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Administrator Guide
Last Updated: 2023-06-23
Steps: Set Up Accounting for Inventory

Steps: Set Up Accounting for Inventory

You can set up inventory costing and accounting, accounting treatment, posting rules, and accounting options for inventory. You can view current inventory valuations and generate accounting entries with each inventory transaction. Workday derives ledger transaction records based on your worktag and account posting rule configurations.
  1. Define the
    Inventory Cost Adjustment
     business process related to inventory accounting.
  2. Access the
    Maintain Worktag Usage
     report.
    Define worktags for:
    • Inventory Location
      : Assign worktags used in accounting entries for transactions in the inventory location.
    • Inventory Issue
      : Assign worktags to enter on the issue transaction and for debit accounting entries on goods issued.
    • Inventory Ad-Hoc Put-Away
      : Assign worktags to enter on the ad hoc put-away transaction and for credit accounting entries on ad hoc put-aways.
    Security:
    Set Up: Enable Worktags
     domain in the Common Financial Management and Worktags functional areas.
  3. Access the
    Create Account Posting Rule Set
     task.
    Configure these account posting rules:
    • Inventory Adjustment
    • Inventory Cost Adjustment
    • Inventory Markup
    • Inventory Markup Expense
    • Spend
    Security:
    • Set Up: Accounting Rules
       domain in the Common Financial Management functional area.
    • Set Up: Company Accounting
       domain in the Common Financial Management functional area.
  4. Access the
    Edit Inventory Accounting Options
     task.
    Select how to account for excess variance:
    Option
    Description
    Excess variance is written off
    When the on-hand quantity is less than the invoice quantity, Workday only applies the price difference to the on-hand quantity, and writes off the remainder. To calculate the new average cost, Workday takes the ((
    Unit Cost Variance
     multiplied by the
    Quantity On Hand
    ) plus the (
    On-Hand Quantity
     multiplied by the
    Average Unit Cost
    )) divided by the
    On-Hand Quantity
    .
    Excess variance is applied to current on-hand quantity
    To calculate the new average cost, Workday takes the (
    Total Variance
     plus the (
    On-Hand Quantity
     multiplied by the
    Average Unit Cost
    )) divided by the
    On-Hand Quantity
    .
    Set the
    Inventory Count Default Accounting Date
     option. Workday uses this option as the accounting date for the count sheet. Select either the adjustment date or the date that a worker starts the count (
    Count Start Date
    ). When you have an open count transaction, you can't edit these settings. When you select the
    Allow Override of Inventory Accounting Date
     check box, Workday displays an
    Inventory Accounting Date
     prompt on inventory count sheets. You can change the accounting date for your cycle count adjustments.
    Select the
    Allow Intercompany Issue
     check box to use issue transactions to move goods between companies and track the associated transfer of cost. When you select this option, a
    Requester Company
     prompt is configurable on the
    Quick Inventory Issue
     task.
    Security:
    Set up: Inventory Accounting
     domain in the Inventory functional area.
Workday generates inventory accounting journal entries when the inventory transaction business process completes. Workday enters accounting dates on the transaction when the journal entry posts to the ledger.
Perform inventory transactions that have an impact on accounting for inventory, such as cost adjustments, moving inventory, or issuing inventory.