this screen there are two tabs. The first tab is labeled Sort. The second tab is labeled Select. The following are explanations of the tabs and how they work.
- Sort
- Select
Enter Inventory Count
After the inventory has been counted, the quantities will need to entered it into the software. This is done though the Enter Inventory Count option located below Physical Inventory Maintenance. This screen has two tabs. The first tab is Sort. The Sort tab will arrange the data entry count screen. For optimal efficiency the Sort tab should be arranged the same as the Count Report. The second tab is “Other Options.” This is where the data entry person will enter their initials and Counter ID. If verify count was selected in Create A Physical Inventory File, the operator will have the ability to select which “Count Type” is being entered, either “Enter Counts” or “Verify Data.” This screen also allows a choice of whether or not to allow multiple tag records. Multiple tags are created if you store this item in different size packs and count is entered for each pack. If this option is selected new tag records may be added for an item already listed on the screen.
Once the selections are complete, click OK. The system will then display the data entry count screen.
Enter Inventory Counts
To enter the counted quantities highlight the item and click edit. The cursor will be in the count field. Enter the quantity and tab to the I/C field. This field stands for “Incomplete” or “Complete.” If the count entered is greater then zero and data verification wasn’t chosen the system will automatically place a “C” in the field. If the count is zero, then system will automatically place “I” in the field. If zero is correct change the “I” to “C.” Press Enter to move to the next item. Once all the counts have been entered, click Cancel. If the operator needs to exit out of the Enter Inventory Count screen, click Cancel. Then click Close. All information entered to this point will be saved except for the line that was cancelled. This feature will allows exiting for the day and finishing the next day. Items entered with an incorrect count can be corrected, if they have not been posted.
- Entering Case counts
- Adding Multiple Tag Records
Note: Multiple tags are useful when inventory is found in multiple locations in the warehouse. If a recount is required, the validation of each location is easier.
- Data Entry Verification
Physical Inventory Edit Report
This option is located below Entering Inventory Count.
This screen contains three tabs: Sort, Select, and Print Options. Sort and Select are the same as in Step Two, Produce Inventory Count Report. Print this report the same as the count report. The Print Options tab allows printing items with deviations greater then either a dollar amount or certain percentage, Customer owned only, House owned only, Both Customer and House owned inventory, as well as Excluding Uncounted Zero On Hand items. Select a report type: Summary, Detail, or Data Entry/Verify. This report can be ran multiple times before the Items have been posted.
Optional Step
Physical Inventory Maintenance: This option is used only to add new tag records for items which were not included in the creation of the physical inventory file, and to correct counts which have not been posted.
- To add a new item into the physical inventory file, Click Add. A new screen will appear. Enter the item number. Click Add. There are several fields which will activate. These fields will be the same as in the
- To edit an existing item, display the item you wish to edit. Then click Edit. All the same fields will be activated which appear in Enter Inventory Count screen.
Note: If you use the Physical Inventory Maintenance option the Physical Inventory Edit Report should be run again.
Post Count to Inventory
This option is found under the Physical Inventory Edit Report. The post count option can be run more then once during the physical inventory. This option will only post items, which are marked “C” in the physical inventory file. This allows posting counts as they are entered and reviewed, instead of having to wait until all item counts have been entered, reviewed, and/or corrected. This screen allows sorting of the post count journal eight different ways.
Choose the sort option which will make the most sense six months from now. This makes researching of the items easier if there are any problems. Once the report has been printed, the inventory will be adjusted accordingly. LIFO/FIFO records will be increased/decreased depending on the LIFO/FIFO records on hand quantity. A journal entry will also post to the Inventory and Inventory Adjustment accounts for the difference. (See your Company Information Screens for standard default General ledger Account numbers.
Note: Only run this Option if the Physical Inventory Edit report has been run and you are sure the counts are correct. To adjust any quantities after the counts have been posted, an inventory adjustment must be done.