Stock Adjustment / COGS with Negative Stock
This section will explain how stock adjustments are caused by negative stock. Negative stock entries are permitted in the system by many users. For instance, by turning on the "Allow Negative Stock" option in Stock Settings, they are able to generate Delivery Notes even in the event that stock is unavailable.
Usually, they do this because they need to provide a delivery receipt and send materials to clients immediately. They then enter a Purchase Receipt or a Material Receipt to correct the stock balance.
However, the purchase or material receipt is typically posted with a date subsequent to the delivery note, causing automatic stock revaluation entries or stock adjustments in the back-end.
Delivery Note
Since the stock was not exists, system has used the valuation rate as 100 and booked the stock in hand as below
Now, since the stock is in negative, we need to make a purchase entry to adjust it. So, we'll create a purchase receipt entry with a purchase rate of 300.
