> ## Documentation Index
> Fetch the complete documentation index at: https://docs.arcuserp.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Manual Inventory Adjustment
> Use a manual inventory adjustment to record a one-line correction with a reason code. Adjustments post directly to the GL, so reason and notes matter for audit review.
A manual adjustment is the right tool when you already know the correction and you do not need a multi-line count workflow. For a controlled count with approval before stock changes, use [Cycle Counts](/support/warehouse/cycle-counts). For the full adjustment form reference, see [Inventory Adjustments](/support/inventory/adjustments).
## When To Use a Manual Adjustment
Use a manual adjustment when:
* You know the exact correction to make right now.
* A damage event, scrap event, or loss event needs to leave inventory before period close.
* A picker reports a small discrepancy on one product and you have already counted it.
* A vendor swap or one-off relabeling moved units between SKUs and you need to true it up.
Use [Cycle Counts](/support/warehouse/cycle-counts) instead when:
* You need to count more than a couple of products.
* The count requires approval before stock changes.
* A separate counter and approver should sign off.
* The change is part of a scheduled accuracy program.
Use [Receive Inventory](/support/inventory/receive) instead when stock is arriving from a vendor.
Use [Inventory Transfer](/support/warehouse/inventory-transfer) instead when stock is moving between locations.
Use a return workflow instead when stock is coming back from a customer.
## Decision Tree
| Situation | Right Workflow |
| ------------------------------------------- | -------------------------------------------------- |
| Vendor delivered stock | Receive against PO or standalone Receive Inventory |
| Stock is moving locations | Inventory Transfer |
| Customer is returning items | Customer Return |
| Vendor is taking items back | Vendor Return |
| You already counted and know the correction | Manual Adjustment (this article) |
| You need to count a section with approval | Cycle Count |
## Steps
1. Open **Inventory**, then **Adjustments**.
2. Select the product.
3. Select the location.
4. Review the **On Hand** value Arcus shows.
5. Enter the **Counted** quantity (the physical quantity you saw).
6. Select an adjustment **Reason**. Reason is required and shows in the journal entry.
7. Add notes that explain what happened. Notes are searchable from the recent adjustments list.
8. Select **Adjust Inventory**.
Arcus calculates the difference and posts the adjustment. The on-hand balance refreshes immediately on the form.
## Reason Codes
The reason code is required for every adjustment. It drives the GL contra account and the audit trail. Common reasons:
* **Cycle Count Correction.** A counted-vs-system difference applied outside the cycle count workflow.
* **Damaged Stock.** Units removed because they cannot be sold.
* **Shrinkage.** Units lost to theft, misplacement, or process error.
* **Scrap.** Units intentionally destroyed.
* **Found Stock.** Units physically present but missing from the system.
* **Vendor Issue.** Adjustment to fix a receiving error that cannot be fixed by reopening the PO.
If none of the listed reasons fit, your admin can add new reasons in Settings. Use the closest match and put detail in the notes rather than picking the wrong reason.
## GL Impact
Every manual adjustment posts a balanced journal entry:
* A **positive** adjustment (found stock) debits Inventory and credits the contra account assigned to the reason.
* A **negative** adjustment (damage, shrinkage, scrap) credits Inventory and debits the contra account assigned to the reason.
The contra account depends on the reason. Shrinkage typically maps to a shrinkage expense account. Damage maps to an inventory writeoff or damaged-goods expense. Found stock maps to an inventory adjustment income or other-income account. Confirm the contra mapping in Settings > Accounting Automation if a reason posts to an unexpected account.
The journal entry stamps the entity, the period, the product, the location, the reason, and the operator. It is reversible by posting an offsetting adjustment with the opposite sign; Arcus does not delete adjustment history.
## Negative-Stock Behavior
If a negative adjustment would drive the location's on-hand below zero, Arcus shows a warning. Your entity's inventory settings decide whether negative on-hand is allowed:
* **Allow Negative Stock = on.** The adjustment posts and the location goes negative. Use only when your process expects to true up later via receive.
* **Allow Negative Stock = off.** The adjustment is blocked. Receive the missing stock first or pick a different correction.
See [Inventory Overview](/support/inventory/overview) for the on-hand health view.
## Common Blocks
* **Reason is required.** Pick the closest match and add detail in notes.
* **Counted equals on hand.** Nothing to post. Cancel the form.
* **Closed period.** Adjustments inside a closed period are blocked. Pick the adjustment date inside an open period or have an admin reopen the period.
* **Permission denied.** Adjustments require the `inventory.adjust` permission. Contact your admin.
## Related Articles
The full Adjustments form, recent corrections, audit trail, and counted-quantity pattern.
Use cycle counts when a multi-line count needs review and approval before stock changes.
Move stock between locations rather than adjusting it up or down.
Bring stock in from a vendor instead of adjusting a count up.