Average cost v FIFO - thoughts....
LS seems to offer the choice of both methods. We use LS with Xero. The official line is that LSA does not support FIFO therefore Average Cost should be used.
We have just started using LS / Xero. I have been trying to reconcile the inventory total in LS with the one in Xero. If everything goes smoothly they should be the same.
Suffice to say that given manual adjustments to quantity and unit cost don't make it as far as the accounting you are playing catch up before you even start.
Assuming you have caught all of the manual adjustments the rest should be plain sailing. Opening stock add purchases less cost of goods sold equals closing stock right? Wrong. With the 'average cost' setting the cost of good sold going across from LS to Xero is the average. However, the LS stock value is actually the individual units in stock multiplied by their individual purchase prices (which in my case were different depending on which batch). Consequently my inventory did not match after the first 2.5 months.
I'm not sure if this was an isolated incident (as it only seemed to occur with one item), but I did have to spend some considerable time trying to identify the problem.
It also got me to thinking why isn't FIFO supported??? Given all LSA does is send across purchases and cost of goods sold it shouldn't matter. Purchases will be at whatever cost the supplier invoices. COGS could be any number so long as the same number is used for both LS and Xero.
Anyway answers on a postcard - I will be having nightmares between now and the next time I try to reconcile our 2000+ lines of inventory!!