Inventory Valuation Report total may not equal to the Inventory balance in the Balance Sheet due to the following reasons:
- Inventory Valuation Report is based on transactions affecting the item and its value.
- Inventory amount in the balance sheet is driven by GL account balance. Transactions that are not linked to an item such as Journal Entries, Bills, Checks and Deposits directly using the Inventory account may cause the discrepancy. The said transactions are reflected in the Balance Sheet as it hits the GL but it is not reflected in the Inventory Valuation Report.
To verify the discrepancies, perform the following:
1. Run the Balance Sheet as of a particular date. Navigate to Reports> Financial > Balance Sheet.
2. Click on the Inventory account name from the Balance Sheet to display the General Ledger Detail Report.
3. Click Customise.
4. Click Filters tab and then:
- Under Field column, set Item = empty.
On the Add fields section, click/expand the Transactions folder > click Account (Line). Select all the Asset Accounts used in the item records.
The said report shows all transactions which do not contain an Item. These may cause the difference on the two reports.