When a price changes, the value of the stock changes, since the value is calculated from the price:
Total value = total quantity x price
Consequently, a price change creates a posting to the stock account that amounts to total quantity x price difference. The offsetting entry is made to an income or expense account.
Debiting or crediting a material account has the following effects: The stock quantity of the material remains unchanged. The value of the material is increased or reduced. As a result, a change of price occurs, but only for a material subject to moving average price control. Consequently, the account movements for a material debit or credit differ depending on the type of price control.
Material with Standard Price
For a material subject to standard price control, the material debit or credit is posted to a price difference account. The offsetting entry is made to an income or expense account. Consequently, a material debit or credit for a material subject to standard price control does not lead to a revaluation.
Material with Moving Average Price
For a material subject to moving average price control, a material debit or credit results in a posting to the stock account. The system checks whether stock coverage exists for the quantity to be debited or credited, then acts accordingly:
If the quantity to be debited or credited is equal to or smaller than the total stock quantity:
The amount to be debited or credited is posted to the stock account. The offsetting entry is made to an income or expense account.
If the quantity to be debited or credited is larger than the total stock quantity:
The amount to be debited or credited is divided proportionally. Only a portion of the amount to be debited or credited is posted to the stock account, as the table below shows:
Total stock |
|
Amount to be debited* |
-------------------------- |
Quantity to be debited |
|
or |
|
Total stock |
|
Amount to be credited* |
--------------------------- |
Amount to be credited |
The rest is posted to a price difference account. The offsetting entry is made to an income or expense account.