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What is the difference between periodic and perpitual inventory system?
Periodic Inventory System Inventory account and cost of goods sold are non-existent until the physical count at the end of the year. Purchases account is used to record purchases. Purchase Return account is used to record Purchases Returns account. Cost of goods sold or cost of sale is computed from the ending inventory figure For goods returned by customers there are no inventory entries. Perpetual Inventory System Account and the balance of costs of goods sold and inventory account exist all the time. No individual purchases account but the purchases are recorded in the Inventory Account. No individual Purchase Returns account but the purchases return are recorded in the Inventory Account. Record cost of goods sold/cost of sale - inventory is reduced when there is a sale. Returns from customers are recorded by reducing the cost of goods sold and adding back into inventory.
What is stock tacking?
I guess you are trying to ask the question " what is stock Taking?" If so, stock taking is the term used when you count your stock/inventory, and match it with the stock that is recorded in your books (these days it is recorded in your computer system). Most of the companies do stock takes half yearly and some do it annually.
Why physical inventory?
Physical inventory is a process where a business physically counts its inventory. It may be mandated by financial accounting rules.
What does the term inventory indicate?
The term inventory indicates that a business houses products and services. Inventory can be inefficient because the company is using money to purchase inventory instead of investing it in the company.
What is the best method of inventory and why?
Just in time is the best inventory management system. With just in time, the organization doesn't house inventory which saves them money.
Is inventory shrinkage recorded as an expense?
As a reduction to merchandise inventory
What are the various costs involved in an inventory problem?
Ordering cost carrying cost shortage cost
In a perpetual inventory system a return of defective merchandise by a purchaser is recorded by crediting what?
inventory
Is inventory reported at cost or retail for balance sheet reporting?
Inventory is recorded at the lower of cost or market value.
What does SIV stand for in inventory control systems?
SIV stands for Store Inventory Verification in inventory control systems. It is a process where physical inventory counts are compared to recorded inventory levels to ensure accuracy and identify discrepancies.
What are the types of inventory costs?
Item (set-up) costs, holding (storage) costs, and shortage costs (demand > product).
Definition of purchases account?
Ledger account in which all inventory purchases are recorded; used generally with periodic inventory method
Assets purchased for resale are recorded in which of the following accounts?
Merchandise Inventory
How do you reduce Inventory Shortage Shrinkage?
You should offset it to Cost of Goods sold. It should be done thru Write-off of Goods.
What is the shortage cost in inventory planning?
The penalty cost is the cost per unit of not satisfying the order when it is received. Shortage cost or stock-out cost is the total of all costs associated with shortage units. We use penalty cost in inventory planning. The penalty cost should not be something you pay actually. It can be like a chance of profit you missed, which is called the opportunity cost. However, there is a case when you should pay a penalty for the shortage. This happens when you have an agreement with a customer to satisfy the demand by a certain date with the right quantities, or you will pay a penalty for the breach of contract.
What is the inventory system in accounting?
Inventory system is more likely recorded in the Balance Sheet section in accounting. It will not be at the Profit and Loss section.
Does consignment stock have to be reported as inventory?
Yes, consignment stock must be recorded and reported. It is a non-asset inventory and must be documented.
