Understanding inventory recalculation and closing

The inventory recalculation is a normal procedure in the Microsoft Dynamics 365 for Finance and Operations environment that calculates the inventory cost in the warehouse and adjusts the inventory issuances, according to the inventory value model (the valuation method).

The inventory cost in Microsoft Dynamics 365 for Finance and Operations is a running average cost. To apply the valuation method, the recalculation process should be run. The normal mechanism of the inventory cost calculation applies the inventory valuation method that is attached to the product master by running the recalculation function. The recalculation function mainly affects two areas: the item cost in the warehouse and the inventory adjustment entries for product issuances from the inventory that generates the inventory financial transaction entries.

Note

The inventory adjustment entries are generated when the issuance cost of the item is different than the current cost...