Understanding the Inventory Ledger

Goal

Use ledger history to audit inventory changes and troubleshoot discrepancies.

Before You Start

• You have posted at least one inventory transaction.
• You know the item or batch you want to investigate.

Steps

1. Open Inventory and locate the item.

2. Open item details.

3. Review item-level transaction history and balances.

4. Open a batch record to inspect batch-specific lineage.

   

5. Confirm transaction type and quantity direction for each row.

   

Expected Result in Formul

• You can trace quantity changes to transaction types such as RECEIPT, ADJUSTMENT, TRANSFER_IN, TRANSFER_OUT, PRODUCTION_OUTPUT, PRODUCTION_CONSUMPTION, ALLOCATION, and SHIPMENT.
• Batch-level history supports audit and traceability workflows.

What Each Transaction Type Means

Transaction Type	Plain-English Meaning	Typical Trigger	Quantity Direction
RECEIPT	New stock was added into a location.	Receiving against a Purchase Order.	Increases stock (+)
ADJUSTMENT	Stock was corrected after a count or loss/gain event.	Manual adjust action (damage, recount, shrink, found stock).	Can increase (+) or decrease (-)
TRANSFER_OUT	Stock left the source location.	Transfer between two locations.	Decreases stock in source (-)
TRANSFER_IN	Stock arrived at the destination location.	Transfer between two locations.	Increases stock in destination (+)
PRODUCTION_CONSUMPTION	Components were consumed to make something.	Work Order completion posting component usage.	Decreases component stock (-)
PRODUCTION_OUTPUT	Finished goods were created by production.	Work Order completion posting output.	Increases output item stock (+)
ALLOCATION	Stock was reserved for a sales order, but not yet shipped.	Sales Order allocation.	Reduces available stock; on-hand is still physically present
SHIPMENT	Reserved/available stock was shipped to a customer.	Sales Order fulfillment.	Decreases stock (-)

If you are troubleshooting a mismatch, first check whether the change is a reservation (ALLOCATION) or a physical move (SHIPMENT, TRANSFER_*, RECEIPT, PRODUCTION_*, ADJUSTMENT).

Why Ledger Interpretation Matters

• The ledger is your operational and audit timeline for every stock change.
• Misreading reservation vs physical movement is a common cause of false discrepancy investigations.
• Correct interpretation shortens root-cause analysis and prevents unnecessary corrective transactions.

If Something Looks Wrong

• Validate whether the discrepancy is from allocation versus shipment.
• Check whether the transaction occurred in a different location branch.
• Reconcile with PO/WO/SO references tied to the entry.

Next Step

Create inbound supply using Buy Overview.

Caution

Ledger entries are corrective, not destructive. Fix errors with compensating transactions instead of deleting history.