Inventory Analysis

Overview

The GF1003 Inventory to GL Reconciliation Report is used to compare the balances in your Inventory General Ledger (GL) accounts with the Invoiced Cost reported by the Inventory Valuation Report. This reconciliation helps ensure that your inventory subledger agrees with the General Ledger at month-end.

Under normal circumstances, the total Invoiced Cost from the Inventory Valuation Report should equal the total balance of all Inventory GL accounts. Any differences typically indicate timing issues, data entry errors, incorrect account setup, or system anomalies that should be investigated.

Monthly Inventory Reconciliation

Perform this reconciliation at the end of each accounting period.

Use the Inventory Reconciliation Schedule 05152025.xlsx Excel template to record balances from both the General Ledger and the Inventory Valuation Report for:

The current month
The previous month

If a discrepancy exists in the previous month, continue moving back one month at a time until you identify the period in which the difference first occurred.

Information to Record

For each Inventory GL account (such as Raw Materials, Subassemblies, and Finished Goods), record:

Inventory GL Balance
Total GL Balance
Invoiced Cost
Expected Cost (manual adjustments, if applicable)
Total Inventory Valuation
Difference between GL and Invoiced Cost

If differences are identified, use the Inventory Analysis tool to investigate the underlying transactions.

Preparation

Before running Inventory Analysis, verify that your Inventory GL Accounts are configured correctly.

For each inventory account (such as Raw Materials, Subassemblies, and Finished Goods):

Enable the Inventory Account checkbox.

Do not enable the Inventory Account checkbox for Work In Process (WIP) accounts, since WIP does not maintain inventory subledger balances.

Tip

If the Inventory Account field is not visible or editable, update the GL Account page layout to include the field.

Running Inventory Analysis

Open the Inventory Analysis tab.
Click Mass Delete All Records to clear any previous analysis.
Click Run GF Analysis.

Enter the following dates:

Start Date – The first day of the earliest month where the reconciliation difference exists.
End Date – The last day of the period you want to analyze.

Recommendation

Ensure all periods prior to the Start Date have already been successfully reconciled before running the analysis.

Click Run Analysis.

How Inventory Analysis Works

GoldFinch compares:

General Ledger Entries
Cost Entries

The comparison is grouped by Document Number.

For inventory transactions related to manufacturing, the comparison is grouped by Work Order Number instead.

Any discrepancies are written to the Inventory Analysis table for review.

Reviewing the Results

Use the Document Number or Work Order Number shown in the Inventory Analysis table to investigate the source of the discrepancy.

Common causes include:

Incorrect GL account assignments
Manual General Journal entries posted directly to Inventory GL accounts
Missing or duplicated Cost Entries
Posting interruptions or failed transactions
Incorrect inventory adjustments
Timing differences between inventory and financial postings

Correct the underlying issue and then rerun both the Inventory Analysis and the Inventory-to-GL reconciliation to verify that the balances are aligned.

Best Practices

Perform Inventory-to-GL reconciliation at the end of every accounting period.
Reconcile one month at a time rather than allowing differences to accumulate.
Investigate the earliest period containing a discrepancy before analyzing later periods.
Avoid posting manual General Journal entries directly to Inventory GL accounts unless specifically instructed by GoldFinch.