Inventory valuation and General Ledger postings
What exactly do we mean when we say all of the transactions in the background? This deserves a bit of attention at this point. As we receive inventory and deliver products, the inventory value in our warehouses goes up and down. In order to account for this, SAP uses valuation methods to determine the monetary values for transactions that go against the CoA.
The valuation methods are Moving Average, Standard, or FIFO. It is worth noting that the relevant setting is often well thought through and based on a recommendation discussed with your CPA, who may explain the preferred accounting method.
Moving Average
With this setting, items are valued based on the average price. This is calculated while transactions are booked. The calculation uses the quantity multiplied by the average price.
Standard
All of the transactions use a specified standard price that never changes.
FIFO
For this valuation method, it is assumed that products which were purchased...