The costing of the product is computed based on the costing methods available for the product internal category. You can keep the different costing methods for the product category depending on the price fluctuation in the market. The inventory valuation is computed based on the product cost price. However, in the Inventory application the inventory valuation is not linked to the balance sheet in accounting when we choose the Periodic (manual) option for the Inventory Valuation field on the product category; in this case, we have to transfer the inventory valuation manually to the balance sheet.
Let's see how the inventory value can be transferred to the balance sheet when we choose to have a Periodic (manual) inventory valuation. It will be linked automatically to the balance sheet when it has the Perpetual (automated) option for the Inventory Valuation field on the product category:
Look at the preceding screenshot of the product internal category. We can configure and link the inventory valuation to financial statements such as Balance Sheet or Profit and Loss accounts, by selecting the Perpetual (automated) option.
