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E1: 41: Zero Balance Adjustments (Doc ID 625466.1)

Last updated on MARCH 11, 2022

Applies to:

JD Edwards EnterpriseOne Inventory Management - Version XE and later
Information in this document applies to any platform.

Purpose

Zero Balance Adjustments are automatically created by certain inventory and procurement applications to adjust the inventory amount in the General Ledger if inventory quantity goes to zero while there is still a cost in the G/L. This document describes the process by which these adjustments are created and the reason for them.

To create an adjustment in the General Ledger if the inventory quantity on-hand goes to zero while there is still a cost value associated with the item. Zero Balance Adjustments are applied for all inventory cost methods selected in the Item Cost (F4105) file, except for 07 Standard Cost.  Inventory and Procurement applications have AAIs that automatically generate a zero balance adjustment when inventory quantity on-hand goes to zero while there is still a cost value associated with the item and 07 Standard Cost Method is not used.

No Zero Balance Adjustment (ZBA) will be accounted when cost is setup with 07 standard cost. Instead the Standard Cost Variance takes precedence over Zero Balance Adjustment  variances (in case of two variances, one has to get precedence over the other).

Standard Cost Example:

  1. Create a new item with an 07 cost method for sales/inventory $10
  2. Adjust in some inventory, says 10                                                 
  3. Use inventory issue out 10 at a lower cost
  4. Review journal entries and cardex.                        
  5. Cardex does not show any ZBA, instead standard cost variance is accounted, and the journal entries reflect the same using DMAAIs 4126 and 4128.

The scenarios below illustrate how the Zero Balance Adjustments are applied to purchasing and inventory transactions in the case where the inventory cost methods selected in the Item Cost (F4105) file is not 07 Standard Cost. As further noted below Zero Balance Adjustments are not applied to sales transactions which cause the quantity on-hand to go to zero while leaving a non zero cost value associated with the item.

Details

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In this Document
Purpose
Details
 Purchasing Scenario
 Inventory
 Sales and Manufacturing
 Inventory Cost Levels and ZBA Adjustments
 Non-creation of ZBA due to rounding in the F4111
 Illustration of Calculations
 Reason for the Difference in Item Ledger/Cardex (F4111)
 Conclusion
References

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