{"id":304,"date":"2022-02-25T00:00:00","date_gmt":"2022-02-25T00:00:00","guid":{"rendered":"https:\/\/www.versaclouderp.com\/blog\/how-to-correct-inventory-with-negative-cost-or-zero-quantity-but-positive-value-in-average-inventory-costing\/"},"modified":"2025-04-10T15:08:56","modified_gmt":"2025-04-10T15:08:56","slug":"how-to-correct-inventory-with-negative-cost-or-zero-quantity-but-positive-value-in-average-inventory-costing","status":"publish","type":"post","link":"https:\/\/www.versaclouderp.com\/blog\/how-to-correct-inventory-with-negative-cost-or-zero-quantity-but-positive-value-in-average-inventory-costing\/","title":{"rendered":"How to correct inventory with negative cost or zero quantity but positive value in average inventory costing"},"content":{"rendered":"
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Negative cost or Zero Quantity but positive value in average inventory costing<\/h2>\n<\/div>\n

How to correct inventory with negative cost or zero quantity but a positive value in Average inventory costing mode<\/h3>\n

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In a business, users can come across instances where some inventoried products would have negative cost or zero quantity but a positive value in the average inventory costing method.<\/h4>\n

Negative\u00a0<\/span>costs <\/span>are <\/span>widely caused<\/span> by adjustments<\/span>\u00a0and bill\u00a0<\/span>postings<\/span>, or\u00a0<\/span>when the inventory transfer<\/span>\u00a0<\/span>is done after the order<\/span>\u00a0<\/span>is received.\u00a0<\/span>These<\/span>\u00a0values cannot be adjusted using the normal inventory adjustment method.<\/span><\/p>\n

You can use this report called Non-Zero or Negative Inventory Value report. This report lists any product with zero quantity on hand but a non-zero value or 0 quantity with negative values.<\/p>\n

Here we explain the flow of transactions in Negative cost or Zero Quantity but positive value in average inventory costing with a scenario<\/h3>\n<\/div>\n
Consider this scenario:<\/div>\n
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You receive some inventory at the cost of 100 dollars. Inventory is recorded in\u00a0<\/span>the system\u00a0<\/span>with<\/span>\u00a0<\/span>a<\/span>\u00a0<\/span>value of\u00a0<\/span>100,<\/span>\u00a0<\/span>which<\/span>\u00a0<\/span>is<\/span>\u00a0<\/span>then<\/span>\u00a0<\/span>added<\/span>\u00a0<\/span>to<\/span>\u00a0<\/span>the inventory asset account for the product<\/span>.<\/div>\n
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Then you sell all of the inventory. The system deducts 100 from the inventory asset account. You now have 0 value in the inventory asset account.<\/div>\n
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You then receive a bill for the shipment receipt at a cost of 90 (discount offered by your supplier).<\/div>\n
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Upon<\/span>\u00a0<\/span>posting<\/span>, the system\u00a0<\/span>will<\/span>\u00a0reverse the 100 value\u00a0<\/span>received and put in\u00a0<\/span>90. Since the entire inventory was sold at 100 value, this leaves\u00a0<\/span>-10 as the value of the inventory. <\/span><\/div>\n
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You can also go into negative if you transfer stock to another facility. And then correct the cost of the stock to a lower value.<\/div>\n
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In Versa Cloud ERP, each inventoried product has a sub-account under the inventory account the product is using. An user can correct the inventory value of a product by posting it to this account.<\/h4>\n

To correct this, a user can do a manual GL entry by:<\/p>\n