Costing a sale when there is no stock

Allowing a sale beyond stock raises an accounting question: what did that part cost? Before the fix, such a sale posted at cost 0, so the journal had sales and VAT but no cost of sales or inventory line, margin looked too good and stock value was wrong once the purchase arrived.

The costing order

When an outgoing movement takes more than is on hand and the item has no moving average cost because nothing was ever received, it is costed at, in order:

1. the last receipt cost: the latest stock-in row that carries a rate, such as a purchase or goods receipt;
2. else the item's standard cost;
3. else the sale still posts, at cost 0, but the stock row is flagged as cost missing.

A part that was bought once keeps its moving average, which is carried forward, so a later negative sale is costed at it. The stock row of a fallback-costed sale is flagged with the source, so a report or a later check can tell an estimate from a real cost.

Finding the gaps

The report Sold with unknown cost, in the Parts family of the Reports hub, lists parts sold with no known cost. They posted at cost 0, so margin is overstated until the item cost is entered. Setting the item's standard cost makes the case disappear for later sales.

The true-up

No separate adjustment is posted when the purchase arrives. The negative balance carries a negative value at the fallback cost, and the receipt adds its real value, so the new average is value after divided by quantity after. The difference between the estimate and the real cost is spread into the average, as for any negative-stock item.