Method of Inventory valuation in Arka:

 

Inventory will be valued on moving average method in Arka. Eg:

 

Consider you have two purchases (Goods Receive) of item A as below:

 

Quantity  Purchased

Price             

Total

100

25

2,500

200

30

6,000

 

 

So, when you record your next sales (Goods Issue) of item A , Cost will be calculated as below:

 

 

8,500/300  =  28.34 per unit. 

 

 

Then if you have one more purchase:

 

Quantity           

Price             

Total

100

25

2,500

200

30

6,000

-150

28.34

-4,250

100

(new purchase)

40

4,000

 

 

Cost for the next sales will be as below:

 

8,250  / 250 = 33 per unit.

 

 

Date is not a parameter while calculating the average cost. So all the purchases recorded in the system are considered.

 

If at any time, total inventory comes to 0 or below 0, in that case latest purchase transaction’s price will be considered as the cost for sales.


However if you have enabled 'Do not allow negative inventory' option, system will not allow you to post any inventory out go when you do not have sufficient inventory.