Stock Close: Cut-Off and Lock

Cut off, close and lock the month on stock

Steps 3 to 5 of the stock close: receive goods at the quantity that arrived, put every document in the month it belongs to, then close, prove and lock. It follows Steps 1 and 2, where the duties were separated and the valuation method chosen. The running example is GadgetSphere Sdn Bhd (GS), whose finance manager runs Month End Processing on the 5th working day, with a storekeeper at each of the 22 branches (Meet GadgetSphere).

Step 3: receive what arrived, not what was ordered.
Step 4: put everything in the right month.
Step 5: close, prove, lock.

Step 3: Receive what arrived, not what was ordered

The outcome: every unit in stock came through a door and was counted there.

Purchase GRN, or Purchase GRN Stock In, created from the purchase order

The goods receipt arrives with the ordered quantities already filled in. That makes it easy to confirm the order instead of counting the delivery. GadgetSphere’s storekeepers work in this order:

Count the cartons against the carrier’s note before signing it. Write any damage or shortage on the note in front of the driver.
Open the cartons and count the units without looking at the order. For phones and laptops, scan every serial number.
Only then open the receipt in BigLedger and change each line to the counted quantity. What is short stays open on the order for a later receipt. Damaged units are not received at all. Buying handles them with the supplier.

Two things in BigLedger reward this, and the first depends on which receipt you use. A serial number that already exists in the company is refused when the document that puts the stock on the shelf is finalised. On GRN Stock In, that document is the receipt, so a laptop scanned twice, or scanned under the wrong model, is caught at the door. On the plain GRN pair, the GRN moves no stock, and BigLedger checks its serials only when the Purchase GRN applet’s ENABLE_SERIAL_NUMBER_VALIDATION_FINAL switch (Settings > Field Settings) is on. With it off, the same check waits for the purchase invoice, which is finalised days later by whoever keys it, far from the carton. GadgetSphere sells serialised phones and laptops, so its finance manager turns the switch on. The switch also refuses a receipt whose serial count does not match its quantity. The opposite mistake shows up later: a serial that was never received is refused when a cashier tries to sell it. When that happens, the receipt is where the fix goes.

Know which document puts stock on the shelf. If your company receives on a plain GRN and the purchase invoice books the stock, goods received on the 30th and invoiced on the 3rd are on the shelf and not in the stock ledger at the month end. If it receives on GRN Stock In, the stock arrives at receipt and BigLedger posts a goods-received-not-invoiced accrual at the same time. Step 4 depends on which one you use. Use one pair for the whole company. Mixing the two counts a receipt twice.

How you know it is right: pick five receipts from last week. Each has the storekeeper’s count on the carrier’s note, and the quantity on the receipt matches the count, not the order. If you receive on the plain GRN, open the Purchase GRN applet’s Field Settings once and confirm the serial switch is on.

Step 4: Put everything in the right month

The outcome: the stock ledger at midnight on the last day matches the goods the business owned at midnight on the last day.

BigLedger dates everything by the dates you give it. It cannot know that the lorry arrived at 11:40 pm on the 31st. Cut-off is the stock controller’s job, and GadgetSphere does it in seven parts:

Write down the last numbers. At close of business on the last day, each storekeeper records the last receipt number and the last invoice or delivery number, and sends them to the area stock controller. Anything numbered after them belongs to next month. Check it when the documents are keyed.
Deal with received but not yet invoiced goods. On the GRN Stock In pair, those goods are in stock and the accrual is posted. On the plain GRN pair, they are not in stock at all. List the open receipts on the last day. Then either have the invoices keyed and dated in the month, or expect the count to show those items as surplus. In the second case the accountant accrues the liability by journal, because nothing else will. The accountant knows the accrual is right when its total equals the value of the open receipts on that list, and when it is reversed as those invoices are keyed.
Look at the transfer queue. A transfer sent on the 31st and received on the 2nd belongs to the company, not to either branch. It sits at the company’s in-transit location, and the company’s closing stock includes it. Stock transfers can still be finalised in a locked month. That keeps a lorry already on the road from being stranded by a lock. It also means the transfer queue can change after you close, so read it last. Any line open longer than three days is a delivery that never arrived, or a receipt nobody raised. The receiving area controller chases it before the month is locked.
Date the count adjustments in the month, on the header. A stock adjustment’s stock movement and its journal both take the document’s transaction date. On every save and at FINAL, BigLedger copies the header date onto every line. That date is filled in with the day the document is first saved, and on the screen only a user holding SHOW_TRANSACTION_DATE can change it. So a count on the 31st keyed on the 3rd lands wholly in the new month, stock and journal together, unless somebody sets the date back to the 31st. A file import takes the date from the Transaction Date column of the first row of each document (one document per location and reference). GadgetSphere gives SHOW_TRANSACTION_DATE to the area stock controllers who finalise year-end adjustments. They set the date to the count day before FINAL. They know it worked when the Stock Adjustment listing, filtered to the count day, shows every year-end adjustment, and none of them is dated in the new month. If the month is already locked (Step 5), FINAL refuses the back-dated document, so key these before the lock.
Lock late documents out of a reported month, or re-run it. A purchase invoice back-dated into a closed month re-costs every later sale. Nobody keys a document into a month after it is reported without the finance manager’s approval. If one is approved, the accountant re-runs Month End Processing for that month and every later month, in date order. How the finance manager knows the rule held: once a month is locked at LOCK_TXN (Step 5), a late invoice cannot be finalised into it without someone reopening the month. For a month that is reported but not yet locked, the accountant checks the Step 5 tie again after every re-run.
If you close on FIFO, ask for the rebuild before Month End Processing. See Step 2.
Count what you own, not what you hold. Stock can be yours and not on your shelf: goods in transit, stock placed with a consignee, a demo laptop lent to a corporate customer. Goods can also be on your shelf and not yours: a supplier’s consignment stock. Stock at a consignee sits at a consignment location that belongs to your company, so it is in your closing stock. Agree it with the consignee’s statement. BigLedger has no document for a demo or loan unit, so the area stock controller keeps a list the borrower has signed and agrees it at every month-end count: for each item, the units on the shelf plus the units on the signed list equal the ledger balance. Count a supplier’s consignment separately and agree it with the supplier’s statement. How it appears in your stock ledger depends on how consignment was set up for you, so ask whoever set it up before the year-end count, not during it. You know the ledger side is right when, for those items, your count less the supplier’s statement equals your own ledger balance. If the ledger balance includes the supplier’s units, your closing stock includes goods that are not yours; take that back to whoever set it up before the year end.

How you know it is right: after the count, the only differences on the count report are ones Step 5 of the counting guide explains, and none of them is “a receipt keyed next month”.

Step 5: Close, prove, lock

The outcome: the stock account equals closing stock, and the month cannot move.

Financial Report > Month End Processing

Month End Processing works out cost of sales for each company: opening stock plus purchases, purchase returns, stock adjustments and Reset MA, minus closing stock. It deletes and rewrites that month’s cost-of-sales journal every time it runs, and moves the stock account by closing minus opening. It never resets the account to your stock, so a difference that gets in stays in. Then:

Tie the stock account to closing stock. The balance on the stock account at the month end should equal Historical Stock Balance run on the close’s basis: every location, no item filter, Calculate Base On the same as Inventory Closing Base On. BigLedger writes the journal and does not compare the two. The accountant does, every month. The six conditions under which they agree, the tie-out, and a worked example are on Stock report versus the stock account on the balance sheet.
Tie closing stock to the count. At the year end, total the count sheets at cost and compare the result with closing stock. A difference means an adjustment is missing, or dated in the wrong month.
Lock the month in the Chart of Account applet’s fiscal-year settings, and choose the value by what it stops. LOCK_TXN refuses FINAL on any document dated in that month, except stock transfers, and still lets the accountant post journals. LOCK_ALL refuses both. LOCK_GL refuses manual journals only, so stock documents still finalise into the month. The accountant sets LOCK_TXN once Month End Processing has run, and LOCK_ALL after the adjusting journals (see Set of Books and Fiscal Periods). How they know it holds: date a new stock adjustment in the locked month and press FINAL. It is refused with The selected date falls within a locked fiscal period. Discard the draft.

What success looks like for this part

The stock account on the balance sheet equals Historical Stock Balance for the month end, run on the close’s basis, the transfer queue has no line older than three days, and the last receipt number each branch wrote down on the last day is the last receipt dated in the month. These are checks 1 to 3 of the whole close’s success check, and its common mistakes cover every part.

Common mistakes in this part

The close’s common mistakes are one table on the front page. For these steps, read first the rows on receiving the ordered quantity, the plain GRN pair with the invoice keyed next month, year-end adjustments left on the 3rd, closing on FIFO without the rebuild, and locking at LOCK_GL.

Next: Steps 6 and 7, find the slow stock and value it.