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Accounting Posting with Standard Costing Method

Updated
Applies toInventory Costing and PostingAudienceAll usersLast updatedMay 19, 2026

Accounting Setups

Inventory Class

The Inventory Class on the Item Card determines which inventory account is used during posting:

  • Finished Goods: Uses the Finished Goods inventory account defined in the Company Setup.

  • Subassembly: Uses the Subassembly inventory account from the Company Setup.

  • Raw Materials: Uses the Raw Materials inventory account from the Company Setup.

Company Setup

The following General Ledger (GL) Accounts are defined in the Company Setup and used for different postings:

  • Accounts Receivable

  • Accounts Payable

  • WIP (Work in Progress)

  • Inventory Adjustment

  • Capacity Expense

  • Indirect Capacity Expense

  • Material Variance

  • Capacity Variance

  • Purchase Variance

Account Posting Setups

The following GL Accounts are configured in Account Posting Setups and can be grouped by Account Posting Group, Item Posting Group, or Item:

  • Sales/Sales Return

  • Cost of Goods Sold (COGS)

  • Purchase/Purchase Return

  • Sales Discount

Accounting Posting

Item Journal Posting

  • The Standard Cost is used as the default Unit Cost on the Item Journal Line. Users cannot overwrite this cost.

  • The Inventory and Inventory Adjustment accounts are used during posting.

Transfer Journals

  • No General Ledger Entries are created during posting for Transfer Journals.

Cycle Count Journals

  • The posting for Cycle Count Journals follows the same process as Adjustment Journals.

Production Journal/Kitting

  • The Production Journal can also be used for Kitting without a Work Order.

Debit

Credit

Finished Good Inventory using Standard Cost amount

Debit/Credit Material Variance for the Finished Goods

Raw Materials at Standard Cost

Capacity Expense for Service Items at Standard Cost

Indirect Capacity Expense (only for Work Orders, not for kitting).

During the Daily Adjust Cost Routine:

  • For Standard costing components, GoldFinch does not post additional variances since the Purchase Price Variance has already been posted on Purchase Invoices.

  • For FIFO costing components:

    • Cost Entry Adjustments are inserted.

    • General Ledger Entries:

      • Credit/Debit Raw Materials.

      • Debit/Credit Material Variance.

    • Updates the Unit Cost on the Item Journal Line.

    • No adjustments are made to the output item.

Warehouse Receipt Posting

  • The Expected Cost of received inventory is recorded, but no General Ledger entries are created during posting.

  • The Expected Cost is based on the Standard Cost on the Item Card.

Purchase Invoice Posting

Debit

Credit

For Inventory items:

  • Inventory account using Standard Cost.

  • Purchase Price Variance: Difference between Invoiced Cost and Standard Cost.

For Service items:

  • WIP account if related to Work Order

  • Purchase account if not related to a Work Order

Accounts Payable

Purchase Credit Memo Posting

Debit

Credit

Accounts Payable

  • Inventory account using Standard Cost.

  • Purchase Price Variance: Difference between Credit Memo Cost and Standard Cost.

Warehouse Shipment Posting

  • The Expected Cost of shipped inventory is recorded, but no General Ledger entries are created during posting.

Sales Invoice Posting

Debit

Credit

Accounts Receivable

COGS account for inventory items using Standard Cost.

Note
No General Ledger entries are created for Service items during posting.

Sales

Sales Tax Payable

Inventory account for inventory items using Standard Cost.

Sales Credit Memo Posting

Debit

Credit

Sales

Sales Tax Payable

Inventory account for inventory items using Standard Cost.

Note
No General Ledger entries are created for Service items during posting.

Accounts Receivable

COGS account for inventory items using Standard Cost.

Work Order Posting

During Production Journal Posting for a Work Order:

  • Output Item:

    • The Expected Cost of finished inventory is recorded but no General Ledger entries are created during posting.

    • Expected Cost is calculated as Standard Cost × Output Qty.

  • Components:

Debit

Credit

WIP

Raw Material Inventory using Standard Cost.

  • Direct Work Center Service:

Debit

Credit

WIP

Capacity Expense account using Standard Cost. (This is set up on Company Setup, and it should be a contra Payroll account or Labor Recovery account.)

  • Indirect Work Center Service:

Debit

Credit

WIP

Indirect Capacity Expense account

When the Work Order is Finished and the Adjust Cost Routine is run:

Debit

Credit

Finished Goods Inventory using Standard Cost.

Debit or Credit to Material Variance and Capacity Variance accounts.

WIP

Debit or Credit to Material Variance and Capacity Variance accounts.

Article Accounting-Posting-with-Standard-Costing-Method  ·  Last updated May 19, 2026 · GoldFinch ERP Help Center

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