The Financial Boundary — what the stock domain hands to the books¶

What this covers. This system is deliberately not an accounting system. The operator's books — the general ledger, the journal entries, the chart of accounts, the tax filings — live in their accounting package (QuickBooks, Xero, or whatever their accountant runs). What the stock domain does instead is emit a small, fixed set of conceptual accounts: named money buckets with stable meanings that an export can map onto any chart of accounts. This chapter names those buckets, defines what each one means, and says what produces it — so that every "this lands in the cost of goods sold" claim elsewhere in these docs has a precise destination, and so the export to the books is designable without guessing.

1. Not an accounting system — on purpose¶

A restaurant operator already keeps books, and already pays someone to keep them right. Running a second general ledger inside the inventory system would mean two books making claims about the same money — and two books that can disagree are how small-business accounting quietly goes wrong. So the boundary is drawn deliberately: the stock domain owns the facts only it can know — what stock is physically worth at each warehouse, what every plate cost, how much purchase VAT is waiting to be reclaimed, what each oven is worth after wear — and the accounting package owns everything else: double-entry postings, the chart of accounts, payroll, rent, the tax return.

The handover is a vocabulary. A conceptual account is a named bucket with a stable meaning — "food cost," "input-VAT receivable" — not a row in a general ledger. The operator's accountant decides which real account each bucket maps onto; the stock domain guarantees only that a bucket's meaning never shifts under them. The buckets below are the complete set.

2. The buckets, one by one¶

2.1 Inventory on-hand value — the asset¶

What it means: the value of the stock physically held, per warehouse — the quantity on hand times the blended average cost, derived from the movement journal and the valuation entries, never stored as an editable number. On a balance sheet this is the inventory asset. The figure each warehouse reports is two numbers kept apart: the value of its stocked (perpetual-inventory) pool — the sellable stock — and, beside it, the value of its implements pool (the durable smallwares with the expensed-on-write-off treatment, §2.6). They are held separate so durable smallwares still awaiting write-off never read as sellable inventory: one warehouse, two on-hand values that must not be added together as if they were the same kind of thing.

What produces it: every stock movement and valuation entry touching the warehouse keeps the running figure current; the period close snapshots it as the authoritative balance, reconciled by the physical count.

Tiny example. A warehouse that just received €424.00 of flour and €106.00 of wine (net of recoverable VAT) reports €530.00 of stocked on-hand value — until something is consumed, wasted, transferred, or counted. If the same warehouse also holds €360.00 of frying pans, that €360.00 rides alongside as the implements pool value, reported as its own per-warehouse figure rather than folded into the €530.00.

2.2 Cost of goods sold — split into food cost and packaging cost¶

What it means: the cost of goods sold (COGS) is the cost of the stock consumed to make the period's sales. It is emitted as two buckets: food cost and packaging cost, split by the item's packaging role. The split is the entire reason the role exists: the food-cost percentage is the most-watched number in a restaurant's economics, and it must not be polluted by the price of the box the dish ships in.

What produces it: every consumption movement and every shrinkage movement, valued at the warehouse's blended average — a dish sale exploded through its recipe to leaf ingredients, a direct sale of stock, and outright losses (waste, expired stock, count shortages) all land here for stocked items. The routing is by the item's accounting treatment: an implement's shortage routes to the implement write-off bucket, not here. The close re-spread carries any residual shrinkage discovered by the physical count: the closing mechanism re-spreads value that should remain over the quantity actually found, so the cost of what silently vanished — theft, spoilage, over-portioning — flows into COGS rather than hiding in a side pocket.

Tiny example. A dish leaves the line carrying €2.40 of ingredients and a €0.80 kraft clamshell: €2.40 to food cost, €0.80 to packaging cost. A 2 kg batch of ingredients spoils and is written off at the €0.84 pool average: €1.68 to food cost — the same bucket, the same logic as a sale. At the close, a further 10 kg of flour the book expected is nowhere to be found: roughly €8.34 (10 kg at the €0.8343 blended cost) lands inside COGS as residual shrinkage through the re-spread.

2.3 Price-difference expense¶

What it means: cost corrections that cannot honestly re-value stock — because the stock in question is already consumed, or never honestly had that price — are recognized as expense here instead of being rewritten into history.

What produces it: three corners of the costing math. The negative-on-hand correction (a consumption posted against stock the book thought was gone); the consumed portion of an invoice price update (a goods receipt posted from a delivery note at estimated prices, re-priced when the supplier invoice attaches later — only the on-hand portion re-values, via a valuation entry); and the cost delta of a late-posted backdated entry (the quantity corrects at today's average; the price difference is expensed, never retro-applied).

Tiny example. A receipt posted from a delivery note at €0.80/kg for 500 kg is re-priced by the invoice at €0.84/kg — €20.00 more. 100 kg has already been cooked: €16.00 re-values the 400 kg still on hand (a valuation entry), and the consumed €4.00 is price-difference expense.

2.4 Input-VAT receivable¶

What it means: in the EU regime, the VAT paid on purchases that the tax authority owes back — a receivable (money owed to you), routed out of stock value at receipt so inventory stays valued net of recoverable tax.

What produces it: each goods-receipt line's recoverable tax, line by line — each line carries its own rate and its own recoverability. The US regime simply never fills this bucket: a taxed line's tax is non-recoverable and capitalizes into the goods instead.

Tiny example. One delivery: flour at 6% VAT (€24.00) and wine at 13% (€13.00), both fully recoverable — €37.00 of input-VAT receivable, while the stock is valued at the €530.00 net.

2.5 Expense-on-receipt expense¶

What it means: the full cost of expensed-on-receipt items, recognized the moment they are received. These items never become inventory — no on-hand, no count, no valuation.

What produces it: goods-receipt lines whose item carries the expensed-on-receipt treatment — oil, salt, gloves, cleaning supplies. (Such an item still costs into recipes at a reference price, but that is a costing convention for the theoretical side of variance, not a stock value.)

Tiny example. €6.50 of salt on a delivery is €6.50 of expense that day — and the last anyone asks the books about that salt.

2.6 Implement write-off expense¶

What it means: the cost of durable smallwares — implements: pans, knives, trays — recognized the day a unit dies, not the day it was bought and not spread over time. Implements accumulate in a quantity-and-value pool by purchases; this bucket is their only exit for value.

What produces it: every outflow of an expensed-on-write-off item, valued at its pool's blended average — an explicit write-off (broken, lost, worn out), or the shortage a periodic count (commonly annual) finds. Routed by the item's treatment, so it never lands in food cost or shrinkage: a dead pan is not a kitchen-efficiency signal, and the food-cost percentage must not be polluted by it.

Tiny example. Twelve €40 frying pans were received during the year (€480 into the implements pool, no expense). Two burned out and were written off, and the annual count found one more missing: €120 of implement write-off expense for the year; €360 of pans remain on the books.

2.7 Depreciation expense, and gain or loss on asset disposal¶

What they mean: depreciation expense is the slice of a capitalized asset's cost recognized each month as it is used up; gain or loss on disposal is proceeds minus book value when an asset is retired or sold.

What produces them: the fixed-asset sub-ledger. The monthly straight-line run posts each in-service asset's slice — evenly over its useful life, the only depreciation method the stock domain runs (jurisdiction-grade methods are the external accountant's job, on the other side of this boundary). A disposal computes its result against the asset's remaining book value.

Tiny example. A €4,500 combi oven on a five-year life posts €66.67 of depreciation expense each month. Sold after two years for €3,000 against a €2,900 book value, it recognizes a +€100 gain on disposal.

3. The buckets at a glance¶

Conceptual account	What it means	Produced by
Inventory on-hand value	what stock is worth, per warehouse — the stocked pool value and the implements pool value as two distinct figures	every movement + valuation entry; snapshotted at the close
COGS — food cost	the food consumed for the period's sales	consumption at the blended average; shrinkage via the close re-spread
COGS — packaging cost	the packaging consumed with those sales	consumption of packaging-flagged items
Price-difference expense	corrections that can't re-value stock	negative-on-hand corrections; the consumed share of invoice price updates; backdated entries' cost delta
Input-VAT receivable	reclaimable purchase VAT (EU regime)	each goods-receipt line's recoverable tax
Expense-on-receipt expense	expensed-on-receipt items at receipt	their goods-receipt lines
Implement write-off expense	dead smallwares, at the pool average	write-offs + count shortages of expensed-on-write-off items
Depreciation expense	the monthly straight-line slice	the depreciation run over the asset register
Gain/loss on asset disposal	proceeds − book value	an asset disposal

4. How the export works¶

The operator queries the export for any date window — the period close is the natural rhythm (that is when the authoritative balances are struck), but mid-month cuts for tax purposes or year-end reconciliation are equally valid. Every figure derives live from recorded artifacts — stock movements, valuation entries, posted documents, asset-register rows — so it can be reconstructed, tied out, and audited at any time. There is no stored export snapshot to go stale.

Inventory on-hand value is always per warehouse, because each warehouse closes independently. Each warehouse row also carries a "closed through" date — the most recent accounting period that has been formally closed there. A warehouse that has never been closed shows none. This marker tells the operator's accountant how authoritative each warehouse's figure is: a closed figure has been tied to a physical count; an unclosed figure is still a running estimate. All the cost-flow buckets (COGS, price-difference, expense-on-receipt, implement write-offs) are company-wide, with no warehouse qualifier, because the cost of what was consumed is a company-level question, not a warehouse-level one.

Late corrections change figures on re-export. The export has no snapshot ledger of its own — it reads the documents as they stand. If a goods receipt is cancelled after the window was exported, re-exporting that window will show different expense-on-receipt and input-VAT numbers. The stock domain's answer to that situation is re-export, not a correction journal: run the export again and reconcile the difference with the accounting package. The period-close snapshot freezes on-hand value; the cost-flow buckets remain re-derivable from the live document history.

No general ledger, no journal entries, and no chart-of-accounts management lives in this system. Turning the buckets into double-entry postings against the operator's real accounts is the accounting package's job, on the other side of the boundary.