How you value stock

Skuvelo values the stock you hold in one of two ways. Average cost, which is the recommendation, gives every unit of an item at a location the same cost and updates that cost when you receive more. First in, first out treats the oldest units still on hand as the ones you sell, at the cost you paid for them.

The connected books are unchanged. Skuvelo does not post an inventory asset or a stock quantity to them. Those books still take cost of goods from your purchase bills. The choice here is how Skuvelo's own stock value and cost of goods are calculated.

1. Open Settings → Stock valuation.
2. Choose average cost or first in, first out. Each option has a one-line description of what it does.
3. Save the choice. You can do this before any stock cost is recorded. After that, a change is accepted on the first day of a month, and costs already recorded stay as they were.

A change on the first of a month records the difference in stock value and does not rewrite costs already posted. Moving from average cost opens one layer per item and location at the current average, so the value does not jump. Moving the other way folds the remaining layers into one average, and a rounding cent is kept rather than dropped.

Under first in, first out, a few movements are valued more simply. A sale made while stock is short uses the last cost and is not corrected when the late delivery arrives. A transfer that moves more units than have a recorded cost sends the extra units without a cost. Undoing a refunded sale takes back the units it restocked. Undoing a build made before the switch takes the newest units of the finished item.

Last in, first out is not offered. A standard cost with a separate variance account is not offered either. Stock is valued at what it actually cost.

This is not tax advice. A US filer who has already filed using one inventory method should talk to their accountant before switching. The change can require IRS Form 3115 under Rev. Proc. 2015-13, and Skuvelo does not file that form. Xero's own tracked inventory uses average cost only. Some other bookkeeping products lock their method once items exist and start from first in, first out. Skuvelo accepts a change before any stock cost is recorded, and after that only on the first day of a month. The change is recorded, and costs already recorded stay as they were.