Inventory count variance
In one sentenceThe difference between the quantity recorded in the books and the quantity actually found in the count; it is either a shortage or a surplus, and is settled with an entry.
Simply put
If you find less than the system shows, that is a shortage; if you find more, that is a surplus. Both need a reason before adjustment: an input error, an issue without an invoice, damage, or theft.
After verification, item balances are adjusted to the actual quantities, and the shortage is recorded as an expense or the surplus is reversed, so the books match reality.
Worked example
A food warehouse records 500 cartons of an item at a cost of 40 SAR, and the count found 488 cartons.
Shortage in quantity500 − 488 = 12 cartons
Dr. Inventory shortage480
Cr. Inventory480
Value of the shortage = 12 × 40480 SAR
in FullScreen ERP
The Stocktaking app posts surpluses and shortages automatically as soon as the count is finished, and shows variance reports by quantity and by value of goods. Stocktaking app