brotherton-erpnext/erpnext/docs/user/manual/en/stock/index.md

For most small business that deal in physical goods, a large part of their net worth is invested in the stock in hand.

Material Flow

There are three main types of entries:

• Purchase Receipt: Items received from Suppliers against Purchase Orders.
• Stock Entry: Items transferred from one Warehouse to another.
• Delivery Note: Items shipped to Customers.

How does ERPNext track stock movement / levels?

Tracking stock is not just about adding and subtracting quantities. Some complications arise when:

• Back-dated (past) entries are made / edited: This affects future stock levels and may lead to negative stock.
• Stock has to be valued based on First-in-First-out: ERPNext needs to maintain a sequence of all transactions to know the exact value of your Items.
• Stock reports are required at any point in time in the past: You have to lookup what was the quantity / value your stock of Item X on date Y.

To manage this, ERPNext collects all inventory transactions in a table called the Stock Ledger Entry. All Purchase Receipts, Stock Entries and Delivery Notes update this table.

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