If you carry inventory, you have probably lived with a small, nagging discrepancy: the Inventory balance in your trial balance does not quite match the grand total of your Inventory Valuation Report — and the gap tends to widen over time. TamilAccounting can now keep the two perfectly in step, on any date, automatically.
Where the difference came from
The usual cause is selling or delivering stock before its purchase has been recorded — a delivery goes out on Monday, the supplier’s goods received note is entered on Wednesday. For a short while, the item’s on-hand quantity is negative.
The older way of handling that moment posted a behind-the-scenes adjustment the instant stock went negative, purely to stop the Inventory account dipping below zero. It parked the shortfall on an Adjustment account — but when the goods finally arrived, that adjustment was never fully unwound. A residue stayed on the books, and your Inventory account read permanently higher than the stock you actually held. Multiply that across many items and many months, and the Inventory account and the Valuation Report steadily drift apart.
The new default: they always agree
With Keep Inventory GL balanced with Valuation switched on — now the default for new and existing companies — your Inventory account balance equals the Inventory Valuation Report grand total on any date you care to check.
Instead of masking a temporary negative with an adjustment that never clears, TamilAccounting lets the Inventory account move honestly with the stock. When an over-delivery briefly takes an item negative, the Inventory account reflects that; when the corrective goods receipt is entered, both the Inventory account and the Valuation Report settle to the same figure — automatically, with no manual journal and no leftover residue.
A worked example
Suppose you sell and deliver 10 units of an item that costs 50 each, before its purchase has been entered. Here is how the two figures track with the new default on:
| Day | Event | On hand | Inventory account | Valuation report |
|---|---|---|---|---|
| Mon | Deliver 10 (not yet purchased) | −10 | −500 | −500 |
| Wed | Receive 10 on a goods received note | 0 | 0 | 0 |
At every step, the two right-hand columns match. The brief negative is real and visible, and the follow-up receipt clears it cleanly.
Contrast that with the legacy handling, which posts an adjustment on Monday to keep the account off zero:
| Day | Event | Inventory account | Valuation report |
|---|---|---|---|
| Mon | Deliver 10, adjustment posted | 0 | −500 |
| Wed | Receive 10 | +500 | 0 |
The Inventory account never went negative — but it never returned to the Valuation figure either, leaving a permanent 500 difference stranded on an adjustment account. That is exactly the gap the new default removes.
Turning it on or off
It is already on. If you ever need the previous behaviour — for example to match a long-standing reporting habit — open Setup → Company & GL Setup and switch off Keep Inventory GL balanced with Valuation. We recommend leaving it on: a temporary, self-correcting negative is far easier to explain than a permanent, growing difference.
Why it matters
- Month-end reconciliation becomes a non-event. The Inventory account and the Valuation Report tie out by design, on any date.
- Auditors see a clean match. There is no unexplained balance sitting on an adjustment account waiting to be questioned.
- The numbers tell the truth. A short-lived negative that clears itself honestly reflects what happened — stock was committed before it was received — rather than hiding it behind an entry that lingers.
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