Re: [SL] Accounting for fuel inventory in a small power generator

[Jeff V. <jv...@ch...>]

On Thu, 2006-11-09 at 09:00 -0600, Oscar A. Valdez wrote:
> We are a small power generator that purchases fuel and converts it into
> electrical and heat energy for sale.
> 
> I've looked at the manual's section on Inventory, and it doesn't seem
> like I can have a fuel inventory and periodically consume it to produce
> energy for immediate sale (can't be inventoried). That would seem like a
> Job Costing or WIP functionality that doesn't seem to be there in
> SQL-Ledger.
> 
> Am I wrong?
> 
Just a thought from a layman. IANAA

Fuel used in operations is an expense item.  You may buy it, and have
some quantity on hand, but it is consumed as overhead in the production
of energy.  It should not be treated as inventory for this purpose.

Energy can be treated as a service, since it is not tangible inventory.
It can be sold by the unit, similar to service hours, and cannot be
stored. Invoicing goes to AR.
Overhead (consumables, labor, etc.) OTOH, is an operating expense that
should be treated as expended as soon as it is received/paid for.  Its
usage impacts profit and detracts from income revenues.  It goes to AP
then gets paid from income. 


> If I am right (i.e., I can't do what I want), I'd appreciate suggestions
> on how to account for my fuel inventory and my energy sales.
> 
> Thanks in advance.