Inventory Valuation in Zoho determines how much your stock is worth at any given time. It directly impacts:
Cost of Goods Sold (COGS)
Profit & Loss
Balance Sheet
Tax & Audit Reports
Zoho uses this to ensure accurate financial reporting and compliance.
Inventory Valuation Method in Zoho
FIFO (First In, First Out) — Default Method
Zoho follows FIFO & WAC (weighted Average Cost)
This means:
Oldest stock is sold first
Cost of earliest purchase is used for COGS
Ending stock is valued at latest purchase cost
Zoho does NOT support LIFO or Weighted Average.
Prerequisites
Enable Inventory
Go to:
Settings → Items → Enable Inventory Tracking
Configure Stock Accounts
Go to:
Settings → Chart of Accounts
Ensure these are set:
| Account | Purpose |
|---|---|
| Inventory Asset | Stock Value |
| COGS | Cost of Goods Sold |
| Purchase Account | Stock Purchase |
Zoho auto-maps these in most cases.
How Inventory Valuation Works
When You Purchase Stock
Example:
Buy 100 units @ AED 10
Entry:
Dr Inventory = 1,000 AED
Cr Supplier = 1000 AED
Stock Value = AED 1,000
When You Sell Stock
Sell 30 units
FIFO picks:
30 × AED 10 = 300
Entry:
Dr COGS = 300
Cr Inventory = 300
Remaining:
70 units @ AED 10 = 700
New Purchase
Buy 50 units @ AED 12
Now:
| Batch | Qty | Rate | Value |
|---|---|---|---|
| Old | 70 | 10 | 700 |
| New | 50 | 12 | 600 |
Total Stock = 130 = 1,300 AED
Next Sale (40 Units)
FIFO uses:
70 @10 → 40 sold = 400
COGS = 400
Remaining:
30 @10 + 50 @12
Where to See Inventory Value
Inventory Valuation Summary
Go to:
Reports → Inventory → Inventory Valuation Summary
Shows:
Item-wise stock value
Total inventory worth
Inventory Valuation Details
Go to:
Reports → Inventory → Inventory Valuation Details
Shows:
Batch-wise movement
FIFO layers
Cost history
Balance Sheet
Inventory appears under:
Current Assets → Inventory
Adjustments & Revaluation
Stock Adjustment
Used for:
Physical count difference
Damaged / expired stock
Opening stock correction
Go to:
Items → Adjust Stock
Zoho recalculates FIFO automatically.
Inventory Revaluation
Zoho does NOT support manual inventory revaluation.
You cannot change value without stock movement.
To change value, you must use:
Adjustment
Backdated purchase
Bill correction