Everyday business with a company’s goods naturally depends on there being enough goods for sale at all times. The stock is usually under constant control and programs such as a merchandise management system have the important task of finding out whether each product is actually available for sale. However, not every company has its own warehouse or even software that analyzes these things. Therefore, an inventory check is important and in many cases has a direct impact on a company’s balance sheet. Therefore, the annual inventory in a company is also an important point.
The importance of inventory in companies
Inventory is basically the things that represent the value of inventory of goods and products that are unsold. In many cases, the value of these goods must be recorded so that the relevant papers can be properly sorted. The value of the goods in your own stock is not recorded with the sales prices, but only with the purchase prices. It is therefore clear at all times how high the values in the company are, which should theoretically still be able to be turned into money. In the course of a year, the stock of goods changes in value due to increases and decreases, i.e. due to new production and sales. Of course, this principle does not apply to every company. In order to be able to record an inventory at all, a separate warehouse is necessary in any case. This is the only way to accurately record how many goods are available and what type of products are still for sale. If a company does not have a warehouse or is even active in the area of services, the corresponding values do not have to be included in the warehouse and therefore not in the balance sheet. It can be very easy to record the corresponding values - however, some things also have to be recorded correctly for the inventory if the balance sheet at the end of the year is to be done correctly:
- The withdrawal of goods from the warehouse is equivalent to a change in the values in the balance sheet. Automatic detection is of course possible, but must be checked at regular intervals. The same principle applies to the new production, of course.
- Of course, the recording of an inventory only works if the company really has goods. Small companies can skip this part and therefore do not need separate inventory management. Nevertheless, registering the goods can also make sense here.
- At the end of the year it is important to take stock. This is used for verification and is an important part of the annual financial statements. In large warehouses, a specific key date is set for this purpose, with which the inventory is recorded.
The item with the inventory is particularly important, because this is the only way to get a precise record of the values.
Inventory and inventory
The key date already mentioned is the starting point for the inventory in the balance sheet. It does not necessarily have to be 01.01. can be taken as a reference date every year – all you need is a fixed day on which the goods in the warehouse are checked. With the help of students and assistants, large companies, for example, begin to record the different goods and then enter them in the balance sheet. Of course, there can also be deviations in the exact management – sometimes there are not as many goods available as the continuous inventory over the course of the year specifies. Corresponding errors in the inventory lead to a correction and then there is a corresponding correction in the balance sheet. The inventory is therefore particularly important when it comes to the precise recording of values.
Visit the rest of the site for more useful and informative articles!