Managing Inventory Using MYOB

Overview
The Inventory command centre controls the way MYOB manages goods and services. We can create items (i.e. things are bought and sold), and set up automatic triggers to remind when the stock levels fall below pre-determined levels which automatically prepare purchase orders to replenish stock. We can create simple inventory systems which track only the quantity of goods and services that have been sold, all the way to the most sophisticated system which tracks the raw materials, direct labour and other manufacturing inputs into production and then follows the finished goods to market.

Overview
Using MYOB accounting system, we can: a) b) c) d) Keep track of our items Identify how many goods are in stock See how much items are worth Find out from whom did we buy and to whom did we sell e) Shows how to revalue the stock f) Track the inventory transfers and automate the transfers using the Auto-Build features.

Perpetual vs. Periodical Inventory

MYOB can be used for either perpetual or periodical inventory management.
1. In MYOB, a Perpetual Inventory system is used whenever an item is marked as I Inventory This Item. This indicates to MYOB that it should track all monetary and physical movements of the item. When an item is purchased, both the Items List and Inventory account are increased by the value of the purchase. When an item is sold, both the items List and Inventory account are decreased by the value of the item. If all the items in the Items List are linked to the one Inventory account, the values in both places should be equal. 2. Periodical Inventory is a system of accounting for inventory in which the goods on hand are determined by a physical count and the cost of goods sold equals the beginning inventory plus purchases less ending inventory. In MYOB, a periodical inventory system is used whenever an item is marked with I Buy and I Sell only.

Our Focus
We are going to focus especially on the following sections of the inventory management process on MYOB:
1. Purchase Return to Supplier. 2. Sales Return to Customer. 3. Recording items received, when no order has yet been recorded. 4. Recording Items received against an existing order. 5. Auto-building Items.

PURCHASE RETURN TO SUPPLIER

1. Recording purchase return 2. Settling returns and debits 3. Effect on payables

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SALES RETURN BY CUSTOMER

1. Creating adjustment note 2. Settling adjustment note against original sales invoice 3. Writing off returned item to reduce quantity on hand

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edit memo

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Recording items received when no order has yet been recorded

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Recording items received against an existing order

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k icon & choose order

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type received qty.

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Click to record the bill of purchase order just created

therefore, choose Bill

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Auto-building Items
For inventory builds that are made repeatedly, Auto-build function can be used to automatically build the finished items. Before a finished item using the Auto-build function can be built, the items required to build the finished item need to be defined.

Auto-building Items
For defining a new Auto-build item, we need to
1. Go to the Inventory command centre and click Items List. The Items List window appears. 2. Click the zoom arrow ( ) of the item needed to be built. The Item Information window appears. 3. Click the Auto-Build tab. 4. Enter the minimum level of the item we want to have on stock in the Minimum Level for Restocking Alert field.

Auto-building Items (Contd.)

5. Click the Edit List button. The Auto-Build Information window appears.

Auto-building Items (Contd.)

6. Specify the number of inventory units needed to be made in the List what it takes to build field. (If bulk quantities of materials are purchased to build an item, it may be easier to specify the materials required to build a greater quantity of the item, such as 10 or 20.) 7. Enter the details for each of the components required to build the item. a) Click in the Item Number column and press TAB. The items list appears. b) Highlight the component item required to build the new finished item and then click Use Item. The details of the component appear in the Item Number and Name columns.

Auto-building Items (Contd.)

c) In the Quantity column, enter the number of a particular component item required to build the specified quantity of the finished item. d) Repeat from step a for each component required to build the new finished item.

Auto-building Items (Contd.)

8) Click OK when all the components have been entered. 9) Click OK and then click Close.

To build a finished item, we need to

1. Go to the Inventory command centre and click Auto-Build Items. The Auto-build Items window appears.

Auto-building Items (Contd.)

In the diagram, A) This column displays all items that have been designated as finished items. B) The On Hand, On Order and Net on Hand columns show the current record of the finished items. C) In the Qty. to Build column, type the quantity of finished items intended to be built. (Click the None button if we want to change all numbers in the Qty. to Build column to zero.)

Auto-building Items (Contd.)

2. Click Build Items. The Build Items window displays the details of the transfer that will occur when the finished item is built. 3. Review the entries in this window to make sure the quantities, unit costs and total inventory values are correct. Note that the quantities of the components in the list appear as negative numbers, while the quantities of the finished items in the list are shown as positive numbers. 4. Click Record to build the finished item, and update the inventory quantities and values.